The government of President Luiz Inácio Lula da Silva (PT) believes that the customs duties recently approved by the Mexican Congress should not affect the majority of Brazilian automobile exports, since the two countries have a free trade agreement in this sector.
In a note, the MDIC (Ministry of Development, Industry, Trade and Services) and the Ministry of Foreign Affairs said that, despite the relief for automobiles and parts, the increase in customs duties could “erode existing bilateral preferences for other sectors and have a negative impact on trade and investment between the two countries, depending on the final lists published”.
The Lula government has not yet published an estimate of the impact that the increase in Mexican tax rates should generate. The Executive’s justification is that the final lists detailing the tax increases have not yet been published.
The CNI (National Confederation of Industry) estimated the value at $1.7 billion.
Brazil maintains another trade agreement with Mexico. According to those interviewed by Leafthe scope of this second agreement is limited, approximately 12% of the tariff universe of bilateral trade.
In addition, this second agreement provides for smaller preferences, which is why the products to which it applies must be affected by Mexican tariffs.
Brazilian authorities were unhappy with the decision of Claudia Sheinbaum’s government to send a bill increasing several tariffs.
Not only because of the negative effects on Brazil, but also because the measure was taken shortly after Vice President Geraldo Alckmin’s visit to Mexico.
At the time, governments committed to updating existing trade agreements.
In a recent letter addressed to CNI President Ricardo Alban, Vice President Geraldo Alckmin said Brazilian concerns on the subject “have been presented to the Mexican political and technical authorities, emphasizing the importance of avoiding measures that harm bilateral trade.”
“I also maintained direct communication with my counterpart at the Secretariat of the Economy (of Mexico), formalizing, through the appropriate channels, the relevant points that I deemed appropriate and timely,” Alckmin said, according to the document obtained by Leaf.
On Wednesday (10), the Mexican Senate approved an increase in import duties on Brazil, China and nine other countries with which Mexicans do not have a trade agreement.
The bill, passed under commercial pressure from the United States, was approved by 76 votes, 5 against and 35 abstentions.
This measure has led a number of Brazilian industries to seek more clarity on the consequences for their businesses, without understanding the scale of the customs duties.
Besides China and Brazil, affected countries include South Africa, South Korea, United Arab Emirates, India, Indonesia, Nicaragua, Thailand, Taiwan and Vietnam.
The surcharges will affect 1,463 tariff classifications in 17 sectors such as automobiles, textiles, clothing, steel, plastics, household appliances, furniture and shoes, among others, mainly Chinese products.
On this list, 316 classifications are currently not taxed.
Sheinbaum introduced the proposal in September, amid growing trade pressure from Trump and accusations that Mexico is the gateway for Chinese goods to the United States.
Mexico, alongside Canada, is preparing to negotiate the renewal of the North American Free Trade Agreement (T-MEC) with the United States, in the face of new demands from the White House.
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