Brazilian government announces a 10% tariff reduction on several basic imported products

Brazilian government announces a 10% tariff reduction on several basic imported products

On May 23, Gecex Resolution No. 353 was published in the Official Gazette of the Federal Executive, determining tariff reductions of up to 10% for several products.

The measure covers items, such as beans, meat, pasta, cookies, rice, construction materials, among another 6,195 tariff codes of the Mercosur Common Nomenclature (NCM). As of November 19 of last year, these products had already suffered a 10% price reduction. Adding the new measure to the previous one, more than 87% of the NCM tariff codes had their rate reduced to 0% or reduced by a total of 20%.

Although the government has previously stated its intention to abandon a protectionist tradition and expand trade openness in the country – including at the 75th United Nations General Assembly[1] -, Foreign Trade Secretary, Lucas Ferraz, told journalists that the main objective of the tariff reduction is to fight inflation. According to estimates by the Ministry of Economy, the measure may bring down inflation by 0.5 to 1 percentage point [2] [3] [4]. In addition, as stated in an official publication of the Ministry of Economy [5], the measure also aims to “alleviate the negative economic consequences arising from Covid-19 and the war in Ukraine.”

The measure applies to products subject to the Common External Tariff (TEC), a tariff equal for all Mercosur states (Argentina, Brazil, Paraguay, and Uruguay) and charged on products imported from states that are not part of the bloc. The decision for the reduction was taken unilaterally by Brazil within the scope of the Executive Management Committee (Gecex) of the Chamber of Foreign Trade (Camex). Therefore, the reduction is temporary. It will only last until December 31, 2023.

The full Resolution with the denotation of all products that suffered tariff changes can be accessed here.