The biggest risk to relations between Brazil and the U.S. is a possible escalation of tariffs, Cassiana Fernandez, JPMorgan Brazil chief economist, said.
This warning comes as recent commercial tariffs imposed by the U.S. threaten to provoke a retaliatory response from Brazil. Such a cycle of trade barriers could disrupt bilateral commerce and strain diplomatic ties between the two largest economies in the Americas.
Fernandez discussed the economic outlook on Tuesday, and said that the primary threat to the stability of the relationship is the potential for Brazil to respond to U.S. trade measures with its own tariffs [1]. This dynamic creates a volatile environment for exporters and importers who rely on predictable trade policies to maintain operations.
Market indicators already reflect the ongoing tension. The exchange rate for the U.S. dollar currently stands at R$5.17 per US$1 [1]. Fluctuations in currency values often mirror the perceived risk of trade instability and political friction between the two nations.
Economic analysts monitor these tariffs closely because they impact the cost of goods and the competitiveness of Brazilian exports in the U.S. market. If Brazil implements retaliatory measures, it could lead to a broader trade conflict, affecting various sectors from agriculture to manufacturing.
Fernandez said that the escalation of tariffs represents the most significant danger to the current economic trajectory between the two countries [1]. The risk remains centered on how the Brazilian government chooses to respond to the existing U.S. trade pressures.
“The biggest risk to relations between Brazil and the U.S. is a possible escalation of tariffs”
A shift toward protectionism between Brazil and the U.S. could signal a broader trend of decoupling or economic friction. If Brazil retaliates against U.S. tariffs, it may seek to strengthen trade ties with other global partners, such as China, further shifting the geopolitical and economic balance in South America.
