Standard Chartered economist Dan Pan argues that Brazil stands out as a major beneficiary of the US Supreme Court ruling against President Trump’s IEEPA tariffs, with effective tariffs likely to fall sharply. The bank expects Brazilian exports to the US to recover in coming months, but warns that US tariff activism and BRICS politics will keep strategic de-risking efforts intact.

Tariff cut boosts exports but risks stay

"Brazil has emerged as one of the biggest beneficiaries of the US Supreme Court ruling that President Trump’s IEEPA tariffs are illegal. IEEPA tariffs as high as 50% on Brazilian products have been replaced with a temporary 15% universal tariff imposed under Section 122."

"If all existing exemptions are maintained, Brazil’s effective tariff rate is likely to fall to around 10%, from over 20% prior to the ruling (the effective rate was well below the 50% IEEPA rate due to exemptions covering over 35% of exports and substitution effects)."

"A lower tariff is likely to restore some Brazilian exporters’ competitiveness in the US market."

"However, the ruling is unlikely to bring Brazil-US trade back to the pre-Liberation Day norm."

"Section 232 tariffs imposed at the sector level for national security reasons may hurt some parts of Brazil’s manufacturing and mining sectors. The close alliance between BRICS countries also makes Brazil a potential target for possible Section 301 tariffs."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)