The American Chamber of Commerce in Brazil, (AmCham Brasil) released the ‘Brazil-United States Trade Monitor’, which pointed out that bilateral trade in 2020 between Brazil and the United States until September registered the worst result of the last 11 years.
According to a study by Amcham Brasil, the value of trade between January and September 2020 was US$ 33.4 billion, a reduction of 25.1% compared to the same period in 2019.
“The contraction of a quarter of trade flow between Brazil and the United States is a severe blow to bilateral trade, and is the worst result for the period since the economic crisis of 2009”, says Abrão Neto, executive vice president of Amcham Brasil, an entity representing around five thousand Brazilian and American multinationals.
The report points to three main factors to explain the sharp reduction in bilateral trade. “The combination of the serious effects of the economic crisis caused by the pandemic, the fall in the international price of oil, and trade restrictions in specific sectors, such as the steel industry, account for a large part of the contraction in bilateral trade”, explained Abrão Neto.
An analysis by Amcham Brasil, Brazilian year-to-date exports to the USA fell 31.5% compared to the same period in 2019, reaching a total of US$ 15.2 billion. It is the lowest sum for the period since 2010. In relative terms, of Brazil’s 10 largest export destinations in 2020, the US was the most affected.
“There were seven billion dollars less in exports. As the profile of bilateral trade is composed mainly of products with higher added value, the current economic crisis has hit our exports to the United States hard. The rate of decline was four times greater than the reduction of total exports from Brazil to the rest of the world “, explains Abrão Neto.
On the other hand, Brazilian imports from the United States plunged in this third quarter, down 41.6% compared to 2019. Between January and September 2020, imports totaled US $ 18.3 billion, down 18, 8%.
As a result of the shrinking of exports and imports, the trend is for Brazil to register the largest trade deficit with the United States in the last five or six years, according to the projection made by Amcham Brasil. To date, the negative balance has been US$ 3.1 billion against Brazil.
Despite the sharp reduction in bilateral trade, the United States remains Brazil’s second main trading partner (12.3% of its total trade with the world). China leads having increased its share to 28.8%, according to data from the study.
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A shame really, but the potential for large scale bilateral trade has bee undermined on both sides. As an example one one side, the automotive industry could compete very well with other imports to the US, but the predatory tax policies in Brazil keep these products from earning trade revenue. On the other side, US 'environmental and food safety' mandates are used as a tool to choke off agricultural exports to the US in favor of established contractors; a lesson I learned in NE Brazil where large scale fruit production is entirely sold to the EU, whereas the operators would dearly love to enter the US market.Oct 19th, 2020 - 04:13 pm +1
I had said that before. Brazil and USA are not complementary economies. The two countries compete with the same products on the international market. And when USA entered into a strategic partnership with China, it took the wealth to the other side of the planet. USA has abandoned South America and is paying the highest price a country can pay: cruel and absolute decay.Oct 19th, 2020 - 01:13 pm -1