US Tariff Hike: What the Market Expects for August 1st

"Wait and see": this is the feeling that has taken over financial market agents less than a week before the start of the 50% tariffs imposed by the United States on products imported from Brazil, this Friday (1st).

The climate of uncertainty regarding the effects on the country occurs in parallel with the announcements of agreements between Donald Trump and other global leaders. This Sunday (27), it was the turn of the European Union, which signed a 15% agreement for the sale of items to the North American market .

For Brazil, however, economists and managers expect the effective application of 50%, but they hope for a negotiation after economic shocks for both countries .

"If it impacts the real [American] economy, Trump's advisors will ask for it not to continue, because Americans are rational. And we expect them to ask for sectoral agreements, with the coffee and orange sectors, for example," says Stephan de Sabrit, managing partner of Grupo Leste.

With over R$16 billion under management, Sabrit is monitoring the situation with concern, especially because the majority of investors he serves are Brazilian.

"It's the famous 'wait and see,' because Trump always backtracks. Most of our investments are medium- and long-term. And I see things working out in the medium term," says the investor.

Upon arriving in Brazil, Sabrit says he realized the scale of the tariff hike, given that in the US the Brazilian situation is being monitored as yet another country on Trump's tariff list.

The climate of anticipation also includes the commitment of Brazilian diplomacy. Gustavo Sung, chief economist at Suno Research, highlights the lack of dialogue between Brasília and Washington after several attempts by the Brazilians to bring the Americans to the negotiating table .

"We hope that Brazil will negotiate the issue of critical minerals and announce investments, adopting a diplomatic stance to postpone the tariffs. The US isn't listening," he says.

Effects on the stock market

For weeks, markets around the world have been monitoring Trump's negotiations. This anticipation of the underlying causes, analysts say, is already embedded in asset prices, shielding the Brazilian stock market from significant fluctuations in the coming days.

Investors' early move meant the Ibovespa ended July down almost 4%, reversing a run of four consecutive months of monthly closings in the black .

"We don't expect significant volatility in the Ibovespa index because the market has already priced in the tariffs and trusts Brazilian diplomatic channels," says Sung.

What excites investors, on the other hand, is the prospect of signing trade agreements with Trump.

But one of Brazil's obstacles remains the political factor, the only difference from all other taxed countries, in which Trump calls for the end of a legal case against former President Jair Bolsonaro.

Sung hopes more companies will seek legal action in the US to avoid the tariff hikes against Brazil. He mentions the case of Johanna Foods, an American orange juice importer, which filed a lawsuit last week .

"This will be a trend from now on. More companies, from different sectors, will seek justice," he says.