A flood of electric and hybrid cars imported from China has prompted the association of Brazilian automobile manufacturers to call on the government to restore the 35-percent tariff slashed last year, reports Brazilian economic and finance outlet Istoé Dinheiro.
In a statement, the National Association of Automotive Vehicle Manufacturers (known by the Portuguese acronym Anfavea) argues that the tariff increase is needed to “avoid a foreign trade imbalance that could further effect production, investments and jobs in the Brazilian automotive chain.” Anfavea has been warning the Brazilian government since last year, prompted by sharp cuts made last July, reducing tariffs on electric vehicles (18 percent), plug-in hybrids (20 percent) and other hybrids (25 percent).
“No country in the world with an automotive industry has such low barriers to import,” Anfavea warns, noting that the discrepancy between Brazil and other major automotive markets like the US, Canada and Europe has led Chinese manufacturers to redirect their sales, flooding the Brazilian market.
Brazil is the sixth-largest car market in the world and such relatively low tariffs, Anfavea argues, make Brazil an “easy target.” Even the requested increase to 35 percent would put the country well behind the European Union, which has a 48-percent tariff on Chinese electric cars, while in the US and Canada tariffs on these vehicles can be as high as 100 percent.
[See more: Chinese new energy vehicle manufacturers zero in on Brazil]
Anfavea argues that the flood of imports is destabilising the automotive industry – only recently recovered from a decade of economic crises and the Covid-19 pandemic – and discourages manufacturers from investing, particularly in development and production of electric vehicles, which is the main target of 180 billion reais (US$31.27 billion) in investments announced last year. “Without a healthy trade balance, this industry, which generates over 1.3 million jobs in the country, will be under serious threat,” the association warns.
While Chinese car companies are a serious concern when it comes to imports, the association welcomes investments from automotive giants like BYD and Great Wall Motor in developing manufacturing in Brazil. If anything, they argue, maintaining such low tariffs will only serve to delay those investments – and the jobs they bring to Brazil.
The new BYD factory, purchased from Ford in 2023 and currently under construction, is expected to generate 10,000 jobs when it opens. That’s twice as many as Ford laid off with its closure of Bahia and two other plants two years ago, which in turn affected around 70,000 other jobs in the domestic supply chain.
Closures like Ford’s, which also shut its São Bernardo plant in 2019, have contributed to the weakening of the automotive sector in Brazil in recent years. BYD bringing its new energy vehicle production to Bahia would double automotive production in the state, thanks to an initial production capacity of 150,000 units – a figure that is expected to increase to 300,000 by 2028.
