Brazil faces 37.5% U.S. tariffs while grain exports sink in climate crisis.

The 25% additional tariffs imposed by the United States on Brazilian products take effect this Wednesday, marking a turning point in trade relations between the two countries — and confronting Brasília with one of the most delicate diplomatic equations of recent years, with no clear response in sight.

The potential impact reaches US$ 11 billion in exports, according to an estimate by Amcham Brasil, and pressure on the Lula administration is immediate. The official response, for now, is one of restraint. Vice President Geraldo Alckmin declared that Brazil does not intend to retaliate against Washington, and the affected sectors that met with Minister Márcio Elias Rosa on Tuesday requested precisely this: more credit, barriers to imports of Chinese products and continued diplomatic negotiations — but without triggering the Reciprocity Law. The government itself awaits a second decisive moment: on Friday, the United States is expected to announce an additional 12.5% tariff on Brazil and 59 other countries, based on an investigation into forced labor. The central question, according to the minister, is whether this rate will be cumulative with the 25% already in force. If so, Brazilian exporters will face total surcharges of 37.5% — a level that Amcham defines as one of the highest among US trade partners. The organization's president, Abrão Neto, was categorical: "This is not going to change in the short term. It's not a cyclical scenario that will pass in the next year or two."

The irony of the moment is that Brazil arrives at this tariff confrontation in a position of vulnerability multiplied by other vectors. Brent crude rose to US$ 95 per barrel after US Secretary of State Marco Rubio stated that Iran is not taking negotiations seriously, and wheat markets are suffering from the combination of falling global production, Black Sea bottlenecks and the return of the conflict between Iran and the United States — all at a moment when Brazil will need to turn to foreign markets to supply its demand for the grain, paying higher prices. In parallel, the war compromises Brazilian corn exports to Iran, one of the largest traditional buyers of the grain, and Hedgepoint projects that Brazil may lose to Argentina the position of second-largest global corn exporter in 2025/26.

There is also the climate threat to export logistics itself. The government is preparing emergency dredging on the Tapajós River, in Pará, to prevent a severe drought — associated with El Niño — from interrupting grain flows through the Midwest waterway corridor. The estimated potential loss reaches R$ 850 million, and the decision to act urgently reflects how exposed Brazilian export infrastructure remains to climate risks that trade diplomacy cannot mitigate.

In contrast with this adverse external scenario, trade numbers with Europe offer an anchor of relief. Brazilian exports to the European Union grew by US$ 2 billion — up 26% — in May and June, the first two months of provisional application of the Mercosur-EU agreement, according to ApexBrasil. Market diversification, which Brasília presents as a strategic response to the American tariff shock, finds here its most concrete proof — even though the volume involved is incompatible with fully offsetting the shock coming from Washington.

Financial markets absorbed the environment with relative composure. The dollar closed at R$ 5.073 on Tuesday, slightly down 0.30%, and the Ibovespa remained stable. NTN-Bs, however, returned to trading with rates above 8% across much of the curve, according to Valor Econômico — a sign that the real yield market maintains its alerts about the long-term fiscal trajectory. This week's Focus bulletin registered, for the third consecutive period, a reduction in inflation projections — a positive data point, but one that coexists with activity indicators that surprised to the downside in May, reinforcing the reading of a more pronounced slowdown in the second quarter. Household indebtedness adds an additional risk to this picture: data from Serasa Experian reveal that 74% of workers with CLT payroll-deductible loans hold two or more active credit contracts, a sign that the consumer credit expansion cycle is beginning to show strain.

On the corporate front, the dispute over the chairmanship of the board of directors of Vale (VALE3) — whose shares traded in New York on the NYSE are a global benchmark for the iron ore market — has reached its conclusion: Manuel Lino Silva de Sousa Oliveira, "Ollie," came out ahead in the preliminary vote with 62.5% of advance votes, backed by Previ, the pension fund of Banco do Brasil employees. Wednesday's shareholders' meeting is expected to confirm the result, though shareholders Geração L. Par and Banco Clássico have questioned CVM whether Previ's support — as a holder of more than 5% of the capital — violates the independence criterion agreed upon in 2021. Vale rebutted the challenges, arguing that Previ merely exercised its right to convene the meeting and publicly expressed support, without making a formal nomination.

WEG (WEGE3) reported results that illustrate, with surgical precision, the cost of currency appreciation for exporting companies: second-quarter net income fell 2.1% year-over-year to R$ 1.56 billion, and net revenue shrank 0.6% to R$ 10.1 billion. The average dollar rate fell from R$ 5.67 in the second quarter of 2025 to R$ 5.05 in the same period of 2026 — a 10.9% depreciation that eroded foreign revenues in reais. ROIC of 33.6%, however, signals that the operational quality of the business remains intact.

What to watch in the coming hours and days is a dense agenda. The American decision on Friday regarding the 12.5% tariff will define the effective degree of exposure of the export industry and the Lula government's room for maneuver in its next round of negotiations with Washington. On the 29th, the 25% duties on goods in transit take effect, closing the second cycle of tariff escalation. Wednesday's Vale shareholders' meeting, the outcome of the Nutrella auction also scheduled for Friday, and monitoring of NTN-Bs — barometers of market sentiment on fiscal policy — complete the immediate calendar at a moment when Brazil must simultaneously manage an external shock, sustain domestic activity, and preserve the fiscal credibility that cost so much to rebuild.

**Vale (NYSE: VALE)** — Wednesday's extraordinary general meeting is expected to confirm Manuel Lino Silva de Sousa Oliveira as chairman of the board of directors, after the candidate backed by Previ secured 62.5% of advance votes; minority shareholders have questioned CVM as to whether the foundation's support — as a holder of more than