(Photo: Reuters/Eduardo Munoz, Nathan Howard)
O agribusiness two United States (USA) and Brazil is closely following the developments in the US elections and what the eventual victory of Kamala Harris or Donald Trump could mean for trade agreements, tariffs and export barriers.
During Prosa Agro, a podcast by Itau BBACesar Castro, manager of Consultoria Agro, received Christopher Garman, executive director of Eurasia Group for the Americas, and Fernando Gonçalves, superintendent of macroeconomic research at Itaú Unibanco, who discussed the US elections and the impacts on the agro Brazilian.
Garman highlights that economic and tariff policies are the main points of difference between Trump and Harris' candidacy.
According to him, Trump wants a 60% tariff on all imports from China in the American market. However, the director of Eurasia says that, regardless of who wins, there will be a deterioration in the bilateral relationship between China and the US.
“Trump is expected to have a very strong protectionist and tariff stance, with a more audacious candidacy profile vis-a-vis China. In Washington, there is a consensus between the two parties that the Asian country is the main geopolitical threat to the US. Both Trump and Biden have maintained tariffs on Chinese products. However, Trump's return could intensify a protectionist tariff policy, especially in relation to China.”
The effects of the election on Brazilian agriculture
According to Garman, the question remains as to whether Chinese retaliation measures will be taken if these protectionist measures are confirmed, as happened in Trump's first term, when Brazil benefited from the trade war.
Compared to the 2018 trade war, where Brazilian soybean exports benefited from the redirection of Chinese demand, Garman points to a new scenario.
“The starting point is already quite different, if we look at the profile of soybean imports in China, Brazil has already gained a market share much higher than it was at the beginning of Trump's first term. It is not trivial for the Chinese to want to retaliate with a tariff policy on American products to reduce this percentage even further, especially because the off-season for soybeans in Brazil and the United States are complementary,” he explains.
Environmental agenda and biofuels
Garman explains that Kamala Harris has a stronger profile than Donald Trump, which should mean a more protectionist environmental policy for the US if she wins. Trump, on the other hand, is likely to withdraw the country from the Paris Agreement.
“If the US decides not to meet these climate targets, there will be impacts on the COP30 negotiations, held in Belém, especially on the negotiations on the green financing agreement and climate finance of industrialized countries. If Trump wins, we will see a country that is less concerned about the environment, but at the same time, defending North American producers.”
For the Renewable fuels standard, Regarding the US biofuels policy, Garman does not foresee major changes, as he seeks to defend the country's producers as a whole. “What may happen, more specifically for ethanol, is a disturbance due to the import tariff imposed by the Lula government. If Trump wins, I think it is very likely that they will retaliate, since this is a problem that currently exists in the Biden government.”
However, for the expert, Brazil is well-positioned in geopolitical terms. “We have the Chinese wanting to reduce their dependence on the United States and a little on the West, and we have part of Europe wanting to get closer to Brazil in an agreement with the European Union and Mercosur that is still in play. But if Trump prevails, Brazil’s close relationship with China will be a source of friction, particularly if Brazil joins the Silk Road.”