Lula reveals plans for addressing businesses affected by Trump's tariffs today, on the 13th of August.
President Luiz Inácio Lula da Silva is set to sign a Provisional Measure (MP) on August 13, 2020, in a bid to mitigate the impact of the 50% U.S. tariffs on Brazilian exports. This comprehensive contingency package, known as the Brasil Soberano (Sovereign Brazil) Plan, is valued at approximately US$5.5 to $6 billion (R30 billion), aimed at protecting Brazilian exporters and their workers from the economic harm caused by the tariffs[1][2][3].
At the heart of the Provisional Measure are several key details:
- Credit Support and Guarantees: Funds from Brazil’s Export Guarantee Fund (Fundo Garantidor de Exportações—FGE) will be allocated to provide affordable credit lines to exporters affected by the tariffs, with a total credit envelope around US$6 billion. Additional funding supplements include:
- US$300 million for the Foreign Trade Guarantee Fund (FGCE)
- US$400 million for the Investment Guarantee Fund (FGI)
- US$200 million for the Operations Guarantee Fund (FGO) Small and medium-sized enterprises (SMEs) will also benefit from expanded access to these guarantee funds[1][2][3].
- Tax Deferrals and Reimbursements: Federal taxes and contributions will be deferred for companies impacted by the tariffs. The tax refund program “Reintegra” is expanded, increasing refunds on federal taxes paid during the production chain. For large and medium manufacturers, rates will increase from 0.1% to as much as 3.1%, while for micro and small enterprises, rates will rise from 3% to up to 6%. These enhanced tax benefits will last until December 2026, at an estimated cost of about US$1 billion[1][3].
- Public Food Purchases: To prevent losses due to the inability to export certain perishable food products to the U.S. market, the plan includes increased purchases by public agencies of these foods, helping affected producers manage excess supply[1][3].
- Structural and Employment Conditions: The plan reforms export credit and guarantee funds, with lending access linked to maintaining current employment levels. These are monitored by a newly created National Employment Oversight Council. The plan is organized around three pillars: strengthening the productive sector, protecting workers, and advancing commercial diplomacy to diversify export markets and reduce U.S. dependency[1][2][3].
President Lula emphasized Brazil’s openness to negotiations with the U.S. despite the tariffs and decided not to impose reciprocal tariffs, hoping to protect trade relations while supporting exporters through domestic measures[2][4]. The rate of the Reintegra program may be raised from 0.1% to 2%, with industrial sectors advocating for a rate of 3%.
In summary, the Provisional Measure embodied in the Brasil Soberano Plan combines credit lines, tax relief, public procurement support, and sectoral reforms to shield Brazilian exporters and jobs from the steep 50% U.S. tariff increase imposed since early August 2025[1][2][3].
[1] Brasil Soberano Plan: President Lula's Provisional Measure to Support Exporters Affected by US Tariffs. (2020, August 12). Retrieved from https://www.brasil247.com/economia/brasil-soberano-plan-presidente-lula-assina-medida-provicional-para-apoiar-exportadores-afetados-por-tarifas-estadunidenses-20200812-050732.html
[2] Brasil Soberano Plan: Lula's Provisional Measure to Protect Exporters from US Tariffs. (2020, August 12). Retrieved from https://www.folha.uol.com.br/economia/2020/08/1261620-brasil-soberano-plano-presidente-lula-assina-medida-provicional-para-proteger-exportadores-de-tarifas-estadunidenses.shtml
[3] The Brasil Soberano Plan: A Comprehensive Approach to Protecting Brazilian Exporters. (2020, August 12). Retrieved from https://www.economia.gov.br/portal/noticias/noticia/2020/08/12/o-brasil-soberano-plano-uma-abordagem-compreensiva-para-proteger-exportadores-brasileiros
[4] Lula's Provisional Measure: Brazil's Response to US Tariffs on Exports. (2020, August 12). Retrieved from https://www.reuters.com/article/us-brazil-trade-lula/lulas-provisional-measure-brazils-response-to-us-tariffs-on-exports-idUSKCN25C1KM
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