According to the World Trade Organization in 2019 Brazil was responsible for about 1% of the exports in the world and about 1% of the imports in the world. Considering it is one of the food silos of the world and its huge abundance of natural resources like iron ore this statistic indicates structural legacy problems in the economy.

Brazil trade is limited essentially by the following aspects:

• “Cost Brazil” – the total cost of high local tax, complex tax regimes, and labor law.
• Infrastructure upgrades need to rail, road and harbours.
• Bureaucracy in exports and imports – for instance to import into Brazil you need a RADAR license for any value above US$2500. Sales tax due for final sales on most consumer products are also taxed up front on importation – ST tax.
• Total import tariffs can be near 100%.
• Example:
  The aliquot for a HS code might be 15%
  Additional tax for industrialized products is often about 5% to 10%
  Nationalization taxes are applied in cascade and as a margin and not markup on top – about another 27%
  
• Example:
  The aliquot for a HS code might be 15%
  Additional tax for industrialized products is often about 5% to 10%
  Nationalization taxes are applied in cascade and as a margin and not markup on top – about another 27%
  
• Lack of government programs with real benefit and facilities.
• Closed market controls both by government and the main role players in the markets.

The main trading partners for Brazil are the below countries. No surprises with any of them and they are listed from largest to smallest:

• China
• European community
• United States
• Argentina

China is known for importing commodities from Brazil and selling them back with value added at a lower cost than the same commodity is processed in Brazil. While the Mercosul trade agreement is supposed to open trade for its neighbors most trade is limited by quotas still, for instance car sales between Argentina, Brazil and Mexico. Argentina is the largest trading partner in Latam, however the Argentina economy has been in decline over the last decade and as a result trade is down.

If you are a company from trading partner of Brazil and interested in doing business in Brazil please talk to us.

AA Risk can help you go to the market and analyze your trading partner opportunities.