Lula da Silva won Brazil’s presidential election in an unprecedented runoff held on Sunday, a result that analysts say is unlikely to bring major changes to Argentina’s commercial relationship with its largest trading partner. Argentina’s trade with Brazil is substantial. According to the Argentine Chamber of Exporters (CERA), Brazil is the country that receives the most Argentine exports, accounting for roughly 40 % of the total, especially in the automotive sector. In the first eight months of the year, shipments to Brazil grew 4.1 %, while imports fell 17.2 %. In August, Argentina exported goods and services worth US$1.099 billion to Brazil, of which US$446 million were automotive products, according to the Argentine Chamber of Commerce (Abeceb). Lácteos sales rose 27.6 % year‑on‑year and energy exports increased 80.8 %. The trade balance for the month was a deficit of US$2.216 billion. The new administration in Brazil is expected to face delays in integrating the country into global markets because of the left‑wing government’s policy agenda and the dominance of the Liberal Party in the legislature. This could slow the passage of regulatory reforms that would otherwise facilitate trade. “The entry into the Brazilian market will remain complex, as it is a closed economy with bureaucratic barriers similar to those that existed during the Kirchner era,” said former Minister of Production Dante Sica, head of Abeceb. He added that a 5 % depreciation of the real would make Argentine products less competitive in Brazil, as imports would become more expensive. “The volume of trade could multiply if access were simpler,” Sica said. Ricardo Diab, president of the Argentine Confederation of Medium‑Sized Enterprises (CAME), warned that the current situation would not change without a significant improvement in diplomatic relations. “Even with the current tariffs and other border issues, small and medium enterprises still face difficulties in placing their goods in Brazil,” Diab said. He added that the only way to see a real shift would be through deep bilateral reforms or a more fully functioning Mercosur. Marcelo Elizondo, director of International Business Development at DNI, noted that the commercial relationship has not deteriorated significantly despite the tense rhetoric between Milei and Lula. “We export more to Brazil than to any other country, mainly industrial goods, and it is the fifth largest foreign direct investor in Argentina,” Elizondo said. He emphasized the need to work toward a more flexible and open Mercosur. Economist Federico Poli highlighted the importance of monitoring Lula’s fiscal program. “A persistent fiscal deficit and high interest rates could undermine the profitability of firms, investment, and consumption,” Poli said. “It is essential to calibrate how to adjust the economy without harming demand for Argentine products.” Overall, experts predict that Lula’s fourth term will not dramatically alter the historical commercial ties between Brazil and Argentina, though a modest decline in bilateral trade could occur if the real depreciates and if political tensions between the two presidents continue.
Article source: Clarin Digital | Image credit: Clarin Digital