The trade war between the United States and China, whose outcome is still unpredictable, has boosted Brazilian exports. The projection is that sales of domestic products abroad will end 2018 with the best result in five years.
Until October, exports have already totaled US $199.1 billion. At that rate, analysts expect to close the year at more than US $230 billion — the highest level since 2013. The record for sales was in 2011 of US $256 billion, according to the Ministry of Industry, Foreign Trade, and Services).
The increase in exports increases the number of jobs in the sectors involved and partly compensates for the slow recovery of the domestic market. In addition, it brings more dollars to the country, improving the balance in the external accounts.
“A few months ago, it was projected that exports would be close to $218 billion. It is the commodities, favored by the commercial war, that have helped, “says Jose Augusto de Castro of the Brazilian Foreign Trade Association (AEB).
The Trump government has imposed import tariffs and quotas on several partners to reduce the trade deficit — when the country buys more than it sells. The Chinese, with whom this deficit is higher, were levied on imports, to force Asians to make concessions. This policy, retaliated by China, led the two countries to the commercial war.
The fight has altered the flow of trade. Brazilian sales of soybeans to China benefited when the Asian country imposed 25% tariffs on the American grain. The US exported 40 million tons to the Chinese; Brazil, about 50 million. Until August, exports of Brazilian soybeans rose 20% compared to 2017. In addition to soybeans, Brazil benefited from the rise in the price of oil.
Brazilian manufactured goods, however, have not performed as well. While the share of primary goods in exports rose almost three percentage points in the first nine months of the year, the share of manufactured goods in sales fell by one point.
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Among experts, there is doubt as to how long this favorable period of exports will last. “The window is narrow,“ says Lia Valls of the Getulio Vargas Foundation (FGV). “In 2019, with US tariffs expected to rise, there will be an aggressive Chinese response, which would lead to more protectionism.“
Michael McDougall, vice president of the US consultancy ED & F Man Capital Markets, has a different view. “The negotiation between them (US and China) will be delayed. Thus, Brazil has the opportunity to export more to China and should take advantage of this by expanding, for example, the planting of soybeans, as it will take years for the Chinese to diversify the supply of oilseed, “he said.
