How the US-China trade war could affect Brazil | World



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$ 34 billion of Chinese products came into effect this Friday (6), marking the start of a trade war between the world's two largest economies. The 25% tariff applied by the United States provoked immediate retaliation from China.

The Asian country imposed an identical surtax on 545 US products, which also totaled 34 billion US dollars. A number of important US export products, such as soy, pork, seafood and electric vehicles, have been affected by the measure.

Another battery of Chinese tariffs, which are not yet covered, will reach $ 16 billion of US products, this time affecting exports of crude oil, natural gas and refined petroleum. Commercial hostilities between the two powers affect other countries, such as Brazil.

In the current context of integrated economies in a multilateral trading system, price changes, reductions or increases in production, closures or relocations or pressure to redirect products to other destinations have a direct impact on China's economic partners. the United States.

  Surcharges on imported goods were one of Trump's election promises (Photo: Getty Images / AFP)   Surcharges on imported goods were one of Trump's campaign promises ( (Photo: GETTY IMAGES / AFP)

Surcharges on imported products were one of Trump's election promises (Photo: Getty Images / AFP)

Although Brazil has a great trade with China , the main economic partner of the country, foreign trade replicates a historical dynamic: Brazil exports raw materials and imports manufactured products.

The Chinese buy products such as iron ore, sugar, cellulose, beef and chicken, but soy is the main Brazilian commodity sold to China, accounting for 43% of last year's exports.Brazilian soybean exports to the Chinese market accounted for more than e 20 billion US dollars in 2017, according to the Ministry of Industry, Trade and Services (MDIC).

The United States imports mainly aircraft, semi-manufactured steel and aluminum as well as crude oil from Brazil. According to MDIC data, Brazilian exports to the United States increased by US $ 26 billion last year. This figure represents just over half of what is generated by domestic exports to China.

"The disadvantage is that these tensions can slow down global growth, which could hurt emerging markets, both in terms of exports and foreign investment growth," said Penelope Prime, Director of the Research Center. from China to Georgia State University (USA).

Since the presidential campaign, Donald Trump had promised to put "America first" and declare that China was the enemy to fight to return jobs to Americans.

During a visit to Beijing last year, Trump insisted that trade rules needed to be readjusted to balance trade between the two countries. Chinese President Xi Jinping, a supporter of globalization, said China would open foreign companies.

Trump accuses China of taking unfair practices, such as stealing the intellectual property of US companies. The US trade deficit with the country reached 375 billion dollars last year. China views the US protectionist measures as an "attack" that it needs to fight back in order to protect itself and claims that the Americans have started "the biggest trade war in history".

In recent months, both countries have entered a growing trade dispute. The United States has begun to implement measures against China, in addition to the resources of the World Trade Organization (WTO). They announced import tariffs against Chinese products and investment restrictions, which the Chinese government fought back.

The White House wants to cut its trade deficit with China by $ 100 billion and announced in March rates on steel and aluminum, which also affected Brazilian exporters. In response, Beijing has evaluated more than 100 US products, such as pork, fruit and nuts, steel tubes for the oil and ethanol industry. The United States then released a list of 1,300 targeted Chinese products of up to 25%, accounting for China's imports worth $ 50 billion.

According to Louis Chan, director of research at the Hong Kong Trade Development Council (HKTDC) in China, the so-called "trade war" does not only involve both countries. "What the United States is doing is a unilateralism against Chinese and other allies, such as the European Union, Mexico, Argentina and Brazil, countries that were once trading partners and have not been able to do so. investment, "he says. The new US rate of 25%, in effect since Friday, triggered retaliation from Beijing (Photo: GETTY IMAGES / AFP) Beijing (photo: GETTY iMAGES / AFP) "src =" data: image / jpeg; base64, / 9j / 4AAQSkZJRgABAQAAAQABAAD / 2wBDAAMCAgMCAgMDAwMEAwMEBQgFBQQEBQoHBwYIDAoMDAsKCwsNDhIQDQ4RDgsLEBYQERMUFRUVDA8XGBYUGBIUFRT / 2wBDAQMEBAUEBQkFBQkUDQsNFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBT / wgARCAAOABkDASIAAhEBAxEB / 8QAGAAAAwEBAAAAAAAAAAAAAAAABQYHAwT / xAAWAQEBAQAAAAAAAAAAAAAAAAAABAX / 2gAMAwEAAhADEAAAAcg84ESbdv6UB9P / xAAdEAABBAIDAAAAAAAAAAAAAAAEAQIDBQAGExQk / 9oACAEBAAEFAkdGEHHfwExgkC2bPLjrSVK3svmG1V6ILxWmf EAB8RAAIBAgcAAAAAAAAAAAAAAAECAAMREhQhQXGR8P // / // aAAgBAwEBPwHNMtVnpC2h91EYMuI78z xAAZEQACAwEAAAAAAAAAAAAAAAABAgADIkH / 2gAIAQIBAT8BFQKBX5DnM // EACYQAAECBQMDBQAAAAAAAAAAAAECAwAREiGBBCIxNUJyQVGRkqH / 2gAIAQEABj8CGudam6w3Uk52n7CR8oYTfSB4qkAqdN / fMJeakvUNSbqWOD2n5tmOkvw6hSlKLu0Kq4HcMwgKVMMGlFh68xqqh O9 / Hgj9BxHUDH // xAAeEAEAAgICAwEAAAAAAAAAAAABESEAMUFhcYGh8f / aAAgBAQABPyEiKGwxqHXghlULYLCxIqDaNZwHQSwXNQhfRycEOuFNssHinsxomUAi7JCXRivCjRtUfNu8 / J5 / / // 9oADAMBAAIAAwAAABAeX EABsRAQEAAgMBAAAAAAAAAAAAAAERIUEAMYFx / 9oACAEDAQE / EEVGrPtuSKlR0z gAgcnIz5V961vn / 8QAGxEBAAICAwAAAAAAAAAAAAAAAREhADFRgeH / 2gAIAQIBAT8QNmZAeSc7w1FhRpg7z // EABwQAQEAAwADAQAAAAAAAAAAAAERACExQdHwcf / aAAgBAQABPxBuSF1wFNDAb3M0TjymCqgcUFcTYj7H1SR0hOlZG5977wOHr3cVBBetguP AYoMwByq + // cXs7OH41NZ8FzufV9Z 9k = "/>   New rate of 25% applied (Xinhua Photo) GETTY IMAGES / AFP (Xinhua Photo) GHETTO IMAGES / AFP (Xinhuanet - A new 25% rate imposed by the United States, in force since Friday, triggered retaliation in Beijing. data-src =

New 25% rate applied by the USA, (Photo: Getty Images / AFP)

"While Brazil and other economies export products in competition with the United States , the Chinese tariffs on these products are expected to increase Brazilian exports and those countries, such as soybeans, "says Prime, of the Georgia State University.

The trade war will be cyclical, says Cui Daiyuan, professor of economics at the University of Shanghai, China. "Brazil could also be affected by US protectionism, although it wins in the short term by diverting supplies of goods."

Trump's surtax on steel directly affects Brazilian steelmakers Brazil is the second largest source of steel for the United States, domestic sales account for one-third of Brazil's exports of steel and are now subject to a new tare 25%.

Even though China and the United States reach a truce, Chan points out that the Chinese government has worked very well with Brazil and other emerging economies. For the Chinese economist, a change in the global supply chain is underway, generating winners and losers.

"Even without the trade war, there will be changes in the relations between emerging economies, the so-called tariff battle will stimulate this process and make it a much faster reality," he says.

Chan believes that the dispute with Washington will serve to bring emerging markets closer, such as South-South cooperation. "If you find that your suppliers are unreliable, as their policies may change overnight, then you will probably be looking for more reliable partners," he says.

But the conflict may not last long. Gustavo Oliveira, a geographer and political scientist at Swarthmore College in Pennsylvania, believes the two countries need to agree on these tariff issues in a matter of months. "What is happening is a realignment, where you have less US exports to China and more exports from Brazil and other countries to China."

  The Brazilian steel industry has suffered significant losses since the deterioration of trade relations between China and the United States (photo: GETTY IMAGES)   Brazilian steel industry suffered losses (Photo: GETTY IMAGES )

The Brazilian steel industry suffered losses though (Photo: Getty Images)

For Marcos de Paiva Vieira, Professor of Economics at the Guangzhou University of Technology, Brazil can explore the situation in a positive way. "It is time to take advantage of the dispute, in all its aspects, to seek more business and investment: being pragmatic, Brazil must remain equidistant, opening to investigations of both parties. of business, mergers and acquisitions and foreign investment. "

The expert points out that the profit from the increase in the sale of Brazilian soybeans, to offset the decline in the US supply , helps to bring a favorable result to the balance of trade and generates currencies.

Despite the initial benefit, William Jackson, emerging market economist at Capital Economics, believes that Brazil can be reached by other means. "First, a more general deterioration in the scenario caused by trade concerns could weaken real and rising inflation." Second, Brazil would be vulnerable if the US began to impose general duties on specific products, such as aircraft. the Chinese economy to slow down, which may cause commodity prices than Brazil's exports to decline. "

For the United Nations Conference on Trade and Development (UNCTAD), the trade war is a fight of elephants, where the grbad is destroyed and everyone loses. A study of the Organization from 124 countries shows that in the worst case of a trade war involving all countries of the world, average tariffs on Brazilian exports could rise from 5% to 32%.

Brazilian Minister Agriculture and one of Brazil's largest soybean producers, Blairo Maggi, told Reuters in Paris that he fears that increased demand for domestic soybeans will drive up local prices and undermines Brazil's competitiveness Dynamics can recur with other products that Brazil exports to China

According to Maggi, the country gains in the short term, but in the medium and long term, a strong demand Exporting can be a problem, since Brazil is an important product and the sector depends on the national soybean for animal feed. .

Soybeans are the main agricultural product that the United States sends to China and accounts for nearly 10% of the country's exports. With the boycott of Beijing by the American soybean, the Brazilian agro-industry has achieved a high profit on the past harvest.

  Trade war can increase external demand for Brazilian soybeans (Photo: REUTERS)   Trade war can increase Brazil's external demand for soybeans (Photo: REUTERS) "title =" trade war can increase external demand for Brazilian soy (photo: REUTERS) "data-src =" https://s2.glbimg.com/U6xcnzeoGROsKPFh6xKI2zqO1aM=/0x0:624x351/984x0/smart/filters:strip_icc()/i.s3.glbimg (19659041) Last year, the trade war can increase the external demand for Brazilian soybeans. [Photo: REUTERS] </span> </p>
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In the last year, China imported a total of 97 million tons of soybeans, which equates to almost total consumption of Brazilian production, 119 million tons, according to Embrapa, and the American company, which stands at 119.5 million tons.The Chinese are the largest importers of the product in the world. [19659036] Ten years ago, 38% of soy entering the Chinese market It came from the United States and 34% from Brazil. Today, 57% of the soybeans that feed the Asian country comes from domestic crops, according to data from the General Administration of Customs of China.

Gustavo Oliveira explains that China can not rely on Brazilian soybeans to replace the American, since Brazil directs much of the domestic production (43 million tons) to feed the domestic market. Brazilian exports suffer from political instability, as evidenced by the recent national truckers' strike.

In addition, China imports nearly two-thirds of the world's soybean production. "Brazil and the United States each export more than a third, and all other countries have added less than a third, which basically means that all soy must come from the rest of the world and from all over the world. The other countries. Brazil should serve the Chinese market, and all other importers, other than China, should import exclusively from the United States. This situation is unrealistic because of various logistical, commercial and contractual problems, "explains the researcher.

Development Model

For Oliveira of Swarthmore College, think of the impact of the trade war on a narrow badysis of agribusiness, that is to badume that everything what promotes the sector is good for the country. "It's not so simple," he said, "and this conversation took place in which the agribusiness, the iron and steel industry and the Brazilian mining are l & # 39; 39; equivalent to the interest of Brazil. "

"A major crisis for the Brazilian agri-food industry can be a good thing for thousands of landless families, for millions of small farmers and for many other sectors of Brazilian society who have a different vision of development. agribusiness "Oliveira Beijing, in an interview with BBC News Brazil.

The researcher warns that the friction between China and the United States shows how vulnerable Brazil is, being a major exporter of agricultural products and minerals. "He is very exposed to the advances and setbacks of the negotiations between Beijing and Washington, where the Brazilian companies or the state do not even have any weight, Brazil is the hostage of a model neocolonial ".

On the fact that Brazil's relationship with China boils down to exporting low-value products and buying industrialized products from China, Chan of Hong Kong argues that Chinese companies are already producing computers, televisions and machines, as a new deployment of Sino-Brazilian cooperation.

"They take advantage of the Manaus free zone to produce and sell not only in the Brazilian market, but also in South America," he says.

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