Brazilian Government launches Brasil Soberano Plan to protect exporters and workers from US tariff increase

Launched by President Luiz Inácio Lula da Silva on Wednesday (August 13), the Brasil Soberano [Sovereign Brazil] Plan contemplates an initial set of measures to mitigate the economic impacts of the unilateral tariff increase over the importation of Brazilian products, announced by the US government on July 30, which can reach up to 50%.

The Plan is composed of actions distributed under three pillars: strengthening the productive sector, protecting workers, and commercial diplomacy and multilateralism.

>> Presentation of the Brasil Soberano Plan (in Portuguese)

The actions aim to protect Brazilian exporters, preserve jobs, encourage investment in strategic sectors, and ensure the continuity of the country's economic development.

The measures direct BRL 30 billion from Brazil’s Export Guarantee Fund [Fundo Garantidor de Exportações/FGE] for credit with accessible rates, and expand finance lines for exports; extend the suspension of taxes for exporting companies, increase the percentage of federal tax refunds through the Reintegra program; and facilitate the purchase of foodstuffs by public agencies.

Since its installation on July 14, the Interministerial Committee for Economic and Commercial Negotiations and Countermeasures, coordinated by Vice President and Minister Geraldo Alckmin, initiated a direct dialogue with the productive sector. A total of 39 meetings were held with around 400 representatives from companies and private organizations, industry federations, state governors, and sectors such as manufacturing, agribusiness, technology, mining, big tech, healthcare industry, food, footwear, and furniture, among others, as well as companies from the United States.

With the Brasil Soberano Plan, the Federal Government is not only reacting to an immediate threat: it is rebuilding and strengthening the national export financing and insurance system, which will increase the country’s competitiveness and reduce its vulnerability to similar measures in the future. The initiative stimulates Brazilian companies to expand their international presence and ensures that the defense of jobs and the national production go hand-in-hand with the strategic preparation for new challenges in foreign trade.

Main measures of the Brasil Soberano Plan

PILLAR 1: Strengthening the productive sector

Credit lines

• BRL 30 billion from Brazil’s Export Guarantee Fund [Fundo Garantidor de Exportações/FGE] will be used as funding for the concession of credit, enabling accessible rates.
• Priorities by: dependence of revenue on exports to the United States; type of product and company size. Priority will be given to the most affected.
• Small and medium-sized enterprises will also be able to resort to guarantee funds to access credit.
• Access to credit lines will be conditioned on maintaining the number of jobs.

Extension of deadlines for the drawback regime

• Exceptional extension of the deadline to provide proof of the export of products manufactured with inputs either imported or purchased domestically under tax suspension.
• The Government will extend by one year the deadline for companies to export goods made with inputs benefiting from the regime. These products may be exported to the United States or other destinations. As a result, companies will not have to pay fines or interest if they fail to export to the United States within the originally established deadline.
• This measure applies to companies that arranged exports to the United States scheduled to take place by the end of this year. Of the USD 40 billion exported to the United States in 2024, USD 10.5 billion was carried out under the drawback regime.
• The extension does not have fiscal impacts, as it only postpones the deadline for the fulfillment of the export commitments made by the Brazilian companies.

Deferral of federal taxes

• The Federal Revenue Service is authorized to defer tax collection for the companies most affected by the tariff increase.
• How it will work: payment of the next two months will be delayed for the most affected companies.

Public purchases: support to rural producers and the agri-industry

• Extraordinarily, through a subsidiary regulation, the Union, States, and Municipalities will be able to make purchases for their food programs (such as school meals, hospitals, etc.) using a simplified procedure and average market price, while ensuring transparency and process oversight.
• This measure is only valid for products affected by the unilateral tariff increase.

Export system modernization

• Expansion of export guarantee rules, a tool that protects exporters against risks such as default or contract cancellations.
• These changes aim to strengthen exporters with medium and high technological intensity and to promote productive investments in the green economy.
• The Brasil Soberano Plan will allow banks and insurance companies to use this guarantee in more types of operations.
• It foresees risk-sharing mechanisms between the government and the private sector, using the Foreign Trade Guarantee Fund [Fundo Garantidor do Comércio Exterior/FGCE] as a first-loss mechanism, increasing access to credit and reducing costs.

Guarantee funds

• Additional contributions of BRL 1.5 billion to the Foreign Trade Guarantee Fund (FGCE), BRL 2 billion to the Investment Guarantee Fund [Fundo Garantidor para Investimentos/FGI] at BNDES, and BRL 1 billion to the Operations Guarantee Fund [Fundo de Garantia de Operações/FGO] at Banco do Brasil, primarily aimed at improving access for small and medium-sized exporters.

New Reintegra program for affected companies

• The Special Tax Reimbursement Regime [Regime Especial de Reintegração de Valores Tributários/Reintegra] for Exporting Companies returns to Brazilian exporters part of the taxes paid throughout the production chain. These funds are returned in the form of a tax rebate, helping to reduce costs and increase competitiveness in foreign markets.
• This measure brings forward the effects of the Tax Reform by easing the tax burden on export activities.
• Currently, large and medium-sized industrial goods producers are subject to a fixed rate of 0.1%, while micro and small enterprises, through the Acredita Exportação program, receive a 3% tax rebate.
• This measure increases the benefit by up to 3 percentage points for companies whose exports of industrial goods were affected by unilateral tariff measures. In other words, to remain competitive in the U.S. market, large and medium-sized companies will now have a rate of up to 3.1%, while micro and small enterprises can receive up to 6%.
• The new conditions offered by Reintegra will be valid until December 2026 and are expected to have an impact of up to BRL 5 billion.

PILLAR 2: Protection for workers

The Brasil Soberano Plan created the National Employment Monitoring Chamber [Câmara Nacional de Acompanhamento do Emprego] to monitor employment levels in companies and their supply chains, oversee labor obligations, benefits, and agreements, and propose actions aimed at preserving and maintaining jobs.

The National Employment Monitoring Chamber will be coordinated at the national and regional levels through the Regional Chambers at the Regional Labor Superintendencies.

Its attributions include:

• Monitor diagnostics, studies, and information related to employment levels in companies and subsectors directly affected by US tariffs.
• Expand the analysis to identify indirect impacts on job creation and retention in companies within the supply chain.
• Monitor labor obligations, benefits, and payroll effects arising from agreements aimed at preserving jobs and mitigating the impact of US tariffs.
• Promote collective bargaining and conflict mediation to maintain employment.
• Implement mechanisms related to emergency situations, such as layoffs and temporary suspension of contracts, in accordance with the law.
• Oversee compliance with agreed obligations and job retention through Labor Inspection.
• Use the regional structure of the Labor Superintendencies to engage workers and employers in negotiations to meet the needs of affected companies.
• Monitor the provision and payment of labor benefits to employees of companies directly affected.

PILLAR 3: Commercial diplomacy and multilateralism

The Brasil Soberano Plan also focuses on expanding and diversifying markets internationally, reducing Brazil’s reliance on exports to the United States. In the realm of commercial diplomacy and multilateralism, Brazil has advanced negotiations on agreements that open new opportunities for domestic companies:

• Concluded negotiations: European Union (European Free Trade Association /EFTA).
• Under negotiation: United Arab Emirates and Canada
• Currently in dialogue: India and Vietnam

These initiatives strengthen Brazil’s international insertion, expanding the number of destinations open for national products and increasing the resilience of the economy in the face of unilateral commercial barriers. It is worth noting that, in less than three years, Brazil has opened 397 new markets.

Brazil is open to constructive dialogue with the United States in the search for negotiated solutions that can reestablish fair and balanced conditions for bilateral trade, to the benefit of producers, workers, and consumers from both countries.

Brazil also reiterates its commitment to multilateralism through its actions at the World Trade Organization (WTO).