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With Additional Tariffs of 40% Added to the Minimum Rate, Brazilian Machine Exports to the USA May Be Paralyzed as of September
The surcharge imposed by the United States on Brazilian machinery and equipment is expected to halt exports to the North American market starting in September. The warning was given by Cristina Zanella, Director of Competitiveness, Economics, and Statistics of the Brazilian Machinery and Equipment Industry Association (Abimaq).
According to her, the extra tariffs of 40%, added to the minimum rate of 10%, are already strongly impacting sales. “There will be an impact mainly starting next month on exports. They are expected to trend toward zero for that market. There has been a significant loss of competitiveness due to the surcharge,” Zanella said at a press conference on Wednesday, the 27th.
Currently, the United States receives about 26% of Brazil’s machinery exports, totaling around US$ 300 million monthly, according to Abimaq data.
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Disadvantage in the Market
The U.S. government has also decided to impose tariffs on any products containing steel or aluminum under Section 232 of the Trade Expansion Act. This rule, which allows tariffs to protect national security, is expected to affect other sectors.
Last week, Vice President Geraldo Alckmin stated that the measure would reduce Brazil’s disadvantage compared to competitors.
However, Zanella does not see room for optimism. She pointed out that, even so, it will be difficult to compete with products from countries such as the United States, Canada, and Mexico, which have zero tariffs.
“When looking at all the announced surcharges, Brazil has one of the highest, with India being the only equivalent. Products from the U.S., Canada, and Mexico have zero tariffs,” she added.
Attempts at Rescue
The federal government announced measures to try to mitigate the damages. Among them is the Special Regime for the Reinstatement of Tax Values (Reintegra), which refunds exporters part of the taxes paid in the production chain.
In the contingency plan, the refund increases by 3 percentage points for those exporting to the U.S. Large and medium enterprises can count on up to 3.1%, and micro and small ones with up to 6%. These conditions will remain until December 2026.
For Zanella, the proposal is limited. “The announcement was that the credit would only be given to companies that export to the U.S. Companies are likely to stop exporting. What we hope is that the government expands Reintegra to all exporters,” she said.
Industry 4.0 Under Discussion
Another bet is the financing line from BNDES for what is called Industry 4.0. The bank has released R$ 12 billion in resources. However, the expectation is for a smaller impact.
According to Zanella, the trend is that companies will only replace more expensive investments with cheaper lines. “The concern is that investments will be substituted, not added. Companies that were already going to invest at rates of 20% to 22% will manage to invest at lower rates,” she explained.
Revenue in July
Despite the uncertain scenario, the Brazilian machinery and equipment industry closed July with a total net revenue of R$ 26.716 billion. The figure represents a 0.3% increase compared to June and a 7.3% increase compared to July 2024.
In the domestic market, net revenue was R$ 19.700 billion, a decline of 5.1% compared to the previous month but an increase of 14.5% year-on-year.
Apparent consumption reached R$ 36.374 billion, a 1.2% increase over June and an 8.9% increase over July of last year.
Exports in July totaled US$ 1.269 billion, an increase of 20.7% compared to June but a decrease of 4.8% compared to the same month in 2024.
Meanwhile, imports were US$ 2.905 billion, a growth of 11.3% compared to the previous month and 8.6% in the annual comparison.
The trade balance was negative, with a deficit of US$ 1.636 billion.
Employment on the Rise
The sector closed July with 424,903 workers. The number represents an increase of 1.1% compared to June and 9.1% over July of last year.
The order book also recorded improvement, growing by 0.6% after a decline of 2.7% in June. There was recovery in sectors related to consumer goods, infrastructure, and components. Nevertheless, the volume is still 1.2% below that recorded in July 2024.
The utilization of installed capacity reached 78%, 0.1 points above June and 2.5 points above the same month last year. On average, in 2025, the sector operated at 77.6%, compared to 74.2% last year.
Agricultural Machinery
The segment of agricultural machinery and implements also showed growth. Total net revenue reached R$ 6.624 billion, an increase of 4.7% compared to June and 7.7% compared to July 2024.
Domestic revenue was R$ 5.847 billion, a 5.1% increase over June and a 10.9% increase in the annual comparison.
In foreign trade, exports totaled US$ 140.71 million, a decrease of 7.7% compared to July of last year. Imports fell by 13.5% in the same comparison base, totaling US$ 102.48 million.
Outlook
The most important thing, according to Abimaq, is that the sector is still maintaining growth in the domestic market and good employment numbers. However, the pressure from U.S. surcharges could reverse this trajectory.
The coming weeks will be decisive as companies will need to assess whether they can absorb the costs or if they will completely abandon the North American market.
With information from Estadão.
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