Since last year, domestic inflation in Brazil has remained high. In order to stabilize domestic prices and alleviate inflationary pressures, Brazil has introduced multiple policies to reduce import tariffs.

Brazil announces the cancellation of import tariffs on six commodities

On March 10th local time, Brazilian Vice President Alkmin announced through social media that Brazil will cancel import tariffs on six types of goods starting from the 10th. These six products include two different types of steel, two types of aluminum plates, bracelets for measuring blood pressure and pulse, and radar antennas.

Alkmin stated that the import tariffs on the aforementioned goods previously ranged from 12% to 16%, and the government will implement a "zero tariff" policy on such goods in the future.

The Brazilian government has repeatedly announced tariff reduction policies

Brazil's domestic inflation remains high, with data released by the country's Bureau of Geographic Statistics recently showing that Brazil's inflation rate in 2022 was 5.79%. The Central Bank of Brazil's previous inflation target for 2022 was 3.5%.

In order to alleviate inflationary pressure, the Brazilian government has repeatedly announced tariff reduction policies to expand imports and stimulate the country's economic development.

On May 23, 2022, the Brazilian Ministry of Economy announced a 10% reduction in import tariffs on commodities such as beans, meat, pasta, biscuits, rice, and building materials.

This policy covers 87% of all categories of imported goods from Brazil, involving a total of 6195 goods, and is valid from June 1, 2022 to December 31, 2023. This is the second time since November 2022 that the Brazilian government has announced a 10% reduction in tariffs on such goods.

According to data from the Brazilian Ministry of Economy, through two adjustments, the import tariffs on the above-mentioned goods will be reduced by 20% or directly reduced to zero tariffs.

In addition, the Brazilian government issued multiple tariff reduction notices from March to May last year. (Details: The minimum is zero! Importing countries have announced the reduction of over 6000 import tariffs on goods, which will take effect on June 1st!)

Is there still room for expansion in the Brazilian foreign trade market?

According to the 2022 import and export data released by the General Administration of Customs, the total trade value of China's exports to Brazil is approximately 62 billion US dollars (accounting for 22.8% of China's total exports to Latin America), an increase of 15.7% compared to 2021, indicating an optimistic growth rate.

Brazil's total import value in 2022 was 272.61 billion US dollars, an increase of 24.2% compared to 2021. The total import value for the first two months of 2023 to date is 38.26 billion US dollars, a year-on-year decrease of 1.2%.

China is the largest importer to Brazil. According to Brazilian customs statistics, China's total import value is 60.7 billion US dollars, accounting for 22.3% (2022 data);

Next is the United States, accounting for 18.8%, while the other top ten importing countries are Argentina, Germany, India, Russia, Italy, South Korea, Saudi Arabia, and Japan.

In the first two months of 2023, China's import volume decreased year-on-year, reaching 8.3 billion US dollars, accounting for 21.7%, and remains the country with the largest import volume.

The main products imported from Brazil are as follows:

The top ten categories of industrial products imported by Brazil in 2022 are fertilizer products (24.7 billion US dollars, accounting for 9.1%), petroleum products (23.5 billion US dollars, accounting for 8.6%), electrical products (11.5 billion US dollars, accounting for 4.2%), chemical products (9.9 billion US dollars, accounting for 3.6%), and automotive parts (7.6 billion US dollars, 2.8%);

Pharmaceutical products (7.1 billion US dollars, 2.6%), insecticides and herbicides (6.9 billion US dollars, 2.5%), communication products and accessories (6.6 billion US dollars, 2.4%), motor products (5.7 billion US dollars, 2.1%), and animal medicine products (4.2 billion US dollars, 1.5%).

What products are currently mainly exported by China to Brazil?

At present, the top 5 products that China mainly exports to Brazil are: electromechanical, audio-visual equipment and its parts, accessories, including nuclear reactors, boilers, mechanical appliances and parts and motors, electrical, audio-visual equipment and its parts and accessories, with a total export value of 25.88 billion US dollars;

Products of the chemical industry and its related industries, including inorganic chemicals, organic chemicals, drugs, fertilizers, coatings, essential oils, detergents and other products, with a total export value of 13.14 billion US dollars;

Base metals and their products, including steel, copper, nickel, aluminum, lead, zinc, zinc, tin and their products, with a total export value of 4.84 billion US dollars;

Textile raw materials and textile products, with a total export value of 4.14 billion US dollars; The total export value of plastics and their products, rubber and their products is 3.04 billion US dollars.

It is worth mentioning that since the beginning of 2022, Chinese customs and Brazilian customs have officially implemented the "Certified Operator" (AEO) system mutual recognition arrangement, which further strengthens the trade relationship between the two sides.

In addition, according to the central bank's official account on February 7, 2023, the People's Bank of China and the Central Bank of Brazil signed a memorandum of cooperation on the establishment of RMB clearing arrangements in Brazil.

The establishment of the RMB clearing arrangement in Brazil will help enterprises and financial institutions in China and Brazil to use RMB for cross-border transactions and further facilitate bilateral trade and investment.

In addition, according to Reuters on February 18th, official sources revealed that Brazilian President Lula plans to visit China on March 28th. This will be his first visit to China during his new term, and he is expected to stay in Beijing for 4 days.

According to the Brazilian website Poder360, Lula's visit to China will focus on deepening economic and trade relations with China and promoting technical cooperation between the two countries, including expanding exports of high value-added products, 5G, satellites, and environmental monitoring.

Reuters reported that in 2009, the year of Lula's second visit to China, China became Brazil's largest trading partner.

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