For the sixth consecutive month since the Trump administration’s tariff increase, Brazilian exports to the United States have fallen. Sales to China, however, continued to rise, according to data released on Thursday (Feb. 5) in Brasília by the Ministry of Development, Industry, Trade and Services.

In January, sales to the United States totaled USD 2.4 billion, a 25.5 percent decrease compared to USD 3.22 billion in the same month of 2025. Imports of US products fell 10.9 percent to USD 3.07 billion, resulting in a USD 670 million bilateral trade deficit for Brazil.

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This was the sixth consecutive decline in Brazilian sales to the US since the imposition of the 50 percent surcharge applied by the Donald Trump administration to Brazilian products in mid-2025. Although the tariff was partially revised at the end of last year, the ministry estimates that 22 percent of Brazilian exports are still subject to the extra rates, which vary between 40 percent and 50 percent.

In contrast to the United States, Brazil recorded positive results with China. Brazilian exports to the Asian country grew 17.4 percent in January, totaling USD 6.47 billion, compared to USD 5.51 billion a year earlier. Imports fell 4.9 percent to USD 5.75 billion, ensuring a surplus of USD 720 million for Brazil in the month.

Trade flow

China and the US are Brazil’s main trading partners. The trade flow - the sum of imports and exports - reached USD 12.23 billion, a 5.7 percent increase with China. Trade with the United States totaled USD 5.47 billion, an 18 percent decrease, reflecting reductions in both exports and imports.

The Brazilian trade balance registered the second-highest surplus for the month of January since records began in 1989, benefiting from a drop in imports, the Ministry of Development, Industry, Trade and Services (MDIC) announced on Thursday (Feb. 5). Last month, exports exceeded imports by USD 4.342 billion, an increase of 85.8 percent compared to the surplus of USD 2.337 billion in the same month of 2025.

The January trade balance result is surpassed only by 2024, when the surplus reached USD 6.196 billion.

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The value of exports and imports:
Exports: USD 25.153 billion, a 1 percent decrease compared to January last year;
Imports: USD 20.810 billion, a 9.8 percent decrease in the same period.

The value of exports is the third highest for the month of January since records began in 1989, surpassed only by January 2024 and 2025. Imports registered the second-highest January on record, surpassed only by the same month last year.

Sectors

In the distribution by economic sectors, exports in January varied as follows:

• Agriculture: 2.1 percent, with a 3.4 percent decrease in volume and a 5.3 percent increase in average price;
• Extractive industry: minus 3.4 percent, with a 6.2 percent increase in volume and a 9.1 percent decrease in average price;
• Manufacturing industry: minus 0.5 percent, with a 0.6 percent decrease in volume and a 0.1 percent decrease in average price.

The high Selic rate - the economy’s basic interest rate - was the main reason for industrial stagnation in Brazil at the end of 2025, the National Confederation of Industry (CNI) said, commenting on the Monthly Industrial Survey released Tuesday (Feb. 3) by the Brazilian statistics agency IBGE.

According to the entity, the cycle of high interest rates, currently at 15 percent per year, has made credit more expensive and dampened consumer appetite. The situation has been worsened by weak domestic demand and rising imports, which captured a significant share of the Brazilian market, the CNI argues.

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Mário Sérgio Telles, Director of Economics at CNI, described the damage caused by interest rates as “enormous.”

“The punitive level of the Selic rate has made credit more expensive for the productive sector, holding back investments, and has reduced consumer appetite for industrial products. The damage caused by high interest rates is enormous. In 2024, with a lower Selic rate, domestic demand for manufacturing goods grew four times faster than the demand recorded up to November 2025,” Telles emphasized in a statement.

This weakening, the CNI director highlighted, led to higher-than-planned inventories and a 0.2 percent decline in manufacturing output, which involves converting raw materials into consumer goods.

The confederation’s analysis also warns of external pressure: purchases of consumer goods abroad jumped 15.6 percent last year. While national industry slowed, imported products filled the gaps, hindering any attempt at recovery by local businesses throughout both semesters of 2025.

Decline in confidence

This combined effect severely impacted the Industrial Entrepreneur Confidence Index (ICEI), released at the end of January, which recorded its worst January performance in ten years. With the indicator below 50 points - the threshold separating optimism from pessimism - for 13 consecutive months, the National Confederation of Industry diagnoses a persistent lack of confidence, which is paralyzing essential investments in the modernization and expansion of Brazilian factories.

According to CNI, without a change in interest rate policy and measures to stimulate domestic demand, this year’s growth is at risk. The organization warns that continued productive inertia and weak hiring intentions could harm not only the manufacturing industry but the performance of the entire national economy in the short term.

The IBGE survey confirmed the sector’s loss of momentum. Industrial production ended 2025 with growth of just 0.6 percent, a modest result compared with the 3.1 percent expansion recorded in 2024. The official survey notes that the slowdown intensified in the second half of the year, coinciding with monetary tightening.

Pressured by high interest rates and a slowing economy, the creation of formal jobs fell in Brazil in 2025. Data released by the General Registry of Employed and Unemployed (Caged), under the Ministry of Labor and Employment, indicate that 1,279,498 formal jobs were created last year.

The indicator measures the difference between hires and layoffs. The balance is 23.73 percent lower than in 2024, when the country created 1,677,575 jobs. The data include adjustments, as the Ministry of Labor registers declarations submitted late by employers and corrects figures from previous months.

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In December alone, a month traditionally marked by layoffs, 618,164 jobs were eliminated, 11.29 percent more than in the same month of 2024. In December of the previous year, 555,430 jobs had been lost.

Sectors

Even with the drop in December, all five sectors surveyed created formal jobs in 2025.

• Services: 758,355 jobs;

• Commerce: 247,097;

• Industry (manufacturing, extraction, and other types): 144,319;

• Construction: 87,878;

• Agriculture: 41,870.

After ending 2025 above BRL 8.6 trillion and at a record level, Brazil’s federal public debt is expected to reach between BRL 9.3 trillion and BRL 10.3 trillion by the end of this year. The figures were released this Wednesday (Jan. 28) by the National Treasury, which presented the targets of the Annual Financing Plan for public debt for 2026.

As in the previous year, the government created room to reduce the share of fixed-rate bonds - whose interest rates are defined in advance - and increase the participation of bonds indexed to the Selic rate, the economy’s benchmark interest rate. This strategy would help attract investors to Selic-linked bonds, as the Selic is at its highest level in almost two years.

Composition

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According to the document, public debt is expected to end 2026 with the following composition:

• Selic-linked bonds: 46 percent to 50 percent, currently at 48.3 percent;
• Inflation-indexed bonds: 23 percent to 27 percent, currently at 25.9 percent;
• Fixed-rate bonds: 21 percent to 25 percent, currently at 22 percent;
• Exchange rate-linked bonds: 3 percent to 7 percent, currently at 3.8 percent.

These figures do not take into account the Central Bank’s dollar buying and selling operations in the futures market, which affect the results.

Bonds indexed to floating rates increase the risk of public debt because the Selic rate puts more pressure on government debt when basic interest rates rise. When the Central Bank adjusts the rate, the portion of domestic debt indexed to the Selic increases immediately.

In theory, fixed-rate bonds offer more predictability because their interest rates are defined at the time of issuance and do not vary over time. As a result, the Treasury knows exactly how much interest it will pay at maturity, when investors are reimbursed. However, fixed-rate bonds tend to carry higher rates than the Selic rate and can increase the cost of public debt during periods of economic instability.

Reserves

According to the Treasury, the government has two safety mechanisms to guarantee its financing capacity in the event of an economic crisis that prevents the Treasury from issuing bonds in the market. First, the government has sufficient international reserves to cover the maturities of external public debt in 2026, totaling BRL 33.3 billion. In addition, it has a buffer of BRL 1.187 trillion, enough to cover 7.33 months of maturities of domestic public debt.

Through public debt, the National Treasury issues bonds and borrows money from investors to meet its obligations. In return, the government commits to repaying the funds with an adjustment, which may follow the Selic rate, inflation, the exchange rate, or be pre-fixed and defined in advance.

Despite the decline in inflation and the dollar, Brazil’s Central Bank left interest rates unchanged. The Monetary Policy Committee (Copom) unanimously maintained the Selic rate, the economy’s basic interest rate, at 15 percent per year.

This is the fifth consecutive meeting at which Copom has maintained the basic interest rate. The rate is at its highest level since July 2006, when it stood at 15.25 percent per year.

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In its statement, Copom signaled that it may begin to reduce interest rates at the March meeting, provided inflation remains under control and there are no surprises in the economic scenario.

“The Committee anticipates that, if the expected scenario is confirmed, it will begin easing monetary policy at its next meeting, but reiterates that it will maintain the appropriate restraint to ensure inflation converges to the target,” the Central Bank stated.

The Selic rate reached 15 percent per year at the June meeting last year and has remained at that level since.

Inflation

The Selic rate is the Central Bank’s main tool for curbing Brazil’s official inflation, as gauged by broad consumer price index IPCA. In 2025, the indicator stood at 4.26 percent, the lowest annual level since 2018. With this result, it returned to within the ceiling of the continuous inflation target.

Under the new continuous target system, in effect since January, the inflation target pursued by the Central Bank and defined by the National Monetary Council is 3 percent, with a tolerance range of 1.5 percentage points above or below. In other words, the lower limit is 1.5 percent and the upper limit is 4.5 percent.

In the continuous inflation targeting model, the target is calculated month by month, taking into account inflation built up over 12 months. In January 2026, inflation since February 2025 is compared with the target and the tolerance range. In February 2026, the procedure is repeated, with calculations starting in March 2025. In this way, the verification shifts over time and is no longer restricted to the December index of each year.