Some economists say the economic slowdown could help keep import levels low, even with the appreciation of the Brazilian real against the U.S. dollar. But there is still uncertainty over the consequences for exports.
Data from the Brazilian Institute of Geography and Statistics (IBGE) show that in the second quarter, exports rose 0.7% while imports fell 2.9%. This resulted in a 0.6 percentage point contribution from net exports to GDP growth, said Rodolfo Margato, economist at XP.
However, in year-over-year terms, the net external contribution remained negative, at -0.4 percentage points. Over that same comparison period, exports rose 2% while imports climbed 4.4%.
Mr. Margato noted that the quarterly drop in imports was partly influenced by the arrival of an offshore oil platform in the first quarter, which inflated the comparison base. But it also reflected a slowdown in domestic absorption, particularly due to a decline in gross fixed capital formation (GFCF), which affects imports of machinery and equipment.
Daniel Xavier, chief economist at Banco ABC Brasil, said that while net external demand (exports minus imports) supported GDP in the second quarter, there was a slowdown, albeit slower than expected, in the components of domestic demand, which subtracted 0.2 percentage points from the quarterly GDP change.
“This reflects a picture of gradually slowing activity in Brazil, in response to the lagged effects of monetary policy and amid ongoing economic uncertainty, both globally and domestically,” he said.
Trade impact from tariffs
Robson Gonçalves, a consultant at the Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV Ibre), noted that the external sector data precede the recent tariff hikes announced by Mr. Trump. “We need to wait and see how the situation evolves. We’re in a thick fog when it comes to forecasting foreign trade trends,” he said.
The real has been gaining strength against the dollar since the beginning of the year, which tends to boost imports. At the same time, Mr. Gonçalves said, China is under pressure to find new markets. “The tariff hikes may also affect Brazilian exports, especially with the weaker dollar,” he noted.
José Alfaix, economist at Rio Bravo Investimentos, said he expects import volumes to continue shrinking. “China maintained a high level of exports to Brazil and the rest of the world in recent months because they anticipated shipments after Liberation Day in April, when Mr. Trump announced tariff increases on several trade partners,” he said. But China is unlikely to sustain that pace, he added.
In his view, the drop in import demand—combined with weaker domestic activity and the rerouting of Brazilian exports from the U.S. to the domestic market due to the tariffs—could offset the impact of a weaker dollar.
Sergio Vale, chief economist at MB Associados, said the tariff war is already showing up in business surveys, with worsening confidence indicators. “Most of the current slowdown is related to interest rates, but expectations around tariffs could weigh on third-quarter results,” he said.
He warned that the export component of GDP could be more directly affected by trade barriers. “Even though the United States is less relevant to Brazil’s exports than it was in the past, we’re likely to see a decline in sales to American buyers, possibly as soon as the third quarter,” he said.
It is not out of the question, Mr. Vale added, that the GDP contraction initially expected only in the final quarter of 2025 due to high interest rates could materialize sooner, with the trade war also playing a role in the third-quarter numbers.
