Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
With the largest consumer market and GDP in South America, Brazil continues to be an excellent market for experienced U.S. exporters. Brazil possesses a diversified economy, and the United States remains its second-largest trading partner in terms of imports, due to a robust commercial relationship and a shared commitment to mutual prosperity. However, despite strong local demand for U.S. brands and products complex domestic regulatory and tax frameworks often present challenges to exporters. As a result, having an intimate knowledge of local market trends and regulations is critical to achieving export success in Brazil.
Situated primarily in the Southern Hemisphere, Brazil possesses the second-largest economy (the US $1.45 trillion in 2020) and population in the Western Hemisphere (211 million inhabitants). Brazil’s geographic territory is larger than that of the continental United States, and business environments often vary by region. A large portion of the population and economic activity is concentrated in Southeastern Brazil, which includes the states of São Paulo, Rio de Janeiro, and Minas Gerais. These states have traditionally served as the engines of economic growth through competitive industries such as manufacturing, agricultural production, mining. and energy. São Paulo continues to be the country’s financial capital and its primary hub for international business activity.
In 2020, Brazil was the ninth largest export market for U.S. products and services, representing $49.36 billion in exports according to the Bureau of Economic Analysis. Important Brazilian domestic industries include agriculture, mining, services and manufacturing, but U.S. exporters across a wide array of industries continue to achieve local export success thanks to Brazil’s diversified domestic market and demand for international products, including a favorable view of technology and brands coming from the United States. Brazil is Latin America’s largest oil producer and has become an important global player in the digital economy with 13 domestic startup companies have reached unicorn status, with each company being valued at least USD 1 billion.
The country’s current President, Jair Bolsonaro, is generally viewed as a pro-business politician and vocal supporter of the U.S.-Brazil commercial relationship. Progress in the bilateral commercial relationship has been gradual but continuous, thanks to multiple channels for dialogue between cabinet officials and the private sector. In October 2020, the commercial relationship took an important step forward when the governments of the United States and Brazil signed a new protocol updating the 2011 Agreement on Trade and Economic Cooperation, adding state-of-the-art provisions on Customs Administration and Trade Facilitation, Good Regulatory Practices, and Anticorruption. The update (essentially equivalent to three free trade agreement chapters), ratified by the Brazilian Congress in November 2021, legally binds both governments to the commitments outlined in the three chapters, presenting new growth opportunities in the bilateral commercial relationship.
The global pandemic remained a top issue for the Brazilian government throughout 2021. In response to the resulting economic downturn, the government made efforts to encourage private sector and consumer recovery and revitalization. Brazil also implemented a mass vaccination program for COVID-19 that rapidly expanded across the country, vaccinating as many as 1.4 million individuals daily. Most restrictive quarantine measures were lifted as the vaccination rollout improved, allowing for the resumption of some routine in-person business activities.
In addition to being an attractive destination for U.S. exports, Brazil is also the largest Latin American source of Foreign Direct Investment (FDI) into the United States, according to SelectUSA, the U.S. Government’s investment promotion program. As of 2020, the United States has received $6.86 billion in job-creating FDI from Brazil, according to the U.S. Bureau of Economic Analysis.
While Brazil may be a challenging market for many U.S. exporters at the outset, there is undoubtedly potential for success for those willing to invest the time and resources necessary to understand and overcome the challenges of doing business within this geographically diverse, resource-rich, and economically dynamic country.