Brazilian government responds to US tariffs with new economic measures

One week after the United States imposed a 50 percent surcharge on products imported from Brazil, the Brazilian government announced the "Brasil Soberano" Provisional Measure. The announcement, made on the morning of Wednesday, August 13, at the Planalto Palace in Brasília, was attended by President Lula, ministers, heads of the Chamber and Federal Senate, and key business leaders. The Brazilian Footwear Industries Association (Abicalçados) views the emergency measures as crucial for the preservation of national companies.

Abicalçados chief executive, Haroldo Ferreira, stated that the package partially addresses the footwear industry's requests. The sector has recognized several important measures, including the expansion of the Reintegra program to 3 percent for all exporters, with a 6 percent rate for small businesses. Additionally, the government announced a one-year suspension of tax payments under the drawback regime and a 30 billion reais credit line for exporting companies. While acknowledging these positive steps, Ferreira noted that the labor-intensive sector continues to seek additional measures to safeguard employment. The government's new procurement measure, however, which targets perishable goods, is not expected to impact the footwear industry.

During his speech, President Lula emphasised the importance of expanding new markets. Ferreira, from Abicalçados, explained that footwear exported to the United States is primarily sold under private label agreements, making it difficult to redirect to other markets in the short term. Abicalçados supports the need for new trade agreements, particularly those that promote the export of manufactured products with a focus on fair trade.

The Provisional Measure was published in a special edition of the Official Gazette on August 13 and will remain in effect for 120 days, during which it must be voted on by the National Congress.