Brazil & Argentina under new US Tariff context

Imagem: CNN

Author: Expert from our network

1. Context: U.S. Tariff Adjustments on LATAM Exports

As of 2024–2025, the United States has implemented new protectionist trade policies affecting imports from Latin America. This includes a baseline 10% tariff on goods from the region and additional sector-specific surcharges — potentially up to +40% for Brazil, depending on the industry. Targeted sectors include steel, aluminum, agriculture, technology, and automotive. These measures reflect the U.S.’s broader effort to protect domestic industries and rebalance trade relationships.

2. Differential Impacts: Brazil vs. Argentina

Brazil is one of the U.S.’s major trading partners in Latin America, especially in commodities like steel, soy, beef, and minerals. If total tariffs on Brazilian exports reach up to 50%, Brazil will experience a significant loss in competitiveness in the U.S. market. Expected outcomes include efforts to redirect trade flows to Asia and Latin America and increased domestic processing.

Argentina, by contrast, is less exposed to the U.S. market, with a smaller share of exports consisting of citrus, wine, biodiesel, and niche agro-industrial goods. A stable 10% tariff leaves Argentina relatively unaffected directly — but its internal limitations (macroeconomic instability, low competitiveness) constrain any meaningful expansion to fill the gap left by Brazil.

Brazil: Directly and Heavily Impacted Brazil is a top exporter to the U.S., especially in:

- Semi-finished steel and iron

- Mineral commodities

- Agricultural goods (soy, beef, coffee)

- Industrial goods (Embraer aircraft, machinery)

With total tariffs potentially reaching 50%, Brazil’s export competitiveness to the U.S. is likely to fall sharply. Expected reactions:

- Diversify exports toward Asia and Europe

- Flood regional markets (including Argentina) with excess supply

- Promote domestic value-added transformation to mitigate losses

Argentina: Moderately or Marginally Affected Argentina’s direct exports to the U.S. are lower in volume and mostly limited to:

- Citrus fruits, wine, biodiesel, and niche food products If the 10% general tariff remains unchanged for Argentina, its U.S. trade position may remain relatively stable However, structural constraints persist:

- Low international competitiveness

- Domestic macroeconomic instability

- High logistical and production costs

3. Risk of Indirect Negative Impacts on Argentina

Even without direct tariff increases, Argentina may face collateral damage from Brazil’s response:

A. Surge of Brazilian exports in LATAM (including Argentina) If Brazil redirects its exports to regional markets to compensate for losses in the U.S., this could hurt Argentine industries. Brazilian products, often cheaper and more competitive, might flood the local market, putting pressure on Argentine SMEs in sectors like plastics, machinery, steel, and food processing.

B. Increased competition from Brazil in Asian markets Brazil has existing trade strength in China, India, and Southeast Asia. Losing the U.S. market could prompt it to expand aggressively in Asia, competing directly with Argentina in soy, beef, and processed foods. Argentina’s premium export niches (e.g., wine, lemon, organic products) could be particularly vulnerable.

4. Justifiable Data (2024 Estimates)

In 2024, Brazil exported approximately USD 34 billion to the United States, with key sectors including steel, soy, meat, and minerals—making the U.S. one of Brazil’s top three trading partners. Argentina, in turn, exported around USD 5.5 billion, primarily in citrus fruits, biodiesel, and wine, with the U.S. ranking as its fifth largest trading partner. While Brazil faces a base tariff of 10% plus up to an additional 40%, Argentina is subject only to the base tariff. As a result, the risk of market redirection is significantly higher for Brazil, which will likely seek alternatives in Asia or neighboring countries. Argentina, by contrast, has more limited external capacity to absorb additional trade flows.

5. Mitigation Options for Argentina

Argentina still has room to respond strategically, despite internal constraints: - Strengthen bilateral trade ties with the U.S. in selected products and sectors - Pursue free trade agreements (FTAs) or partnerships in Asia, Africa, and the Middle East - Implement temporary safeguard mechanisms within MERCOSUR to protect sensitive industries - Provide targeted fiscal, credit, and logistic support to exporting SMEs and agro-industrial firms

6. Final Remarks

While Argentina may not be directly targeted by the new U.S. tariffs, it is not isolated from the consequences. Brazil’s trade reorientation could disrupt regional balance and expose Argentine exporters to stronger competition both locally and globally. Strategic planning and proactive trade policy are crucial to defending Argentina’s market position and identifying new growth opportunities.