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Updated December 15, 2017
U.S.-Brazil Trade Relations
Overview
United States. According to the World Trade Organization
The United States and Brazil share one of the most
(WTO), Brazil’s trade-weighted tariff rate is 10.4%, while
important trade relationships in the world. In 2016, Brazil
that of the United States is 2.4% (see Table 1).
ranked as the United States’ twelfth largest global trading
partner and second largest Latin American trading partner
Table 1. U.S. and Brazil Average Tariffs, 2016
in goods. The U.S. has maintained a trade surplus in goods
exported to Brazil since 2008, measuring an estimated $4.1
Simple
Simple MFN
Trade
Country
billion in 2016. The U.S. has also had a bilateral services
Applied
Bound*
Weighted**
trade surplus with Brazil since at least 1992.
United States
3.4
3.5
2.4
Brazil’s economic strategy traditionally favored
Brazil
31.4
13.5
10.4
protectionist trade policies, but after years of minimal
Source: World Trade Organization (WTO).
growth, it has begun to adopt a more liberal stance toward
Notes: *Most-favored nation (MFN) basis. **2015 data.
international trade and economic integration. Brazil’s long-

term trade strategy, however, depends on the unpopular
President’s ability to influence Congress and the outcome
Since 1991, Brazil, along with Argentina, Uruguay, and
of Brazil’s 2018 Presidential election.
Paraguay, has formed part of a customs union known as the
The United States is
Mercado Común del Sur, or Mercosur. Venezuela, a
embracing a more nationalist approach through the review
member of the bloc since 2012, was suspended in
of existing free trade agreements (FTAs). Some experts
December 2016. Mercosur exports for the four original
contend the change in Brazil’s economic policy may lead to
countries dropped from $344 billion in 2012 to $260 billion
closer bilateral trade relations. Others have indicated that
in 2016. Mercosur has a high common external tariff and
Brazil and other emerging economies in South America are
various nontariff barriers.
seeking to diversify their trading partners and to establish
stronger ties with countries like China and India, as well as
Recently, Brazil and its Mercosur partners expressed
the European Union.
interest in rethinking the trade arrangement. Argentina’s
Brazil’s Economy
President Mauricio Macri has stated that Mercosur has
under-delivered and that Mercosur’s trade quotas are
Brazil is the world’s ninth-largest economy, with a GDP of
barriers to Argentina’s goal of reinserting itself in the
$1.8 trillion and a GDP per capita of $8,726 in 2016. The
global market. Brazil’s new foreign minister,
country’s
Aloysio
economy shrank in 2015 (3.8%) and 2016 (3.6%)
Nunes Ferreira, contends that Mercosur would benefit from
as it struggled with its worst recession in recorded history.
extra-regional negotiations with key partners and
Recent reports, however, indicate the economy is
investments in infrastructure. In addition, members of both
recovering. The International Monetary Fund projects
Mercosur and the Pacific Alliance, a trade bloc formed by
Brazil’s GDP to grow by 0.7% in 2017 and by 1.5% in
Chile, Colombia, Mexico, and Peru, have taken an interest
2018. Brazil’s unemployment rate remained above 12% in
in greater trade collaboration. Mercosur is also actively
the quarter ending in October 2017, although it has
engaged in negotiations with the European Union
improved over the course of the year.
concerning a potential FTA. Since 2015, Brazil has
Brazil’s economy has been hampered by
negotiated trade agreements with countries outside of
a number of
Mercosur, such as the automotive trade agreement with
external factors. Chief among these is the drop in
Colombia and a trade expansion agreement with Peru.
commodity prices that started in 2011. Waning global
demand for products like minerals, crude oil, and
U.S.-Brazil Trade Relations
agricultural goods has been particularly damaging, as these
Despite historical differences in trade policy approaches
products make up significant portions of the country’s
between the two countries, U.S.-Brazil trade relations have
exports. Other factors that have impacted Brazil’s economic
deepened in the past two decades. Two-way trade has more
growth have been the depreciation of the national currency,
than doubled since 1996. Leading U.S. export items to
the spike in global oil supply driven by countries such as
Brazil include aircraft, machinery, petroleum products,
the United States and Canada, as well as corruption, tax and
electronics, and medical instruments. Leading imports
other policies. Brazil’s economy has also been adversely
include aircraft, crude petroleum oil, coffee, chemical
impacted by a decline in consumption.
products, and iron and steel products.
From 1989 to 1995, Brazil’s average applied tariffs fell
Total merchandise trade (exports plus imports) between the
notably from 329% to 11%, and average applied tariffs on
United States and Brazil was valued at $56.2 billion in
manufactured products fell from 18% in 1998 to 9% in
2006. Brazil’s tariffs are
2016, with $30.1 billion in U.S. exports and $26.1 billion in
generally higher than those of the
U.S. imports. The United States has had a trade surplus
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U.S.-Brazil Trade Relations
with Brazil since 2008 (see Figure 1). Merchandise trade
(FTAA). Negotiations broke down in 2005, mostly because
peaked in 2012, at $75.9 billion, with $43.8 billion in U.S.
of disagreements between the United States, Brazil and
exports and $32.1 billion in U.S. imports. In 2013, trade
other Mercosur countries.
declined to $71.6 billion and then increased slightly to
$72.5 billion in 2014. In 2015, merchandise trade with
Brazil has played an important role in the Doha Round of
Brazil decreased 18.5% to $59.1 billion and, in 2016, it
WTO multilateral trade negotiations that began in 2001. It
decreased another 4.9% to $56.2 billion. According to the
has led a group of developing countries in calling for a
Office of the U.S. Trade Representative (USTR), in 2016,
reduction in agricultural tariffs in developed nations and in
U.S. goods and services exports to Brazil totaled $88.2
resisting calls for greater access to developing nations’
billion.
services and industrial sectors. In October 2014, the two
countries settled a longstanding dispute under the WTO
Figure 1. U.S. Merchandise Trade with Brazil
over U.S. government support for cotton farmers. Under a
memorandum of understanding, the United States agreed to
make a final one-time payment of $300 million to the Brazil
Cotton Institute and introduce additional changes to its
export credit guarantee program. Brazil agreed not to
challenge U.S. cotton support programs prior to September
30, 2018. The United States has brought four WTO cases
against Brazil on issues related to the automotive sector,
import prices and patent protection.
Selected U.S.-Brazil Bilateral Dialogues
The United States and Brazil have over twenty government-
to-government bilateral dialogues and one high-level CEO
Forum. In March 2016, they held the third meeting of the
Commission on Economic and Trade Relations and made
Source: CRS using U.S. International Trade Commission data.
progress on trade facilitation and regulatory coherence

issues as part of the United States-Brazil Commercial
The accumulated stock of U.S. foreign direct investment
Dialogue. In a joint statement released in May 2017, the
(FDI) in Brazil was $64.4 billion in 2016, a $6.8 billion
countries reflected on the advances made in bilateral trade
(11.8%) increase from 2016, but still lower than the 2014
thanks to the U.S.-Brazil Commercial Dialogue.
amount of $66.8 billion. Most U.S. FDI in Brazil is in the

manufacturing industry ($18.6 billion). Brazil’s
Issues for Congress
accumulated stock of FDI in the United States was $551
While an FTA between the United States and Brazil may
million in 2015, a decrease of 61.8% from 2014. For 2016,
continue to be an elusive proposition in the near- and
U.S. data shows Brazil’s stock of FDI in the United States
medium-term, government-to-government dialogues have
dropped to -$1.8 billion (see Figure 2).
moved towards a more collaborative relationship, and
Congress could examine how to enhance these dialogues to
Figure 2. Stock of U.S.-Brazil Foreign Direct
tackle trade concerns that may hamper closer bilateral
Investment (FDI)
economic engagement. Another policy issue relates to the
Generalized System of Preferences (GSP), which provides
nonreciprocal, duty-free tariff treatment to certain products
imported from designated developing countries. The
program expires in 2017 and Congress may consider
extending GSP benefits for Brazil. Some question Brazil’s
inclusion in the program, given the size and sophistication
of its economy. Finally, Congress may want to explore
more in-depth prospects for a more outward-looking
Mercosur trade policy and its implications for the United
States, as well as implications of a potential EU-Mercosur
free trade agreement.
(For more information see CRS Report RL33456, Brazil:
Background and U.S. Relations, by Peter J. Meyer, and

CRS In Focus IF10193, The WTO Brazil-U.S. Cotton Case,
Source: Source: CRS analysis, Bureau of Economic Analysis (BEA)
by Randy Schnepf).
data.
Trade policy between both countries has been a contentious
M. Angeles Villarreal, Specialist in International Trade
issue for the last twenty years. Brazil has generally objected
and Finance
to trade liberalization agreements outside of Mercosur, and
has pursued trade issues multilaterally at the WTO. In the
Edward Y. Gracia, Research Assistant
1990s, the United States and other countries in the Western
IF10447
Hemisphere attempted to incorporate Mercosur and other
regional trade blocs into a Free Trade Area of the Americas
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U.S.-Brazil Trade Relations

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