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BRASÍLIA - The federal government has been mapping markets for the redirection of agricultural products that will no longer be exported to the United States , if the 50% tariff comes into effect on August 1st. There are two fronts: the opening of new markets and the expansion of trade flows to destinations to which the products are already exported, according to people linked to this movement, who spoke on condition of anonymity.

The destination diagnosis is being carried out by the Ministry of Agriculture together with the Ministry of Foreign Affairs and the Ministry of Development, Industry, Commerce and Services (MDIC) . The Middle East and Asia are in the sights of the actions.

The initial focus is on the sectors most affected by the 50% tariff and most exposed to the North American market, such as orange juice, coffee, beef, fruit, and seafood, according to Broadcast Agro. The government is coordinating the strategy with the private sector, particularly regarding which markets should be prioritized in bilateral negotiations.

On the other hand, agricultural attachés working at embassies abroad have been instructed to seek out importers to make Brazil available and identify opportunities. At the same time, Chambers of Commerce are already contacting the government to present their countries as potential destinations for the re-routing of Brazilian products, such as Arab countries.

An initial overview presented by the Ministry of Agriculture to entities representing exporters in the sector includes the conclusion of market opening negotiations, the accreditation of meatpacking plants, and negotiations for tariff reductions on some products."All options are on the table to minimize the impacts of the affected trade flow with the United States as much as possible. The first step is to examine the sectors that will have sales to the US rendered unviable by the 50% tariff and actively seek out opportunities," says someone monitoring these negotiations.

At the Ministry of Agriculture, there is a recommendation to reinforce Minister Carlos Fávaro's agendas with his counterparts from other countries to accelerate high-level conversations with importers and unlock any negotiations already underway.

Among the possibilities mentioned are the opening of Japan, Turkey, and South Korea to Brazilian beef, negotiations that are already underway. The most advanced process is with Japan, which has already audited the national health system and is expected to approve Brazilian beef in November. Also regarding beef, Brazil is negotiating to expand the number of meatpacking plants authorized to export the product to Indonesia, Vietnam, and Mexico. At least 50 plants have requested authorization for the three destinations combined. Approval depends on the health authority of each importing country.

In the case of orange juice, one of the negotiations on the radar involves a request for a reduction in the tariff charged by China on imports of Brazilian product, which arrives there with taxes ranging from 7.5% to 20%, which currently limits shipments to the country. Saudi Arabia is also cited as a destination for expanding foreign sales of orange juice.

China is also at the center of plans to open up to Brazilian fruits, such as limes, and to increase trade in items like mangoes and grapes. The Brazilian government is already negotiating with Mexico to maintain the tariff exemption for agricultural products from Brazil, which expires on December 31st, and even to expand the Economic Complementarity Agreement No. 53 (ACE 53, a bilateral trade agreement).

There is also a front to expand commercial promotion for agricultural products, such as coffee in China, which has seen growing consumption of the Brazilian beverage, and also of Brazilian coffee in Australia.

Limited effects in the short term

Industry entrepreneurs agree with the market diversification strategy proposed by the Executive, but in private conversations with government officials, exporters reported seeing limited short-term impact from these measures. According to an export representative, interviewed on condition of anonymity, these negotiations are lengthy and, in some cases, involve technical issues yet to be resolved.

Exporters are particularly concerned about the volumes already produced for the United States, which are sitting in ports, on the high seas, or in factories awaiting distribution. According to an industry leader, there isn't enough room in the domestic market to absorb all these goods immediately, which could drive down prices. This person also notes that, in the long term, the lesson is the importance of decentralizing the export agenda.

Exporters have even asked Vice President and Minister of the Ministry of Foreign Affairs, Geraldo Alckmin, for differentiated treatment for cargo shipped from ports or already en route to the United States. The request is that the 50% rate be applied to shipment dates after August 1st. The reference date would be the date issued on the Bill of Landing, a document for maritime cargo transportation.

Minister Carlos Fávaro himself has publicly emphasized that 397 new markets have already been opened for Brazilian agricultural products under the current administration, since January 2023. He advocates for the ministry to be proactive in intensifying its market search. The minister has also publicly acknowledged that, despite the strategy of seeking new markets, it is not possible to handle the entire volume sold to the United States in ten to fifteen days.

"It is President Lula's determination that this role of opening and expanding markets be intensified, of finding alternatives for this Brazilian production," Fávaro told reporters recently, after a meeting of the agricultural sector within the interministerial committee that discusses the Brazilian government's response to the United States' tariff hike.

The government's and exporters' concerns are justified by the trade balance figures. The United States was the third-largest destination for agricultural exports in 2024, with shipments totaling US$12.1 billion—a position maintained in the first half of this year. From January to June, Brazilian agribusiness exports to the United States totaled US$6.63 billion, 8% of the sector's total exports in the first half of the year, according to data from Agrostat—the Brazilian agribusiness foreign trade statistics system managed by the federal government.

Forest products (US$ 1.762 billion, 26.6%), coffee (US$ 1.063 billion, 19.54%), meats (US$ 1.063 billion, 16%) and juices (US$ 743 million, 11.21%) lead the list of agribusiness products sold to the North American market.

Brazilian agribusiness could lose US$5.8 billion in exports to the United States if the 50% tariff announced by the US government on Brazilian products comes to fruition, estimates the Brazilian Confederation of Agriculture and Livestock (CNA). The confederation's projection considers a 48% drop in agribusiness product shipments to the US market, compared to the US$12.1 billion traded in 2024.