‘Neither work with the hypothesis of not solving the tariff,’ says Haddad

In an exclusive interview with Estadão, the Minister of Finance, evaluates that there will be negotiation on the tariff before the deadline determined by the President of the Donald Trump, for the measure to come into force on 1st August. For the minister, the 50% rate imposed by the Republican “makes no economic sense” to the United States. “What is the sense of taxing juice, coffee, meat? These are things that will make the American breakfast,” Haddad said. The Minister of Finance avoided estimating impacts on the Brazilian economy of the measure and new investigations initiated by the US government, which cite topics such as deforestation, piracy and even Pix. “The United States should be copying Pix. You don’t bother with cryptocurrency and will be bothered by Pix? What is the meaning of it?” He asked.

About the economic agenda and the relationship with the Fernando Haddad wants the mayor, Hugo Motta (Republicans-PB), embrace the bill exempting from income tax (IR) who receives up to $ 5,000 as if it were “the reform to call his own.” Motta has said, in turn, that he would like to approve the administrative reform and have already ordered a proposal to the legislature to be processed. The last presidents of the House led, each in turn, important economic reforms. Under Rodrigo Maia, the Labor and Social Security reform were approved. Already Arthur Lira (PP-AL) approved the tax reform. “The biggest renovation he can call” mine “, in his case, is the reform of income,” said the Minister of Finance.

Next, the main excerpts of the interview.

1. The US announced a commercial investigation of several fronts in the Brazilian economy, including the Pix. They even mentioned 25 de Março Street…

It must have been because of me, I worked 18 years there (on March 25)…

2. How will the government react to this investigation now that there are new elements beyond the promise of taxing 50%?

We are looking for rationality, what is, in fact, behind this initiative. Because, for example, we, in May, present a negotiation proposal (at the tax then 10%) without even a response to the proposal Brazil made, came the taxation of 50%. There were ten meetings. I don’t think I have mine I had with the United States Treasury Secretary Scott) Bessent in California. And he himself, at the meeting he had with me, said he would negotiate the 10%rate, in the face of my provocation that it made no sense to target a deficient country in relation to the trade of goods and services with the United States. He said there is room for an understanding, for a negotiation. If with 10% there was room for a negotiation, what are we talking about? What can pix disturb?

3. Credit card companies?

But let’s suppose it is. Will you give up an instrument that was developed with Brazilian technology, which will cheapen the financial transactions? The United States should be copying the pix. Pix can be exported as a technology that will make people’s lives easier. Don’t you bother with cryptocurrency and will be bothered by Pix? What is the meaning of this? It is difficult to understand. Is it just a lobby of credit card companies? Is that what we are talking about? This is not clear to us. The question of deforestation? President Trump expresses support and admiration to former president (Jair) Bolsonaro, who was largely responsible for increasing deforestation. We are reversing deforestation. Will this country be penalized? What is the meaning of this? It is difficult to understand.

4. But if mr. It says there is no economic rationality, what’s behind the decision?

They are realizing a vulnerability of Brazil due to the fact that it has a political force, which is the extreme right right, competing for US interests; They are taking advantage of this opportunity. (They must be thinking, “When are we going to come across this same situation in the future? Of a political force, which has political capital, being defending our American interests. It’s a golden opportunity for us to put Brazil in a difficult situation.”

5. In the implementation of the reciprocity law, a group was created and the farm was responsible for analyzing the impacts of Trump government measures. Mr. Do you already have the impacts of 50% tariffs on the importation of Brazilian products?

We have this deadline (until 1st of August), which has to be used with great wisdom. President Lula does not want a thin, it is not the style of the president. He wants to deal with due seriousness the same way he wants to be respected as head of state, he also respects the sovereignty of another country. But we have to use this time to find the path of overcoming a traumatic thing.

6. What is the potential for damage that taxation can have about Brazilian economy?

At this point, I don’t even work with the hypothesis that we don’t get over this business, because it will disturb their economy. You have a way to produce today completely different, the chains today are much more fragmented. Thinks about the production of an Embraer airplane: 45% of the components come from the United States. And most of the planes are sold in the United States. Orange juice is packed there in the United States. So there will be a factory stopped there for lack of juice from here. And what is the sense of taxing juice, coffee, meat? These are things that will cost the American breakfast. So, you see how this does not make much sense, from an economic point of view.

7. Is the deadline until August is sufficient or can it be extended?

Most entrepreneurs we talk to say the deadline is good, but it doesn’t solve, because the contracts are being closed. If you prolong this too much, you will lose a lot of business while things are not determined. How will anyone buy something from Brazil without knowing the fare that will focus on the acquired good? It is getting difficult to do business. Ideally, there is a quick task force, put the points, look at what you are taking, what we can do so that we can get out of this situation as soon as possible. President Lula’s determination is that we have a map of everything quickly and that this dialogue will happen on national bases so that Brazil does not suffer.

8. Trump said he will tax Brazil by 50% “because I can” apparently, there is a very strong political component. How will Brazil negotiate in this political field?

I believe the Brazilian far right itself will realize that this is a shot in the foot. We have seen war movies. A soldier sacrificing himself for a country is routine. But a soldier sacrificing his country on his own is something that will give a TV series. It is not possible such a thing. Are we going to sacrifice Brazil because of Bolsonaro? He who should be sacrificing himself in Brazil. We are in an inversion of values so great that it worries the degree of lack of notion of this family of evil, which it is doing for the country. It is a family that is all articulated around itself and does not have a word from any member for the benefit of the country. There are many jobs that can be affected by a complete reversal of values. It is a country being sacrificed by a soldier.

9. Former President Bolsonaro has been wanting to put himself as an interlocutor in this case to resolve the issue. Or his son, Eduardo Bolsonaro, who is in the United States. What do you think of this?

But they produced the situation. Now there is a palace of Itamaraty, with all Brazilian diplomacy working on it. The worst thing that can happen is that we divide. Are you going to open two trading tables?

10. Mr. Are you referring to the governor of Sao Paulo, Tarcísio de Freitas?

No, to anyone. Will you have two negotiation tables representing Brazil? Do it through the institutional channels. And add forces, not divide. And who will make a proposal on behalf of Brazil? Which of the 27 governors? Isn’t we better to have a centrality in negotiations? Also because the interest is the same, suppose, which is to help the affected economic sectors. So it makes no sense by opening a negotiating table. One with Tarcisio, one with the governor of Rio, one with the governor of Minas.

What mr. Did you think Governor Tarcisio came out in defense of former President Bolsonaro?

I expressed myself about it. I consider his position very strange and I repeat: a person who has the claims he seems to have cannot behave like a vassal from another country, as if it were a servant from another country. This is unworthy. And he received, as far as I read, the proper treatment of various editorials rebuking this abject behavior, which does not compete for the solution of the problem.

11. Regarding US commercial investigation into Brazil, announced on Tuesday, some points were listed. How will the government go to the point by point?

That’s what we are doing. With each manifestation of the United States, our response has been of clarification. Now, it’s strange, right? A president of a country want to tax the pix from another country? In addition to taxing exports, will it tax the pix? Because it will make the costs of financial transaction in Brazil cost.

12. Now about tax issues in Brazil. In addition to the IR and IOF measures that mr. Evaluates that they are to close loopholes, as in private pension, is there any more measure of tax justice that we can expect?

Provisional Measure 1303 (which compensates for the decree of IOF). The special commission was installed, and what does it have there? Bets spent four years during the Bolsonaro government, without paying any tax, as if they were a philanthropic entity. The calculations here of the revenue are that the Bolsonaro government has given up R $ 40 billion in four years of Bets’s collection.

13. Do you have other measures, minister, in this tax justice, in addition to what is already on the table?

No.

14. Mr. Already said that it misses discussing and reviewing more structural issues such as the health and education floor, even by the way the Brazilian budget is cast. Still has space?

You are moving with two very sensitive areas, which have very urgent demands, especially the health that is sub -financed – remembering that we have a universal system. There is so much that it needs to be revised immediately that we are negotiating is Deputy Pedro Paulo (PSD-RJ) negotiating with (Minister of Management) Esther Dweck on the issue of administrative reform. It has a series of remedies, programs that have an explosive career trajectory, which has had a recent decision now from the National Council of Justice disciplining the matter. So all this has to be done. We, with the support of the PT and everything, we review the policy of valorization of the minimum wage, keeping real gains above inflation, therefore, as well as the salary advance.

15. But mr. Do you think this is sufficient to discuss budget mousse? Why not discuss the health and education correction rate to fit the tax framework? Does the framework stand without this debate?

He stands, but you see: when you can’t approve the easiest, what is the expectation of approving the hardest? We are not able to approve the easiest. We have to have a frank conversation, because I depend on vote. It’s no use sending something there (Congress) to be well regarding Faria Lima and not know how things will be processed. The farm never argued to discuss anything. It was said that administrative reform was going to save Brazil; There is Deputy Pedro Paulo, will present the proposal. Let’s see.

16. On another front, also dealing with the tax issue, the mayor, Hugo Motta, has defended administrative reform as if he wanted a reform to call his own.

The biggest renovation he can call “mine”, in his case, is the reform of income. Do you imagine being the president of the House of Representatives who sponsored the approval of a historical measure, which was never attempted by any government? I, in his place, would embrace this cause.

*With information from Estadão Content