Showing posts with label punitive tariffs. Show all posts
Showing posts with label punitive tariffs. Show all posts

Thursday, 24 July 2025

Trump tariffs wreaking havoc in Brazilian citrus belt

According to Reuters, US President Donald Trump's plan to impose a new 50% tariff on all Brazilian products from August 01, 2025 could devastate the South American nation's citrus belt, as factories scale back production and orange farmers consider leaving fruit to rot amid a sharp drop in prices.

"You are not going to spend money to harvest and not have anyone to sell to," said grower Fabricio Vidal, from his farm in Formoso, in the state of Minas Gerais.

The new tariffs could make it impossible for his fruit to enter the United States, which buys 42% of the orange juice exported from Brazil, a trade worth around US$1.31 billion in the season ending last June.

This month, orange prices in Brazil dropped to 44 reais (US$8) a box, almost half of what they were a year ago, according to the widely followed Cepea index from the University of Sao Paulo, illustrating how Trump's disruptive trade policies can sow chaos even before enacted.

"As the day approaches in which tariffs will come into effect, anxiety increases about what might happen," Ibiapaba Netto, the head of orange juice exporter lobby CitrusBR, told Reuters in an interview.

US orange juice production dropped to its lowest level in half a century in the 2024/25 harvest, with output estimated at 108.3 million gallons, according to data from the United States Department of Agriculture cited by Cepea, which shows imports will represent 90% of US supplies through September.

US consumers will bear the brunt along with Brazilian farmers. An astounding half of the orange juice Americans drink comes from Brazil under household brands such as Tropicana, Minute Maid and Simply Orange.

Brazil, which produces 80% of the world's orange juice, will be hard to replace, too.

The US has become more dependent on orange juice imports in recent years due to the "citrus greening" crop disease, hurricanes and spells of freezing temperatures.

But the new tariff on Brazilian imports represents a 533% increase over the US$415 per ton duty levied on the country's juice now.

Last Friday, Johanna Foods, a New Jersey-based producer and distributor of fruit juices, challenged in court the proposed tariffs on Brazilian orange juice, claiming they would cause "significant and direct financial harm" to the company and US consumers.

The tariffs may also spell trouble for Coca Cola and Pepsi, which account for some 60% of the orange juice sold in the United States, Netto said.

Brazil won't find it easy to replace American consumers, some of the most avid orange juice drinkers in the world.

Typically, higher-income countries import orange juice, limiting Brazil's potential reach into new markets. Brazilian orange juice is only sold to some 40 nations – representing about a third of the destinations that buy Brazilian meat, for example, according to trade data.

CitrusBR's Netto noted that hefty duties in markets such as India and South Korea, as well as low household income in China, have hampered trade with Brazil.

The European Union, in turn, already buys some 52% of Brazil's total exports, making it unlikely that countries there will make up for lost business with the US.

One would be to export Brazilian orange juice through Costa Rica, which some companies already do to avoid the current duties, said Arlindo de Salvo, an independent orange consultant. But it is unclear whether exporters will be able to pull it off once the new levy starts being enforced.

As companies struggle to find new paths to consumers, farmers in Formoso fear the worst. Prices have already dropped to about a third of what growers were paid at this time last year, farmers said, making the cost of picking oranges hardly worth the trouble.

Grower Ederson Kogler said that the only solution would be to find other markets. But, he added, "These are things that don't happen overnight."

Friday, 20 December 2024

Trump wants EU to buy more US oil and gas or face tariffs

According to Reuters, US President-elect Donald Trump said on Friday that the European Union (EU) may face tariffs if the bloc does not cut its growing deficit with the United States by making large oil and gas trades with the world's largest economy.

The EU is already buying the lion's share of US oil and gas exports, according to US government data, and no additional volumes are currently available unless the United States increases output or volumes are re-routed frm Asia - another big consumer of US energy.

"I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas," Trump said in a post on Truth Social.

"Otherwise, it is tariffs all the way!!!," he added.

The European Commission said it was ready to discuss with the president-elect how to strengthen an already strong relationship, including in the energy sector.

"The EU is committed to phasing out energy imports from Russia and diversifying our sources of supply," a spokesperson said.

The United States already supplied 47% of the European Union's LNG imports and 17% of its oil imports in the first quarter of 2024, according to data from EU statistics office Eurostat.

Trump has vowed to impose tariffs on most if not all imports, and said Europe would pay a heavy price for having run a large trade surplus with the US for decades.

Trump has repeatedly highlighted the US trade deficit for goods, but not trade as a whole.

The US had a goods trade deficit with the EU of 155.8 billion euros (US$161.9 billion) last year. However, in services it had a surplus of 104 billion euros, Eurostat data shows.

Trump, who takes office on January 20, 2025 has already pledged hefty tariffs on three of the United States' largest trading partners - Canada, Mexico and China.

Most European oil refiners and gas firms are private and the governments have no say on where the purchases are coming from unless authorities impose sanctions or tariffs. The owners usually buy their resources based on price and efficiencies.

The EU has steeply increased purchases of US oil and gas following the block's decision to impose sanctions and cut reliance on Russian energy after Moscow invaded Ukraine in 2022.

The United States has grown to become the largest oil producer in recent years with output of over 20 million barrels per day of oil liquids or a fifth of global demand.

US crude exports to Europe stand at over two million bpd representing over a half of US total exports with the rest going to Asia. The Netherlands, Spain, France, Germany, Italy, Denmark, and Sweden are the biggest importers, according to the US government data.

The United States is also the world's biggest gas producer and consumer with output of over 103 billion cubic feet per day (bcfd).

The US government projects that US exports of liquefied gas (LNG) will average 12 bcfd in 2024. In 2023, Europe accounted for 66% of US LNG exports, with the Britain, France, Spain and Germany being the main destinations.

EU exports are dominated by Germany with key goods being cars, machinery and chemicals.

 

Thursday, 19 December 2024

How would WTO brace Donald Trump?

The World Trade Organization (WTO) held the last of its 2024 meetings this week, and for anyone rooting for the institution to conclude long-discussed agreements just ahead of its 30th anniversary, the results were a little hard to watch. Here’s a recap of what came out of gatherings of the WTO’s General Council and its Dispute Settlement Body.

Here’s a recap of what came out of gatherings of the WTO’s General Council and its Dispute Settlement Body:

·        Dispute settlement reform was unresolved and there was a pledge to continue talking next year

·        On the second fisheries agreement, India and Indonesia were granted more time to air their concerns. “Fish 2” was at the decision stage but was demoted to a “discussion” item

·        India, South Africa and Turkey blocked a deal known as Investment Facilitation for Development. That left it short of the needed consensus, even though 126 members backed its incorporation into WTO bylaws

·        Progress was made on two administrative issues: picking dates for the next ministerial conference (March 26-29, 2026, in Cameroon) and approval of WTO Secretariat pension reforms

Newly re-appointed Director General Ngozi Okonjo-Iweala tried to maintain a positive outlook, saying she hopes members return in the new year with a “spirit of compromise, ready to do deals.”

For an organization that needs everyone to agree, that’s going to be a challenge when US President-elect Donald Trump takes office January 20, 2025. His threatened tariffs and “America First” trade agenda run counter to the mission of the Geneva based WTO.

Trump promised 60% duties on Chinese imports and at least 10% for the rest of the world. In November, he threatened to impose further 10% tariffs on Beijing and 25% on Mexico and Canada if they fail to stop the flow of fentanyl and undocumented migrants to the US.

All of that violates the commitments that more than 160 nations make to join the WTO, said Bill Reinsch, a Commerce Department official during the Clinton administration and now a senior adviser at the Center for Strategic and International Studies.

Trump is known to dislike multilateral institutions, having withdrawn the US from a trade deal for the Indo-Pacific, the Paris Climate Agreement and the World Health Organization in his first term.

He could quit the WTO, too. Or he could stay in it, heap more scorn on the rules-based international order and ignore other countries complaining about Washington’s protectionism.

In Trump’s first term, US Trade Representative Robert Lighthizer watched the WTO’s appellate body grind to a standstill by preventing the appointment of new judges as terms expired, leaving it short of the number needed to function.

This week Biden administration delegates blocked a move by 130 WTO member countries that called for a restart of the process to fill vacancies on the appellate body — the 82nd time that that proposal failed.

The outlook for the WTO to free itself of paralysis under the incoming Trump administration isn’t favorable. 

Jamieson Greer, Trump’s nominee for USTR, was a close adviser to Lighthizer. His views on WTO relevancy are unclear, but he did say in testimony in May that “efforts to hold China accountable under WTO dispute mechanisms were largely unfruitful.”

The WTO also irked some Trump allies by accelerating the process this year of approving Okonjo-Iweala for another four-year term at its helm.

That was “almost certainly designed to prevent the incoming Trump administration from having a say in the matter,” said Dennis Shea, Trump’s ambassador to the WTO in his first term.

“The WTO already has diminished reputation in the United States,” he said. “This unprecedented action only diminishes it further.”

According to a Geneva-based trade source, Trump’s name wasn’t mentioned during this week’s General Council session.

Courtesy: Bloomberg