How Trump’s tax reform could affect Brazil’s economy

A few decades ago, there was a running joke to illustrate the extent to which the United States impacted Brazil’s economy: “When the United States catches a cold, Brazil is hit with pneumonia.” Over time the use of the phrase waned as China surpassed the U.S. to become Brazil’s number-one trading partner. Still, what happens to our North American neighbors continues to impact Brazil’s economy.

Such is the case with the tax reform proposed by Donald Trump’s administration. The American president promised the biggest tax cuts in U.S. history, which includes slashing the corporate rate from 35 percent to 20 percent. And that’s the part of Trump’s tax reform that risks hampering business in Brazil. We explain:

Right now, the U.S. system taxes corporate profits at 35 percent, but gives...