BRICS: Brazil Imposes Heavy Tax on China!

In a context of fierce international competition, Brazil has adopted a new policy that could redefine its trade relations with a long-time partner, China. This initiative, touching the Middle Kingdom with whom it shares the BRICS bloc, is part of a series of measures aimed at protecting local industries in the face of a major economic challenge. The implications of this decision promise to be wide-ranging and profound.

Brazil Imposes Taxes on Chinese Steel

The Brazilian government has recently decided to take protectionist measures by imposing a 25% tax on steel imported from China beyond a certain quota. This decision, although surprising given that China is Brazil’s largest trading partner, reflects a desperate attempt to protect the national steel industry. Brazil and China, members of the BRICS bloc, have strong and strategic trade relations. However, the massive influx of Chinese steel in 2023 has seriously disrupted the local market, plunging the Brazilian steel sector into an unprecedented crisis.

The decision to tax Chinese steel aims to curb this perceived unfair competition and stabilize the national industry. The Brazilian government has targeted eleven specific products in the steel sector for this tax, although industrialists hoped for more. In 2023, the overabundance of Chinese steel led to the temporary suspension of activities by a large Brazilian steel company, resulting in the dismissal of 700 workers.

The Brazilian government could no longer remain inactive while the sector is in deep crisis. By imposing this tax, Brazil hopes to breathe new life into its steel industry, even though this measure does not fully meet the expectations of local industrialists who wanted broader protection.

Le Brésil 🇧🇷 a récemment suivi l'exemple d'autres pays, et a décidé de taxer son premier partenaire commercial, la #Chine 🇨🇳, et notamment son acier revendu au Brésil. Le pays essaye de faire face à une concurrence de plus en plus rude. ✒️ @franceinfo pic.twitter.com/pXJ4LHNBwk

— AsieNews (@AsiaNews_FR) July 9, 2024

Other Brazilian Sectors Threatened by Chinese Competition

The steel industry is not the only one suffering from Chinese competition in Brazil. Several other economic sectors are also feeling the increasing pressure of low-cost imports from China. Textiles, shoes, and toys, which heavily rely on intensive labor and relatively low technology, are particularly vulnerable.

These industries are exerting considerable pressure on the Brazilian government to adopt similar measures to those imposed on steel. In response to these concerns, Brazil recently implemented a tax on online products sold for less than 50 dollars, a decision primarily aimed at protecting the textile sector against the influx of cheap Chinese products.

This new tax, although necessary to support local industries, has sparked an outcry among Brazilian consumers, particularly those from lower-income classes. Cheap Chinese products had gained popularity due to their affordability, and the price increase resulting from this tax is seen as an unpopular and punitive measure for these consumers.

Brazil’s decision to tax Chinese steel imports marks a turning point in its trade policy. Although this measure reflects an attempt to support the local economy, it could complicate relations with China, its main trading partner and co-member of the BRICS bloc.