Lula's Whining About U.S. Imposed Tariffs is Ridiculous As Well As Hypocritical
About the Brazil Business Environment
First, Brazil is isolationist - they want as little outside resources to establish a base in their country as possible.
For most large corporations, this is not a problem.
Chevrolet, Chrysler, and Nestle are very prominent in the Brazilian business landscape - but the prices of their goods are 2 to 3 times higher than those in the U.S.
In part, this is due to parts needing to be imported as the quality of metals in Brazil is sorely lacking due to high energy prices.
The cars have 25% fewer welds due to those energy prices, resulting in most cars folding like cheap cardboard boxes when involved in an accident.
The other price factor is compounded taxation, explained below.
Any small or mid-sized business will find it expensive to do so - there is a minimum reserve of $75,000 required to be held untouched as well as the workforce must be all Brazilian.
Consultants may work with them to train and manage facets of the business - but they have a limited stay in Brazil.
What You Need to Know About Taxation in Brazil
DOMESTIC TAXES
The domestic tax is 20 to 60% on nearly everything, including food but not apartments, houses, and real estate.
The amount of tax you pay is only made known after you pay for your purchases and even then only a percentage is provided, the actual tax paid is not truly known by the customer.
The blessing is their agriculture is very prolific in Brazil and as a result food is inexpensive, even for a Brazilian - but that is about all that is inexpensive.
Even still, on average an item here in Brazil is 2 to 3 times higher than that of an equal or even the same product in the USA.
Remember, these are domestic products.
IMPORT TARIFFS
The import tax is hefty - starts at 160% and has no defined ceiling. I have seen as high as 3000% for Made in America products.
A Delonghi coffee maker I had purchased in the USA for $200 had a 1000% import tax based upon the selling price (even with imports, you never know the exact amount you pay).
This was in 2012 and at the time it cost R$3900, the exchange rate was R$2.40 for every US$1.00 - meaning you were paying R$480 for the machine and R$3420 in Brazilian taxes.
Cars are worse - for one Chrysler 300 in Brazil, I could have bought 4 of the same car in the U.S.
And if you did order something outside of Brazil and it did pass customs’ scrutiny, count on your order arriving at port in Brazil in 4 days or less and then the delivery from port to your Brazilian home taking 2 to 3 weeks if a letter or up to 2 months if a product to complete the journey.
Six weeks is about the time it took for a message to get to King George from his soldiers in the Colonies that they had declared their independence.
The Brazilian government's motto? Progress and Order…
COMPOUNDED TAXATION
In the U.S., as a product moves from one aspect of production to another, any taxes imposed is based upon NET invoice - this avoids compounding the taxes in what can be up to 6 levels of production.
In Brazil, taxes imposed is based upon the TOTAL invoice - therefore you are paying taxes for taxes already paid, in what can be up to 6 levels of production.
Ever notice the more corrupt a government, the more they want to impose taxes?
The Brazilian government is known as the tax king - which also means they are easily one of the most corrupt governments as well.
2025 Steel and Aluminum Tariffs
President Trump has stated that he is set to announce a 25% tariff package on all steel and aluminum imports into the country.
The decision directly impacts Brazil, the second-largest exporter of steel to the U.S., with sales to the country accounting for one-third of Brazilian steel exports.
Currently, 48% of Brazilian steel exports and 16% of aluminum exports are directed to the U.S.
Steel exported by Brazil to the U.S. is not the same as they use domestically - it is a LOT softer and easily folded by hand thus making it easy to be damaged. Why? Takes a lot of electricity to produce steel and electricity is very expensive in Brazil.
During his first term, Trump also imposed tariffs of 25% on steel and 10% on aluminum imports.
At the time, the Brazil Steel Institute, which represents Brazilian steelmakers, warned that the measure would force companies to halt operations, shut down furnaces, and lay off workers.
Trump eventually reversed course after a meeting with then-President Jair Bolsonaro and later granted several trade partners tariff-free quotas, including Canada, Mexico, and Brazil.
With a more retaliatory stance and a focus on leveraging policies against the global left, likely, Trump most likely will not back down this time.
Members of the Brazilian government are already wary as they seek measures to prevent disruptions to the country's economic development.
Given the hefty level of taxes already imposed upon the Brazilian people, Lula has already told the Brazilian people to eat less since groceries have nearly doubled in a year - maybe he and Congress need to take a serious pay cut.
After all, they are some of the highest-paid government officials globally.