As Brazil, Latin America’s largest economy, is hit by a wave of cheap imports, the industry ministry has launched a series of investigations into alleged dumping of Chinese manufactured goods.
At the request of industry, the ministry has opened at least half a dozen investigations in the past six months into products ranging from sheet metal and painted steel to chemicals and tyres.
Brazil’s moves come as the world braces for a ‘flood of imports’ from China as the world’s second-largest economy struggles with overcapacity due to a slowdown in the property sector and weak domestic demand.
To revive its economy, China is investing in advanced manufacturing, particularly in solar energy, electric vehicles and batteries. In addition to Brazil, China’s steel exports to Vietnam, Thailand, Malaysia and Indonesia have grown rapidly in recent months.
Chemical industry wants ‘protection’
Chemical industry wants ‘protection’With the EU launching an anti-subsidy investigation into Chinese electric vehicles and the Biden administration recently raising safety concerns about the Asian country’s vehicles, developed markets have begun to take comprehensive measures against imports from China.
On the other hand, China’s exports grew by 7.1% in the first two months of this year, far outpacing import growth.
China’s exports to and imports from Brazil rose by more than a third in the first two months of the year, according to Chinese customs data.
“Last year we witnessed one of the most critical situations in the entire history of the national chemical industry. We see temporary increases in import tariffs as an indispensable regulatory tool to combat these predatory operations and protect the domestic market,” the Financial Times quoted André Passos Cordeiro, president of the Brazilian Chemical Industry Association, as saying.
Lula cautious on China
Trade tensions pose a dilemma for President Luiz Inácio Lula da Silva, who is trying to improve relations with Beijing while protecting and developing Brazil’s national industries.
Lula, who returned to the presidency for a third term last year, has made industrial policy a key part of his economic strategy.
But Brazil is also likely to avoid confrontation with Beijing, its largest trading partner and a major buyer of commodities such as soybeans and iron ore.
Last year, Brazil exported more than $104 billion worth of goods to China, while importing $53 billion. Of the 101 million tonnes of soybeans shipped from Brazil in 2023, 70 per cent (worth around $39 billion) went to China.
One of the latest investigations was launched earlier this month after CSN, a major Brazilian steel producer, alleged that imports of certain types of carbon steel sheet from China increased by almost 85 per cent between July 2022 and June 2023.
Launching the investigation, which is expected to last 18 months, the industry ministry said there were “sufficient elements indicating the existence of dumping in exports from China to Brazil … and the injury to the domestic industry resulting from this practice”.
Brazilian steelmakers have asked the government to impose tariffs of between 9.6% and 25% on imported steel products. Total steel and iron imports from China rose from $1.6 billion in 2014 to $2.7 billion last year.
Rising steel imports are a particularly sensitive issue for the Brazilian government, as the Latin American country is one of the world’s largest exporters of iron ore, a key ingredient in steel production.
Chemicals and tyres, for which the industry ministry has launched separate investigations in recent months, are also under discussion. According to official data, imports of the chemical phthalic anhydride from China increased by more than 2,000 per cent by volume between July 2018 and June 2023. Over the same period, tyre imports also increased by more than 100 per cent, from 23 million to 47 million units, of which around 80 per cent came from China.
Brazil not the only country to investigate
Brazil is not the only emerging market to raise concerns about the rise of manufactured goods from China.
In Thailand, the government accused Chinese companies of evading anti-dumping duties, while industry groups warned of huge losses from cheap steel on the market.
The Vietnamese government launched an investigation into the dumping of wind towers and some steel products from China following complaints from local industry.
Last August, Mexico imposed tariffs of between 5 and 25 per cent on hundreds of products imported from countries with which it does not have a free trade agreement, and China was one of the countries most affected.
