How are investments in Brazil affected by Trump’s election?

Donald Trump’s election in the United States marks a significant moment for the global economy, and Brazil, as one of the main trading partners, may feel the effects of these changes.

With Trump’s policies likely to favor protectionism, it is crucial to understand the potential impacts and strategies for the Brazilian market.

Policies announced by Trump

Trump proposed tax cuts for American businesses, as well as increases in tariffs on foreign products, ranging from 10% to 20% for most countries, and up to 60% for Chinese products.

These measures, if implemented, could destabilize global trade relations and negatively impact Brazilian exports.

A volatile scenario

Projections suggest an increase in import tariffs and subsidies for the American industry, promoting an economy more dependent on fossil fuels and less engaged with free trade practices.

These policies are expected to strengthen the dollar and concentrate investments in the U.S. economy, which could result in:

1. Reallocation of investments to more stable economies

As safer bets for international investors, economies with stronger currencies, such as the United States and the European Union, tend to attract more resources during times of economic instability.

2. Economic slowdown in Brazil

Trump seeks to favor the American economy by creating barriers for other countries. This means reduced access for Brazilian products to reach their second-largest trading partner.

We can anticipate that primarily industrial and commodity sectors, such as agribusiness, steel mills, and the textile industry, will be impacted.

3. Currency fluctuations

We can expect an unfavorable exchange rate for Brazil in the short term, considering ongoing instabilities in Brazilian politics and economy.

With the U.S. dollar on the rise, higher interest rates and inflation are expected, making it more difficult to obtain credit, increasing the cost of living, and slowing the country’s economic growth.

Strategies for the Brazilian scenario

To mitigate the impacts of Trump’s protectionist policies, Brazil can adopt several strategies:

• Internal fiscal balance: strengthen fiscal management to make the Brazilian economy less vulnerable to external shocks.
• Diversification of trade partners: seek new markets, especially in Asia and Europe, to reduce dependence on the American market.
• Bilateral negotiations: explore bilateral agreements with the U.S. that could benefit Brazilian strategic sectors.

Brazilian companies and investors must be attentive to changes in U.S. economic policy and prepare for a potentially volatile environment.

Upside Investment is ready to guide you through these uncertainties, providing tailored strategies to protect and maximize your investments in the new global landscape.