Retreated her assets Brazilianas President Donald Trump’s threat to impose duties 50% in all goods from South America’s country hit markets.
Specifically, the possibility of high duties has a Brazilian markets impact Real to decline 0.8% in Sao Paulo, Expanding Wednesday’s fall (9.7.25). Future stock contracts fell 1.5%. SWAP interest rates were jumped throughout the curve, with contracts expiring in January 2029 increasing nearly 30 basis points, while The Ishares MSCI Brazil ETF-the largest US brokerage reciprocal funding in the country’s shares-fell 3.2% to New York Pre-Crims.
Brazilian markets are likely to see increased volatility in the future, as the country comes to the forefront after months flying under Trump’s radar. The duties with which the US president threatened were well above what the markets had calculated, as Trump initially imposed a 10% duty on Brazil. However, it is not clear how the two countries can negotiate, according to Bloomberg sources.
The US already has a trade surplus with Brazil. And instead of the emphasis observed in other statements issued to commercial partners, Trump’s letter made a direct connection to politics, saying that it made the change “in part because of Brazil’s insidious attacks on the free elections and fundamental free speech rights”.
While Brazilian President Luiz Inacio Lula da Silva (known as Lula) opposed, saying that the nation would not “take lessons” from anyone, the Brazilian president has little hope of avoiding duties, according to Bloomberg. This is because Trump’s demands relate to legal issues, which do not have the power to satisfy – likely to create a difficult negotiation process in front of him, leaving the markets on lit charcoal.
“This move adds a new risk of risk to local assets, increasing volatility and possibly fueling the need to revise cash flow and valuation for companies with greater exposure to the US market,” Ativa Investimentos said in a note.