By Ana Mano
SAO PAULO (Reuters) -Chemical products companies in Brazil, which exported $2.4 billion to the U.S. last year, face a slew of contract cancellations as President Donald Trump has threatened a new 50% tariff on the South American nation’s exports from August 1.
Since Trump’s announcement, export orders have been canceled for certain resins and compounds used to make fertilizers, which Brazil supplies to the U.S. agriculture sector, Andre Cordeiro, head of Brazilian chemical lobby Abiquim, said on Friday.
“Fundamentally, these decisions are being made because the bet is that he will actually apply the tariff,” Cordeiro said.
One company in Brazil had all its contracts for exports to the U.S. canceled, Cordeiro said, adding that other businesses have seen some of their contracts canceled. There are also cases where sellers had secured export financing for the order, which was later revoked.
He declined to name the affected exporters.
Losses associated with the tariffs go beyond direct exports, as almost every industry uses chemicals in manufacturing processes, from oil to steel, from machinery to production of agricultural commodities, he said.
“No one produces coffee, even grains, without some kind of chemical product in the process.”
Cordeiro added that chemical companies are losing export business and also local sales to clients that export goods into the U.S. market.
Brazilian plywood exporters, for example, use chemicals for bonding and themselves have faced U.S. order cancellations, he said. Orange juice makers, which sent 42% of their exports to the U.S. last year, also use chemical preservatives.
Brazilian companies like Braskem have operations in the U.S. and could be affected.
Dow Chemical, which has 10 plants in Brazil and sizeable exports of silicon metal for processing in the U.S., is also at risk.
Braskem and Dow did not immediately comment.
Exxon Mobil, which declined to comment, operates in Brazil and serves clients in various industries.
Tariffs are unjustified because Brazil’s chemical sector runs a $7.9 billion trade deficit with the U.S., Abiquim said.
(Reporting by Ana Mano; Editing by David Gregorio)
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