Brazilian Minister of Industry, Foreign Trade and Services Marcos Pereira is also national president of the Brazilian Republican Party, or PRB.

Brazilian Minister of Industry, Foreign Trade and Services Marcos Pereira said in January that Brazil could stand to gain from the United States’ move to a more protectionist trade stance under new U.S. President Donald Trump, especially in the agribusiness sector. He added that Brazil would hope to fill the gap the United States would leave by backing out of the Trans-Pacific Partnership trade deal. Is Pereira correct in saying that Brazil stands to gain under the Trump administration’s policies? What changes can Brazil expect in terms of trade and economic development? How might other South American countries be affected by a United States that is less embracing of globalization?

Peter Hakim, member of the Advisor board and president emeritus of the Inter-American Dialogue: "So far, Trump’s words and actions with regard to Mexico are the best indicator we have of his thinking about Latin America. Mexico is a proxy for Latin America—and perhaps for U.S. policies worldwide. Trump’s much-publicized border wall, if it gets built, will sit not only on Mexico’s border, but also on Latin America’s frontier with the United States. The intent is not merely to keep unwanted migrants out or Americans safe. By constructing a potent symbol of antipathy toward both immigrants and job-destroying goods from abroad, Trump is reflecting and fueling the views of the Americans who elected him. With his threat to trash NAFTA, the anchor of U.S.-Mexican ties, and impose stiff tariffs on Mexican products, Trump is announcing his protectionism to the world. He demands American companies produce in the United States, regardless of opportunities elsewhere, insists they use U.S. inputs and labor, regardless of the cost, and stands ready to punish corporations that move abroad. It is a mistake to expect the champion of ‘America First’ to advocate major trade or foreign investment initiatives in Latin America (or anywhere else), especially while discouraging them in Mexico. Countries with free trade deals with the United States should be prepared for pressure to revise them to favor U.S. interests. Countries without trade arrangements with the United States, like Brazil and Argentina, are unlikely to benefit much from a cooling of U.S. bonds with Mexico. Trump is today leading a personal crusade to stop U.S. companies from investing in Mexico and to reduce imports from China and Germany. The crusade will surely reach South America as well. Brazil and Argentina have had, over many years, opportunities to expand trade with the United States and globally, but kept their economies closed and erected multiple other barriers to foreign commerce and investment. The economic reforms now underway in both countries should, presuming they are sustained, pave the way for more productive commercial relationships with many countries, although sadly, probably not, at least any time soon, with the United States."

Joel Korn, president of WKI Brasil and senior international partner at UPITE Consulting Services: "Brazil is not on the radar of Trump’s protectionist trade intentions, simply because the country is a marginal player in foreign trade. Besides being member of a weak Mercosur, the country is not part of any other meaningful geographic trade agreements. It is therefore somewhat ironic to conclude now that the ongoing pressures for protectionism, its negative effects on globalization and economic growth will ultimately benefit Brazil, with a fairly closed economy and limited competitiveness in the world market. Even though the United States is Brazil’s second-largest trading partner, the country’s exports are largely made up of commodities. Unlike its neighbor, Mexico, exports of Brazilian manufactured goods—except for aircrafts—are limited and do not represent a meaningful threat to U.S. jobs. While it is reasonable to expect that the U.S. expansionary policies and associated inflationary pressures may have a positive impact on the price of commodities and Brazil’s term of trade, it remains to be seen the effect of possible slower economic growth in China and, especially, the effects of domestic subsidies imposed by the United States and European countries to mitigate imports of agriculture products. It is also logical to assume that there will be opportunities for Brazil to strengthen further its trade and investment relations with China and other major economies. Undoubtedly, the door is open for stronger trade ties with Latin American neighbors, particularly Mexico, Colombia, Peru, Chile and Argentina. However, Brazil’s shy track-record as an international player, combined with the current political and macro- and micro-economic recovery challenges, suggest that there is a long way to go. History tells us that protectionism and other anti-market populist solutions are short-lived and bring about severe disruptions to the world’s economic growth and to financial markets. In addition to capital outflows prompted by a scenario of rising U.S. interest rates, the flow of foreign direct investments may also constrain countries like Brazil, with a low savings rate and strong dependence on foreign capital to fund critical infrastructure projects."

José Flávio Pacheco, senior associate at KLA-Koury Lopes Advogados: "The United States’ withdrawal from the Trans-Pacific Partnership represents a hard blow for the success of the initiative and also a backfire in the U.S. position as a key trade policymaker, since it abandons decades of protagonism as it turns to adopt a more protectionist approach. No other country has more to gain than China, as it now has an easier path to increase its trade influence in Asia, the region with the greatest GDP growth in the world and a natural region for technology development. On the other hand, no other country has more to lose than Mexico, which has been presented during the elections as the enemy of the U.S. workforce. The withdrawal of the United States from the center stage in international trade may slow down global growth, impacting developing countries, especially Brazil, which has been struggling to leave behind the political and financial crisis that hit the country during the past two years. The uncertainty about Trump’s international trade approach also affects Brazil’s exchange policies, causes investors to hold back investments and further affects the country’s ability to fill the gap the United States leaves by backing out the Trans-Pacific Partnership. However, Trump’s Administration seems to be prone to sudden swings in positions and is not likely to forgo good trade opportunities. It’s time to gamble: based on the strong trade history between Brazil and the United States, and on their huge combined consumer market, Brazil should take the initiative in opening negotiations for a bilateral agreement with the United States, strengthening the countries’ trade relationship."

Karen Hansen-Kuhn, director of Trade and Global Governance at the Institute for Agriculture and Trade Policy: "While it may be true that President Trump’s call to renegotiate NAFTA will drive Mexico and other countries to consider stronger commercial ties with Brazil, the issue is much bigger than the possibility of increasing Brazil’s soybean exports. The Trump administration’s push for a series of bilateral deals could be the first steps in a series of actions that tear apart the multilateral norms that have set the rules on trade, as well as on issues like climate change and human rights. It would be a mistake to think of the possible new alignments as an opportunity to continue with the business-as-usual approach to trade. The backlash against the inequities of free trade agreements happening in the United States, Latin America, Europe and around the world is real. The TPP generated massive resistance to many trade proposals that Brazil has traditionally opposed, such as the Investor State Dispute Settlement mechanism that empowers corporations to sue governments over public interest laws, or extreme limits on access to essential medicines. Civil society organizations around the world will be pushing hard against any new trade deals that lock in those failed measures. Years ago, during the negotiations for the Free Trade Area of the Americas, Brazil helped to unify several Latin American governments to form a counterweight to U.S. proposals to open their economies with no regard for the social and environmental consequences. Brazil is in a position to become a leader on a new kind of multilateralism, rather than focusing narrowly on agribusiness interests."

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