Tariffs, tariffs, tariffs...

CAUSE: The reciprocal tariffs that the United States will implement starting April 2nd have created uncertainty in global markets, as they could increase import and export costs, affecting strategic sectors of the economy. The inflationary risk driven by rising prices is worrying investors, who have adopted a more cautious stance, increasing financial volatility. In the U.S., the Personal Consumption Expenditures (PCE) Price Index coming in above expectations reinforces doubts about interest rate cuts, while the dollar remains strong, reflecting global instability and fiscal concerns in Brazil. The market remains attentive to new economic data and decisions from authorities to assess the impacts of this trade policy.

CONSEQUENCE: The U.S. trade war could have significant consequences—and already has—for Brazilian assets, especially regarding exchange rates. Risk aversion tends to strengthen the dollar, putting pressure on the real and making imports more expensive, which could drive up inflation in Brazil. Furthermore, instability in global markets may reduce the flow of foreign investment into the country, making it more difficult to finance the current account deficit. This scenario also impacts the Central Bank, which may be forced to intervene in the foreign exchange market to curb volatility, complicating the conduct of monetary policy and affecting economic growth expectations. In other words, looking at this uncertain environment, even the Focus projections have remained well-behaved in recent releases.

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