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BRAZIL: Haddad Denies Big Tech Tax Report, BRL Vulnerable To US Steel Tariffs

BRAZIL
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  • Finance Minister Haddad has denied a report that the government would tax big tech if the US imposes tariffs on Brazil. Haddad said that the government will only speak out in a timely manner, based on concrete decisions, not announcements that could be revised. It follows earlier reports in local media that the government is working to identify sectors that could be affected by tariffs and considering responses.
    • As the market awaits further tariff developments, BRL continues to modestly outperform, with USDBRL holding below the 5.80 level, with sights on 5.7231, the Nov 13 ‘24 low.
    • However, CIBC believes that BRL will be one of the largest losers to Trump’s steel tariff threats, noting that iron ore and concentrates made up to 8.7% of Brazilian exports in January. Also, Brazil’s trade weighted tariffs on US imports are over 4x larger than the tariffs applied to US imports from Brazil. This could be a source of tension between the two governments. CIBC maintain their Q1 USD/BRL forecast at 6.10.
    • Beside tariffs, attention ahead will also be on tomorrow’s IPCA inflation data for January, where analysts see a dip in the headline rate to 4.58% y/y. Services volumes and retail sales figures follow later this week.
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  • Finance Minister Haddad has denied a report that the government would tax big tech if the US imposes tariffs on Brazil. Haddad said that the government will only speak out in a timely manner, based on concrete decisions, not announcements that could be revised. It follows earlier reports in local media that the government is working to identify sectors that could be affected by tariffs and considering responses.
    • As the market awaits further tariff developments, BRL continues to modestly outperform, with USDBRL holding below the 5.80 level, with sights on 5.7231, the Nov 13 ‘24 low.
    • However, CIBC believes that BRL will be one of the largest losers to Trump’s steel tariff threats, noting that iron ore and concentrates made up to 8.7% of Brazilian exports in January. Also, Brazil’s trade weighted tariffs on US imports are over 4x larger than the tariffs applied to US imports from Brazil. This could be a source of tension between the two governments. CIBC maintain their Q1 USD/BRL forecast at 6.10.
    • Beside tariffs, attention ahead will also be on tomorrow’s IPCA inflation data for January, where analysts see a dip in the headline rate to 4.58% y/y. Services volumes and retail sales figures follow later this week.