According to informed sources, the Brazilian federal government has been planning new markets to address the situation where agricultural exports to the United States will cease after the 50% tariff takes effect on August 1st. This effort primarily involves exploring new markets and expanding trade with existing export destinations.

As per Zhongjin's understanding, the Brazilian Ministry of Agriculture, Foreign Ministry, and Ministry of Development, Industry, Trade, and Services are conducting destination assessments, with a focus on markets in the Middle East and Asia.

The initial focus is on industries most affected by the 50% tariff and with significant ties to the North American market, such as orange juice, coffee, beef, fruits, and seafood. The government is coordinating strategies with the private sector, particularly prioritizing which markets to focus on in bilateral negotiations.

Agricultural attachés at foreign embassies have been instructed to seek importers. Additionally, chambers of commerce have been in contact with the government, recommending potential export destinations for Brazilian products, such as Arab countries.

The preliminary overview submitted by the Brazilian Ministry of Agriculture to entities representing exporters in the industry includes completing negotiations for market access, meat processing plant certifications, and discussions on reducing tariffs for certain products. An individual monitoring the negotiations stated: "All options are being considered to minimize the impact on trade with the United States. The first step is to identify which industries will not be able to sell products to the US due to the 50% tariff and actively seek opportunities."

Minister Carlos Favaro of the Ministry of Agriculture has recommended strengthening talks with counterparts in other countries, expediting high-level discussions with importers, and initiating any ongoing negotiations.

Possible scenarios mentioned include opening markets for Brazilian beef in Japan, Turkey, and South Korea, with negotiations already underway. Negotiations with Japan have progressed smoothly, with Japan completing a national health system audit and expected to approve Brazilian beef by November. Additionally, negotiations are ongoing to expand the quantity of meat processing facilities exporting Brazilian beef to Indonesia, Vietnam, and Mexico. At least 50 factories have submitted export applications to these three destinations, with final approvals dependent on the health departments of each importing country.

Industry representatives endorse the government's strategy of diversifying markets, but in private conversations with government officials, exporters have indicated that the short-term impacts of these measures are limited. An exporter who preferred to remain anonymous stated that these negotiations are lengthy and in some cases involve unresolved technical issues.

Exporters are particularly concerned about goods already produced for the US, which are currently stuck in ports, on the high seas, or awaiting distribution. An industry leader noted that the domestic market may not be able to immediately absorb all of these goods, potentially leading to price declines. This individual also emphasized the long-term importance of diversifying export destinations.

Exporters are even hoping for differentiated treatment for goods shipped from ports or already en route to the US, requesting consideration for the shipment date of products after August 1st when the 50% tax rate applies.

Minister Carlos Favaro has emphasized that under the current government's leadership since January 2023, Brazilian agricultural products have gained access to 397 new markets. He advocates for the proactive development of new markets by the Ministry of Agriculture. He has also publicly acknowledged that despite the strategy of exploring new markets, it is not feasible to address all agricultural products sold to the US within 10 to 15 days.

In 2024, the United States was the third-largest destination for Brazilian agricultural exports, with a total export value of $12.1 billion, maintaining this position in the first half of this year as well. From January to June this year, Brazilian agricultural enterprises exported a total of $6.63 billion to the US, accounting for 8% of the industry's total exports in the first half of the year.

Among these, timber products ($1.762 billion, 26.6%), coffee ($1.063 billion, 19.54%), meat ($1.063 billion, 16%), and fruit juice ($743 million, 11.21%) are the main products of Brazilian agricultural exports to the North American market.

The Brazilian Confederation of Agriculture and Livestock (CNA) estimates that if the US government proceeds with its plan to impose a 50% tariff on Brazilian products, Brazilian agricultural exports to the US could suffer a loss of $5.8 billion.