Brazil's economy Ministry announced recently that the Brazilian government has officially reduced 11 import tariffs to ease the impact of the country's high inflation on production and life. The measures took effect on May and will last until December 31 this year.

Products to be removed include frozen boneless beef, chicken, wheat flour, wheat, biscuits, bakery products and confectionery, sulphuric acid and corn kernels. In addition, the import tariff for BOTH CA and CA60 rebar steel was reduced from 10.8 percent to 4 percent, while that for mancozeb (fungicide) was reduced from 12.6 percent to 4 percent.

Brazil's economy ministry said the tariffs will be lifted on goods that affect daily production and consumption. The move is aimed at curbing inflationary pressure in the country's market by lowering prices at the supply end.

However, some experts pointed out that the Brazilian government has taken measures to reduce import tariffs to curb inflation, the effect may be ineffective.

Brazil's inflation rate hit 1.06% in April 2022, the highest for the same period since 1996, according to data released by the National Geographic Statistics Agency. Brazil's cumulative inflation rate over the past 12 months has reached 12.13 per cent.

Jose Augusto de Castro, president of the Brazilian Foreign Trade Association (AEB), said the Brazilian government's decision to cut tariffs would have no real impact on the price of imported products.

As a result, the price of imported goods rose by an average of 34% in April, making imported goods more expensive. In this case, no one will import more expensive products as a result of the reduction of tariffs on individual products.

Brazilian economists believe that the return of the US interest rate hike cycle will bring more severe challenges to Brazil's capital market, local currency exchange rate and monetary policy and other emerging economies will also face more financial risks.

Brazil's central bank began its rate hike cycle in March 2021, when rates stood at just 2%. In just over a year, the central bank's monetary policy committee raised interest rates by 10.75 percentage points in 10 meetings.

Local media pointed out that despite successive increases in benchmark interest rates, inflation in Brazil showed no signs of falling. Xia believes the impact of the devaluation of the real will ripple through the manufacturing sector, making end goods more expensive and hitting the purchasing power of middle and lower income groups.

Brazil is China's largest trading partner in Latin America and the Caribbean and trade between China and Brazil has grown rapidly in recent years.

In 2021, Bilateral trade between Brazil and China reached us $138.1 billion, up 30.9 percent year on year. Among them, Brazilian exports to China reached US $89.75 billion, up 28 percent year on year. Imports reached 48.34 billion US dollars, up 36.7 percent year on year.

This year, Brazil continued to import more. Brazil's imports reached us $20.754 billion in April, up 35.7% from a year earlier, according to data released by the Secretariat for Foreign Trade (Secex) of the Brazilian Ministry of Economy. Among them, agricultural imports increased by 33 percent, extractive industries by 58.1 percent and manufacturing by 35.5 percent.

It can be seen that the Brazilian market still has a great potential for development. However, we need to remind you that there are still certain risks in the Brazilian market at present. Please pay attention to them.