Brazil-USA Trade Declines Sharply in 2020, Hits Worst 9-Month Mark in Eleven Years

RIO DE JANEIRO, BRAZIL – According to a report released by Amcham Brazil, bilateral trade between Brazil and the United States by September recorded its worst result in the past 11 years. Between January and September, the two countries traded US$33,4 (R$183) billion, a 25,1 percent reduction over the same period last year. The report points out the main factors to explain the sharp reduction in bilateral trade.

The most obvious factor is the pandemic, which has produced a significant drop in the USA of both consumption and companies’ need for products originatingfrom Brazilian exports. But other factors lead to reflection on the guidelines of Ernesto Araújo’s Itamaraty (Foreign Office). China, attacked head-on by US government officials, has expanded its participation in the Brazilian market as the country’s main trading partner. According to the report, the Asian country represents 28.8 percent of all international transactions in Brazil.

Another key factor involves the American president’s protectionist policy, which has restricted the entrance of Brazilian steel products in order to protect US domestic industry. In August, with the November elections in mind, Donald Trump announced that he would cut Brazilian steel imports by over 80 percent until the end of the year. The Bolsonaro government reacted complacently: it renewed, without any compensatory or countervailing measures, the exemption of import tariffs on American ethanol, infuriating local producers in Brazil.

According to the AmCham analysis, in the 9-month year-to-date, Brazilian exports to the US dropped by 31.5 percent compared to the same period in 2019, reaching a total of US$15.2 billion. This is the lowest figure for the period since 2010. In relative terms, the US was the most affected among Brazil’s top ten export destinations in 2020: there were seven billion dollars less in exports.

The decline rate was four times greater than the reduction in Brazil’s total exports to the world. On the other hand, Brazilian imports from the United States plummeted in the third quarter, with a 41.6 percent reduction compared to 2019. Between January and September 2020, imports totaled US$18.3 billion, an 18.8 percent drop. Despite the sharp decline in bilateral trade, the US remains Brazil’s second largest trading partner.

At the start of the month, AmCham had outlined scenarios for the impacts of the US elections on Brazil’s foreign policy and trade relations. The organization warns of a greater defense of a national-developmentalist and protectionist policy of the Republican in relation to the Democrat candidate Joe Biden, whose party is more historically linked to globalist ideals.

According to the document, under Trump’s leadership, the United States has become more averse to multilateralism and to the actions of international organizations such as the World Trade Organization, the World Health Organization, and the United Nations. Trump, the report points out, has also backed out of some free trade agreements previously signed by the United States (such as NAFTA and the Transpacific Partnership) and tends to favor bilateral negotiations over negotiations involving multiple parties.

In Trump’s world, it’s always “America First”.