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* U.S. says "protectionist" Brazil policy hurting trade
* Brazil defends "WTO-consistent" response to Fed policy
* Monetary expansion has "distorted" FX rates, says Brazil
By Doug Palmer and Brad Haynes
WASHINGTON/SAO PAULO, Sept 20 (Reuters) - U.S. Trade Representative Ron Kirk urged Brazil to reconsider plans for tariff increases, prompting a stinging rebuke of American monetary policy that has "distorted" global exchange rates.
The spat drew attention to growing trade barriers in the world's No. 6 economy as it struggles to emerge from a year of disappointing growth and highlighted Brazil's sensitivity to the latest aggressive stimulus by the U.S. Federal Reserve.
In a letter to Brazil's foreign minister, Kirk expressed "in strong and clear terms" the U.S. concerns about plans to raise import tariffs on 100 foreign products, warning that they could spark retaliation from trade partners.
Foreign Minister Antonio de Aguiar Patriota replied in a letter on Thursday that the currency effects of U.S. monetary stimulus had forced Brazil to confront "a flood of imported goods at artificially low prices."
Brazilian Foreign Ministry spokesman Tovar Nunes said, "The form in which the statement came was inadequate and its content lacked foundation in fact."
According to Brazil's foreign ministry, all of the country's recent tariff increases are permitted under World Trade Organization rules. The most recent round of tariff hikes covers industrial sectors such as steel, petrochemicals, pharmaceuticals and capital goods. Tariffs on some items were raised by as much as 25 percentage points above previous rates.
Brazil's finance minister Guido Mantega also spoke about it:
Brazil defends tariffs hike considered as protectionism by US
Brazilian Finance Minister Guido Mantega defended Friday his country's recent plans to raise import taxes, a move considered as protectionism by the US.
In a letter to the Brazilian government on Wednesday, the United States asked the Latin American country to reconsider its decision to increase import taxes on 100 foreign products and termed the measure as protectionism.
Brazil reportedly considered the US letter as disrespectful and incoherent with the two countries' trade relations, and was preparing an official reply.
Responding to the letter, the finance minister said "This is absurd, as the US took much more protectionist measures than Brazil. Besides direct protectionist measures, there is also the quantitative easing in US, which is a way to reduce the dollar's value. One of its goals is to increase the US exports," the minister said.
He reaffirmed that the Brazilian government would continue to take actions against the excessive appreciation of the Brazilian Real against the US dollar.
Mr Mantega is correct. QE or money printing is an attempt to devalue currency and stimulate exports. Raising tariffs is simply leveling the playing field. Brazil's currency is not pegged to the dollar and they have to have a way to protect themselves from predators like the US
Doesn't the U.S have high tariffs on imported ethanol, mostly from Brasil?
We crap all over their citrus as well.
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