Chinese imports threaten Brazilian industrial production

Trade between Brazil and China is vital to guarantee the surplus in the Brazilian trade balance and the sale of our commodities, but it also presents challenging - and sometimes unfair - competition to the national industry . This duality has been accentuated in recent years due to surges in Chinese exports to Brazil registered by several sectors. The reason for this is the greater protectionism in the world, which, masked by environmental measures, has increased the idle capacity of the Chinese industry, which seeks alternative markets to ship its products.

In this adverse context, traditional mechanisms, such as tariff changes and trade defense, have proven insufficient to contain these imports. The Brazilian government then created the "list of tariff changes due to cyclical trade imbalances (DCC)", launched in January 2024 with one hundred vacancies, aiming to ensure the competitiveness of the national industry. Even so, the restriction on vacancies in the DCC prevents it from meeting all the demand for requests from the industry.

Another limitation of this solution is its indiscriminate impact: the tariff increase applies to all countries, except the few that have free trade agreements with Brazil. As a result, the remedy, aimed mainly at China, also makes it difficult to buy from other countries and makes imported products more expensive, affecting consumers in Brazil.

Alternatively, anti-dumping measures allow for a more precise approach, restricting imports only from countries that cause harm to the domestic industry, but the process is time-consuming.

Ironically, the long-term solution may lie in the root cause of the problem itself. EU and US environmental policies that act as trade barriers could inspire similar action in Brazil. In June 2024, the government launched a grant-taking exercise to identify sustainability attributes of domestic goods, with the aim of developing regulations that ensure fair competition between Brazilian and imported products, especially from China.

The new reality of international trade - more restrictive and unstable - is expected to continue for the next few years, especially after the trade measures announced by US President Donald Trump. While Brazil fails to find effective solutions to reduce the losses caused by unfair Chinese imports - without completely blocking the entry of alternative products - the competitiveness of the national industry will continue to decline and suffer significant losses.