Citi Study: Left-Wing Government and China Ties Increase Brazil’s Risk Under Trump

The Citi bank’s analysis department has identified Brazil as the second most vulnerable economy in Latin America to Donald Trump’s policies. This assessment comes as Trump begins his new term as President of the United States.

The study considers factors such as government ideology and trade relations with China to rank countries’ vulnerability. Mexico tops the list as the most exposed nation to Trump’s policies.

Brazil’s high ranking stems from its left-wing government and strengthened ties with China. These factors may put Brazil at odds with Washington’s interests, potentially creating a challenging political environment.

The report notes that the new U.S. Secretary of State, Marco Rubio, has criticized left-wing governments in Latin America. This stance could pose difficulties for Brazil under Trump‘s administration.

Trump’s active, ideologically-driven approach makes countries with leftist governments and low popularity more vulnerable. Brazil’s increased economic partnership with China in recent years adds to its vulnerability.

Citi Study: Left-Wing Government and China Ties Increase Brazil’s Risk Under Trump. (Photo Internet reproduction)

The country now exports a larger share of goods to the Asian giant, which is engaged in a global hegemony dispute with the U.S. This shift in trade dynamics could further complicate Brazil’s position.

Trump’s Policies and Their Global Impact

Trump’s fiscal, immigration, and trade policies are viewed as inflationary. This outlook suggests reduced liquidity and increased pressure on emerging market interest rates.

Brazil is confronting these challenges as its benchmark interest rate approaches 15%, while inflation veers away from the central bank’s target. While some experts see potential opportunities for Brazilian products in the U.S. market, concerns remain.

Trump has threatened to impose 100% tariffs on BRICS countries if they pursue a new currency to replace the dollar. This aggressive stance, coupled with China’s industrial overcapacity, could impact Brazil on multiple fronts.

An escalation in the trade war could lead to a lose-lose scenario. Increased tariffs and retaliations may result in decreased global trade, higher inflation, and reduced economic growth. Brazil, like the rest of the world, stands to lose more than gain in this environment.