Good morning! We’re covering Brazil’s plan to lower import tariffs, and how it could implode Mercosur. Poor-quality roads make producers lose a lot of money. The deal to allow U.S. rockets to launch from Brazil. (This newsletter is for platinum subscribers only. Become one now!)
Brazil’s plan to slash import tariffs
Since before taking office, Economy Minister Paulo Guedes has talked about dramatically slashing import tariffs in Brazil within four years. We talked about this plan in one of our Weekly Reports in November last year. Now, details of this strategy have been published, with the government presenting its proposal to other members of Mercosur—the South American trade bloc that includes Argentina, Uruguay, and Paraguay.
The plan to open up Brazil’s economy would slash average tariffs on industrial goods from 13.6 to 6.4 percent. Brazil would have lower tariffs than Canada on textiles, than Japan on shoes, and than the EU in fertilizers and pesticides.
Why it matters. Brazil is one of the most insular economies in the Western hemisphere. Mr. Guedes wants to increase competition in a country where market reserves are the norm. The question, however, is whether Brazilian players can keep up with potentially more competitive newcomers.
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