Brazilian Real Strengthens as U.S. Exempts Country from Severe Tariffs
The Brazilian real has strengthened following the U.S. decision to exempt Brazil from harsh trade penalties, resulting in a 10% tariff on exports. This positions Brazil to benefit from the ongoing trade war by increasing commodity exports to China and other countries reducing trade with the U.S.
The Brazilian real has shown a robust performance, remaining around 5.66 per USD, as it experienced a third consecutive day of strengthening. This positive trend stems from Brazil’s recent exemption from being classified as a “bad actor” on trade by the White House, which has saved the country from facing more severe trade penalties.
Consequently, Brazil will only incur a 10% baseline tariff on its exports to the United States. Although Brazil has historically had high tariffs on imports, a recent announcement by President Trump revealed that Brazil imposes the lowest reciprocal tariff—10%—on U.S. goods compared to other nations cited in the announcement.
As a result of these developments, Brazil is now strategically positioning itself as a beneficiary in the ongoing trade tensions. The nation aims to capitalize on the situation by boosting its commodity exports to China and other countries that are reducing their trade volumes with the U.S.
In summary, the Brazilian real has strengthened following favorable trade relations with the United States, avoiding harsh tariffs and benefiting from a low reciprocal tariff rate. This development enables Brazil to bolster its position amid the global trade war, focusing on increasing exports to other markets, particularly China. Brazil’s proactive approach aims to convert current global tensions into economic opportunities.
Original Source: www.tradingview.com
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