How tariffs and technology are reshaping Brazil’s economy from the inside out

Brazil’s economy doesn’t often make headlines. But the story gets more interesting day by day.

Facing pressure from powerful forces abroad and profound shifts at home, the country is charting a course that could redefine its future.

Trade tensions with the United States, changing work patterns fueled by technology, and bold political choices are rewriting the rules. What unfolds next will not just shape Brazil’s growth but also influence global trade and labor models.

How deep is Brazil’s economic slowdown?

The 0.74% drop in Brazil’s economic activity index in May seemed shocking. Analysts expected nearly no change. Yet the annual figure still showed 3.16% growth compared to May 2024.

The Central Bank raised its benchmark interest rate, the Selic, to 15% in June, the highest in two decades. The goal is to fight inflation, which remains stubbornly above the 3% target, with pressure from a strong labor market and high government spending.

High interest rates mean loans cost more, slowing business investments and consumer spending. The tight policy will likely hold until inflation cools, putting the brakes on growth.

But Brazil’s economy is not just struggling with internal factors. External shocks, especially US tariffs, add to the uncertainty.

What impact do US tariffs really have on Brazil?

President Trump’s decision to impose a 50% tariff on many Brazilian products is a headline grabber. But the real economic damage is more limited than it sounds.

The US takes just 12% of Brazil’s exports, compared to 75% for Mexico and Canada. China is Brazil’s biggest buyer, accounting for 28% of exports, nearly triple the US share.

Trump’s tariffs exclude nearly 700 products, including aircraft, energy, and orange juice. The tariffs mainly target commodities like beef and coffee. Experts expect Brazil will find other markets for these goods with only small price cuts.

Brazil’s trade volume is also less than many countries. Exports and imports make up 36% of its GDP, roughly half the level of neighbors like Mexico. This lower openness shields Brazil somewhat from trade shocks.

Still, not all regions will weather the tariffs equally. The Northeast, which exports labor-intensive goods such as fresh fruit and textiles, faces a full 50% tariff and may suffer more job losses.

The government’s ability to provide targeted support will be key to avoiding deeper damage.

Why is Brazil’s labor market shifting beneath the surface?

Brazil’s informal workforce is growing, especially in gig work. Since Uber’s arrival in 2014, many Brazilians have taken app-based jobs in delivery, ride-sharing, and domestic services.

These jobs promise flexibility but often mean unstable income and no labor protections.

Data from Brazil’s statistics agency shows 77% of app workers are under 40, and 59% are Black or Pardo, highlighting how the gig economy reinforces long-standing inequalities.

Workers face algorithmic control with no transparency, arbitrary rules, and efforts by companies to disrupt union organizing.

The pandemic exposed these vulnerabilities, as delivery workers were labeled essential but remained unprotected. Strikes in 2020 highlighted demands for better pay, equipment, and transparency.

In response, Brazil is pioneering a Digital Solidarity Economy, a model where workers own and control their platforms.

Cooperatives like Señoritas Courier and Liga Coop are creating alternatives to big tech platforms. This model focuses on democratic governance, transparency, and collective ownership of data and technology.

However, these efforts face hurdles. They lack funding compared to major corporations and struggle with organizational complexity and legal uncertainty. Without policy support, these models risk remaining marginal.

How is Lula using tariffs to strengthen Brazil’s position?

President Luiz Inácio Lula da Silva has refused to bow to US pressure linked to Bolsonaro’s trial and the tariffs. He insists on negotiating as an equal, defending Brazil’s sovereignty.

Polls show his approval rising since the tariffs, with 50.2% now backing him compared to 49.7% disapproving. Meanwhile, 63% of Brazilians hold negative views of Trump.

Lula is turning the dispute into political capital at home and pushing Brazil to reduce dependence on the US. He is courting BRICS partners and expanding ties with China, India, and Southeast Asia.

China’s foreign minister recently expressed strong support for Brazil’s sovereignty and opposition to “abusive tariffs.”

Brazil is also pursuing new trade deals, including with the European Union and Mercosur, seeking to diversify export markets and reduce vulnerability to unilateral US actions.

What does Brazil’s economic future look like?

Brazil is caught between internal and external challenges but shows resilience through diversification and innovation.

The economy’s slowdown from high rates and tariffs is real but manageable. The limited share of US trade and growing ties with China cushion the blow.

On labor, the gig economy’s growth fuels social risks but also sparks innovative collective models that could reshape work if given enough support.

Lula’s government will need to back these models with clear legal frameworks and funding.

Politically, Brazil is moving toward a more multipolar foreign policy, less reliant on the US.

This shift offers greater bargaining power but comes with the challenge of balancing relationships with powerful but sometimes competing partners.

Investors and consumers should watch Brazil not just as a country hit by tariffs or inflation, but as a nation reshaping its economy and labor market on its own terms.

The story is not just about struggle but about new forms of economic cooperation and a strategic reorientation that could shape Latin America’s future.

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