The recent decision by the United States to raise import tariffs to levels that already exceed 100 % on various product groups opens up a new phase in world trade. American companies speak of "the end of an era of cheap goods" and warn of the threat of disorganization of global supply chains - not only in the relationship with China, but also with traditional partners in NAFTA and the European Union.

With domestic inflation on the rise, logistics costs less predictable and the prospect of higher international interest rates, multinationals need to redesign supply routes. This movement creates a window of opportunity for countries capable of delivering:

Preferential access to large consumer blocs (Mercosur, EU-Mercosur agreements under negotiation).

Industrial base ready to absorb transferred production with minimal ramp-up time.

Competitive and clean energy, a key factor in chains seeking carbon neutrality.

Brazil combines these three attributes and, what's more, it combines market scale with cultural proximity to the West and a mature legal framework for foreign investment.

Why look at Brazil now?

With 215 million inhabitants, expanding middle classes and accelerated digitalization of consumption, the country creates enough demand to justify local plants even before relying on additional exports. This dilutes exchange rate risk and smoothes out global demand cycles.

Regional trade integration
In addition to Mercosur (common external tariff from 0 % to 20 % for most industrial inputs), Brazil is negotiating agreements with the European Union, Canada and EFTA that reduce tariff barriers just when major economies are erecting new ones. For investors, this means producing on Brazilian territory and selling to more than 800 million consumers under preferential regimes.

Low-cost clean energy
More than 83 % of Brazil's electricity matrix is renewable (hydro, solar and wind), while Europe and the US are facing fossil price shocks. The global scramble for green hydrogen puts Northeast Brazil among the ten most competitive locations in the world for export projects, according to IRENA estimates.

Robust pipeline of concessions
By 2027, the Investment Partnership Program (PPI) foresees auctions in ports, railroads, highways, sanitation and private 5G, adding up to more than US$ 100 billion in contracted capex. The new framework for guarantees and the extension of incentive debentures add legal certainty and tax advantages.

Sectors with immediate traction

Steel and special metals
Brazil is already the second largest supplier of steel to the US, behind Canada. If additional tariffs make direct shipments unfeasible, American and Asian steel and metalworking companies may opt for local joint ventures to supply South America and African markets without the "tariff premium" applied to the US. There is a surplus of high-quality iron ore and new rail routes (the West-East Integration Railway and FIOL) are being installed.

Information technology and niche electronics
The same documents that point to a lack of engineering labor in the US indicate that semiconductors and consumer electronics will not be returning quickly to American territory Tarifaço_ empresários f.... The Manaus Free Trade Zone, combined with incentives from the Informatics Law and the ex-tariff regime for imported capital, offers competitive payback for advanced assembly lines destined for Latin America.

Agribusiness 4.0 and bioindustry
US tariffs on Chinese agricultural inputs are already making fertilizers, implements and biotechnology more expensive in the US Trump's tariffs_ repercussions...Understand_ Trump's tariffs.... Brazil, for its part, has 65 % of arable land still available for sustainable expansion. Start-ups in bio-inputs, tropicalized genetics and refrigerated logistics are finding domestic risk capital and rural credit policies that cushion the risks of commercial traction.

Renewable energies and green hydrogen
Greenfield projects in Ceará, Rio Grande do Norte and Bahia offer a wind capacity factor of 55 % and solar irradiation of 2 200 kWh/m²/year, among the best in the southern hemisphere. State auctions provide for long-term contracts (PPAs of 15 to 20 years), allowing project finance modeling in dollars.

Digital services, fintechs and applied AI
Brazilians spend an average of 5 h12 a day on mobile applications - the longest engagement time in Latin America. The instant payments ecosystem (PIX) reaches 37 million daily transactions and serves as a real sandbox for banking-as-a-service solutions, regtechs and anti-fraud machine-learning. The recent Complementary Law 182/2021 created the Legal Framework for Start-ups, simplifying stock options and regulatory fast-tracking at the Central Bank.

How to mitigate regulatory risks

Although Brazil's average import tax rate (12.4 %) is higher than the American rate (2.7 %) Tarifaço_ empresários f...Tarifas Trump_ repercus..., instruments negotiated business-to-business significantly reduce this cost:

• Ex-tariff for capital goods and IT (rate reduced to zero for up to 2 years).
• Integrated drawback, which eliminates import taxes on inputs destined for export.
• Special customs regimes - Repetro, Reidi, ZPEs - with suspension of federal taxes.
• In addition, the tax reform approved in December 2023 creates the Goods and Services Tax (IBS), which will replace five indirect taxes and bring Brazil into line with international VAT, reducing cumulativeness and complexity.

ESG as a competitive advantage

Global institutional investors moved US$ 37 trillion under ESG mandates in 2024. Companies with a footprint in Brazil gain direct access to:

• High integrity forest carbon credits (VCS, CCB and ART-TREES standards) in the Amazon and Cerrado biomes.
• Voluntary renewable energy market (I-RECs) with lower prices than European certificates.
• Public just transition programs that demand social counterparts - training, inclusion of local communities - but deliver PIS/COFINS exemption and BNDES financing at TJLP.
• Integrating environmental goals into the business plan is now a requirement not only to reduce the cost of capital, but also to access federal tenders above R$ 200 million, which require proof of climate neutrality from 2028.

Macro scenario and legal stability

The 2024 fiscal framework sets a progressive ceiling for the real expansion of public spending and provides for a primary surplus of 0.25 % of GDP by 2026. The Central Bank's autonomy, sanctioned in 2021, ensures that the inflation target will converge to 3 % by 2026, reinforcing exchange rate predictability.

In the legal field, the Economic Freedom Law (13 874/2019) and the new Guarantees Framework (Law 14 711/2023) simplify the opening of companies, consolidate security in fiduciary guarantees and reduce average credit recovery times from 4.5 to 2.7 years, according to the World Bank.

Suggested entry models

Greenfield 100 % foreign
Advantage: total control and capture of customized state incentives.
Challenge: average licensing period classified as "complex" by the WEF.

Joint venture with local player
Advantage: use of distribution channels and tax knowledge.
Challenge: align governance; foreign minority shareholder must negotiate tag-along.

Export platform in EPZ
Advantage: suspension of ICMS, PIS/Cofins and II; free exchange.
Challenge: 80 % of production needs to leave the country; suitable for high value-added goods.

Shared services center
Advantage: reduced ISS benefits (2 %) in several capitals; compatible zones with North America and Europe.
Challenge: war for IT talent requires upskilling programs.

Next steps for investors

• Map the federal, state and municipal incentive matrix before defining the location.
• Assess logistics integration - railroads, ports and expanding air hubs (e.g., Corrido Central).
• Hire a local advisory firm for labor, environmental and tax due diligence - areas in which case law is evolving rapidly.
• Monitor the complementary tax reform that will detail the crediting of the new IBS and CBS between 2025 and 2026.
• Use natural hedge structures: revenues in reais backed by export contracts in dollars reduce cash volatility.

Conclusion

The recomposition of value chains initiated by the US tariff hike is more than a cyclical rearrangement. It signals an environment where security of supply, clean energy and regional access have become strategic assets. Brazil, with its robust domestic market, renewable matrix, pipeline of concessions and ongoing trade integration, is positioning itself as a natural destination for multinationals looking for a competitive and resilient base in the Americas.

For executives who need to reposition their global operations over the next decade, "wait and see" can mean missing out on the local learning curve and leaving room for more agile competitors. The time to explore Brazil as a platform for expansion is now - and Ideas International is prepared to lead this journey from end to end.

Contact us for a personalized feasibility analysis and incentive mapping.