In a gesture to Brazil’s economy, the Trump administration said Thursday it would sign a new trade deal with South America’s biggest country early next year.
The agreement — which the administration said represents “the largest bilateral trade partnership in the Western Hemisphere” — will eliminate nearly a dozen different bilateral trade measures.
President Trump and Brazilian President Michel Temer are expected to sign the agreement during a state visit to the United States in January.
The new trade agreement includes “highly significant” tariff reductions, said Deputy Secretary of State John Sullivan in a phone interview Thursday.
As part of the agreement, the two countries will eliminate tariffs on 1,000 items — from machinery to sugar. The remaining tariffs will be cut by as much as three-quarters.
And while the United States will still charge tariffs on certain other items, such as vehicles and agriculture, under the new agreement they’ll begin to drop much more quickly than before.
The tariffs will have an annual benefit of $21 billion to American businesses, said Sullivan.
At one point, Brazil’s tariff level on motorcycles or 3 percent seemed insurmountable. But as the negotiations progress, “I think we’ve made really significant progress there,” Sullivan said.
Sullivan said there’s no connection between the new trade deal and a personal relationship between Trump and Temer, a longtime senator who became the country’s president in 2016.
Temer has spent the past three years in office attempting to heal a political scandal that led to the impeachment of his predecessor, Dilma Rousseff. The nation’s latest investment rate this week showed just how bad things have gotten: President Temer is facing dire credit rating downgrades.
“A very important business person in Brazil” who knows “every minister in the government of Brazil,” Sullivan said he and Trump have “mutually benefited” during the negotiation process.
Both sides, for instance, have agreed to push for reforms to the country’s labor laws, both on a domestic level and also in the United States.
Sullivan said that in the first five months of Trump’s presidency, the United States saw the largest annual growth in exports from Brazil of any country except China.