Photo: © Ruletkka
Brazilian forwarders appear unfazed by the US 25% tariff that came into effect today, pointing to the broad exemption list and lead time to ready themselves as substantial buffers to any financial pain.
President Trump made clear his intention to slap a huge tariff rate on the South American neighbour, but with his wider tariff policy having been hobbled by the Supreme Court, the administration sought to ensure this one stuck.
One forwarder told The Loadstar this had required the US government work through a year-long investigation that gave industry sufficient time to prepare itself, with many pleased with the exemption list served up with the tariff.
AGL Cargo’s Jackson Campos told The Loadstar: “The tariff is broad, but the exemption list is significant, so the impact will vary considerably by commodity. Furniture, machinery, footwear, timber, sugar, and ethanol are among the more exposed flows.
“Coffee, beef, aircraft, and some energy and industrial products are exempt. We’ve responded at shipment level,” Mr Campos added, noting that AGL would be checking classification, origin, and exemption status with customs brokers to ensure compliance.
The company would also be also tracking the US customs-entry date and running landed-cost scenarios before bookings were confirmed.
Forwarders The Loadstar spoke to said there was little immediate concern of a physical interruption to cargo flows, but there were some fears over customs compliance.
Mr Campos said: “My main concern is the secondary effect on logistics. We may see an initial pause in US-bound bookings, followed by cancellations or changes in cargo mix in the most affected sectors.
“That could alter container availability and carrier capacity planning, even for exporters whose products are exempt. Overall, I do not expect an immediate system-wide breakdown.”
Forwarders also highlighted a need over the coming weeks to keep ahead on customs compliance, shipment visibility, and flexibility, as Brazilian exporters and US importers adjust to the new cost base.
“We are also reviewing Incoterms and duty responsibility, while keeping ocean allocations flexible so customers can defer shipments, adjust volumes or redirect cargo to other markets where commercially viable,” added Mr Campos.
On a broader level, the tariffs against Brazil could be part of a push by the US administration to renew its push towards their use as a bargaining tool.
Washington-based Atlantic Council, certainly thinks so, the think tank’s Valentina Sader telling France 24 the tariff could be intended “as an example to send a broader message about its priorities and negotiating approach”.
Certainly there is some logic at play here, the tariffs coming into effect the same week that President Trump has escalated his trade dispute with Canada, with additional 50% tariffs on hundreds of its products.
Baker Tilly’s director of global trade advisory services, Pete Mento, believes the Canada tariffs have a decent chance of surviving legal scrutiny by using what is known as a “Section 338”, designed to address foreign discrimination against American trade.
“The administration’s justification is that Canada has treated US commerce less favourably than competing countries in three areas – alcoholic beverages, motor vehicles, and dairy,” said Mr Mento.
“The alcohol case is the strongest. Canadian provinces allegedly removed US products from their systems while continuing to sell competing foreign products. The motor vehicle case is also fairly direct, because Canada imposed measures specifically against US vehicles.”
However, he noted, the dairy issue was “more complicated, because the claim depends on comparing quota treatment under different trade agreements”. But he said “a court is unlikely to reject Section 338 as a valid tariff authority altogether”.