Ron Kirk, US Trade Representative, urged Brazil in a letter sent on Wednesday to reconsider plans for “protectionist” tariff increases expected to hurt US exports.
“I am writing to state in strong and clear terms the United States’ concern about scheduled and proposed tariff increases in Brazil and Mercosur,” Kirk said in the letter to Brazilian Foreign Minister Antonio Patriota.
Brazil triggered international concerns over growing protectionism when it announced plans to raise import tariffs on 100 foreign products. This is the latest step by president Dilma Rousseff to fend off competition from foreign producers, which has hit local industries and Brazil’s economy.
The temporary increase in levies, initially for a year, would apply to products ranging from glass to iron pipes and bus tires. The rate will reach 25% for most of those products, an increase from the low teens.
“We live in a time when the world market is shrinking and exporters flood Brazil, which is one of the few growing markets, and our industry is being harmed by this,” Brazilian Finance Minister Guido Mantega told reporters this month.
Kirk said the US expects scheduled tariff increases around September 25, and possibly more increases in October, to “significantly hit US exports to Brazil in key areas of export interest to the United States.”
“Further, these two sets of tariff increases follow earlier increases that have been implemented during the course of the past year … Brazil’s tariff increases will significantly restrict trade from current levels and clearly represent protectionist measures,” Kirk said.
“The overall effect is that an ever broader range of industrial goods faces deteriorating market conditions in Brazil’s market,” Kirk added.
A spokesman for Brazil’s foreign ministry said the criticisms were “baseless” and the letter was “unjustifiable.”
“This format is not consistent with the relationship we have with the United States,” ministry spokesman Tovar Nunes said in a telephone interview. He added that Brazil would likely have a formal response ready by Friday.
Kirk also expressed concern that Brazil’s trading partners could respond by increasing their own tariffs, which “would amplify the negative impact” of Brazil’s actions.
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