Mexico auto exports to Brazil capped to settle a trade spat

An article in the Wall Street Journal (March 16,2012) describes Mexican auto exports growing to 20% of all imports into Brazil. Recent agreements between the countries have planned an auto import limit of $1.6 billion, down from the current $2.1 billion. With cars in Brazil costing twice that in Mexico, high Brazilian currency exchange, high tax rates in Brazil, these caps will lmit the options available to consumers in Brazil. But will this agreement cause even smaller cars to be shipped to Brazil, thus increasing price pressures within Brazil? Will these caps increase the pressure for changes to Brazil’s tax structure ? How is it that imports from other Mercusor countries to Brazil have not kept pace, is it mainly a currency effect ?

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About aviyer2010

Professor
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