In recent days, the government has increased taxes, including smartphones, cameras, machinery and industrial equipment, with rates that can reach 25%. The Minister of Finance, Fernando Haddad, said that the measure is regulatory in nature and will not have an impact on prices, as the majority of these products are already produced in Brazil.
At the same time, the economic team incorporated an increase of R$14 billion in revenue resulting from the change into the Budget. The contradiction is evident, but the problem goes beyond it: the measure cannot be sustained as an industrial policy, distributive policy or revenue strategy.
A tariff protects the national industry by making imported products more expensive and works like this: suppose electronic equipment costs R$2,000 abroad. With a 20% rate, the government charges R$400 in tax upon entry, and this cost does not disappear. Marchand (2012), when studying trade liberalization in India, estimated that 64% to 68% of this tax increase is passed on to the final consumer in urban areas. Using this percentage as a reference, of the R$400 in tax, around R$250 ends up in the price that the consumer pays, so that equipment that would cost R$2,000 now costs between R$2,250.
With more expensive imports, the national product is cheaper in comparison, and the consumer tends to buy it. It is this relative increase in price that protects the local industry, and without it there is no protection. To say that the measure protects the industry, but does not change prices, is to assume that a tariff can work without doing what tariffs do.
And who absorbs this increase? According to the Family Budget Survey, by IBGE (Brazilian Institute of Geography and Statistics), lower-income families allocate a proportionally larger portion of their budget to the consumption of durable and semi-durable goods. When the price of a computer or cell phone increases by a few hundred reais, the impact is greater on tight budgets. High-income families can postpone the purchase, purchase abroad within the permitted quotas or absorb the increase without compromising a relevant portion of their income.
It is worth noting that the list of products charged in this round is not limited to final goods: CPUs, GPUs, memories and components are productive capital used by data centers, technology companies, audiovisual producers and digital services. By making them more expensive, the policy increases costs throughout the chain and reduces the incentive to incorporate technology, precisely when the official discourse talks about digitalization. Brazil is already poorly integrated into global value chains. Economies that advanced in the global chain facilitated access to technological inputs, which increased productivity. Therefore, increasing tariffs on these inputs goes in the opposite direction.
Dix-Carneiro, Goldberg, Meghir and Ulyssea (2026) calibrated a model for Brazil. They estimated that a 33% reduction in trade costs would generate a real income gain of 24% through the reallocation of capital and labor to more productive sectors. In other words, fewer barriers allow resources to migrate to where they add more value. Brazil has already tried the opposite path for decades: it protected sectors with diffuse tariffs under the argument of strengthening national industry. The result was low external integration, stagnant productivity and few competitive exporting companies.
Whatever the declared objective —increasing the competitiveness of national industry, making Brazil more integrated or raising revenue—, this is not the way. In practice, the measure makes products more expensive for those who already earn little and forces choices that should not exist. A family that needs a computer for their child to study or work will pay a few hundred reais more or forego the purchase and end up with outdated equipment. A small technology company that depends on imported components to provide services will have to choose between passing on the cost to the customer, losing margin or simply not expanding. All this in exchange for protecting companies that cannot compete without barriers.
What remains of the government’s contradictory speech are poorer people, less competitive companies and a country that
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