Tariff war may open doors for Brazil’s textile and footwear exports

The escalating tariff war is creating a volatile trade environment, but U.S. import taxes could end up benefiting certain sectors of the Brazilian economy. Still, due to high levels of uncertainty, Brazil should work to diversify its trade partners and explore new markets, specialists told Valor.

With reciprocal tariffs currently suspended and a 125% surcharge imposed on Chinese goods entering the U.S., Brazilian products that lost market share to China—such as textiles and footwear—could see gains in the American market.

“At the moment, the only change in market access to the U.S. is for China, which now faces a 125% tariff—a prohibitive rate. Brazil competes with China in about 700 products in the American market. Last year, the U.S. imported around $12 billion from Brazil and $29 billion from China in these categories,” said Abrão Neto, CEO of the American Chamber of Commerce for Brazil (AMCHAM Brasil). He noted that clothing and footwear could benefit alongside machinery, equipment, certain chemicals, and construction materials.

Last week, the Trump administration suspended the reciprocal 10% tariffs for 90 days and imposed a 125% surcharge on Chinese goods. China responded in kind.

If the 10% tariffs on Brazilian goods return, sectors like textiles, footwear, apparel, machinery, equipment, and paper could benefit. On the other hand, steel and auto parts could suffer, while aircraft and oil are unlikely to be heavily affected, said Fernando José da Silva Paiva Ribeiro, planning and research analyst at the Institute for Applied Economic Research (IPEA).

“Brazil could regain market share in textiles, footwear, and clothing, which we once exported significantly to the U.S. before being overtaken by China and other Asian countries such as Indonesia, Vietnam, and the Philippines,” he said. “Over time, we were pushed out of that market, but if those Asian countries are taxed more heavily than Brazil, we might reclaim some of those exports.”

Impact on steel

Brazil’s exports to the U.S. are concentrated in three main products not on the tariff list: steel, aircraft, and oil. Should reciprocal tariffs return, the basic steel sector and auto parts could be negatively affected, particularly since taxes on auto parts were expected to begin in May.

“Steel is hard to predict because it depends heavily on what happens with Canada and Mexico, which are the main U.S. suppliers,” Mr. Ribeiro said. He believes crude oil, refined products, aircraft, and related machinery are unlikely to be significantly impacted. Oil and derivatives are exempt from tariffs, and aircraft face limited competition.

A report by the Financial Times on Sunday (13) highlighted how the deepening trade war between the U.S. and China is benefiting Brazil’s agricultural sector. As China seeks alternatives to U.S. products, Brazil has grown as a top food supplier to Beijing, from soybeans to beef. Chicken exports to China rose 19% in the first quarter, the FT noted, citing China’s importers association.

Another area where Brazil could gain is fruit exports. Rubens Ricupero—former ambassador, former UNCTAD secretary-general, and former finance and environment minister—added that if the U.S. reinstates 25% surcharges on Mexican products, Brazil could expand its U.S. market share.

Investment flows

Beyond trade, the uncertainty and speed of developments are likely to affect investment flows into Brazil, said Mr. Neto of AMCHAM, pointing out that the U.S. is Brazil’s top foreign investor. “A lack of predictability impacts investment. And I believe low predictability will prevail. It’s not something that will be resolved in the coming days,” he said.

Mr. Neto noted that the situation is far from stabilized, and that close attention should be paid to how the U.S. economy reacts to these developments.

“It’s U.S. market demand that will dictate American purchases and, consequently, appetite for Brazilian products,” he said. “So, the main concern right now is whether the U.S. economy slows down. If it stays strong, demand for Brazilian goods should continue.”

For now, Mr. Ribeiro said it remains unclear whether the U.S. has the capacity to domestically produce all the goods it has recently hit with high tariffs.

“No country in the world today has the industrial capacity to manufacture everything. After 50 years of globalization and the rise of global value chains, production has become concentrated in certain areas, while the rest is imported,” he added. “There are many items the U.S. no longer produces domestically. In some cases, that loss is irreversible.”

The study Economic Analysis of U.S. Tariffs Introduced Over March-April 2025, released earlier this month by Victoria University in Melbourne, Australia, shows that the new surcharges could lead to a 33% drop in U.S. imports. “If the model is accurate, that’s a sharp decline. A reduction in aggregate U.S. demand would impact all exporting countries,” Mr. Ribeiro said.

Mr. Ricupero noted the Trump administration is taking a selective view of trade data and ignoring areas where the U.S. has a competitive edge. “Their mindset is outdated—they only focus on goods trade balances and ignore services. They may lose out on goods, but they hold a massive advantage in the ‘invisible’ economy.”

Given the uncertainty about which tariffs will actually be applied and when, Mr. Ricupero argued that Brazil should deepen its economic ties with other partners, especially in Asia. “If you combine China, Japan, South Korea, Singapore, India, Malaysia, and Indonesia, they account for 50% of our trade. Brazil should explore those markets,” he said. “I think the Americans will tie themselves in knots and create many problems. But for those able to diversify—like Brazil and the Asian nations—there are opportunities.”

Source: Valor International

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