Dollar Trades Higher

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On Monday, January 19th, the dollar rose by 0.16% to R$5.3809 around 9:10 am, while Brazil’s Ibovespa stock index opened at 10 am. Market sentiment reflects Brazilian economic projections, a U.S. holiday, and geopolitical developments, with investors monitoring policy and commodities signals. A report by J.P. Morgan Global Research anticipates that the U.S. will continue its increased reliance on emergency tariffs, investment controls, and sanctions in its trade policy through 2026. These measures are expanding beyond cartel activity, with export controls broadening and sanctions programs targeting new areas of commerce. The implementation of outbound investment restrictions is affecting businesses’ commercial and operational strategies. As a result, companies are strengthening their trade compliance efforts by: Improving their understanding of multilayered supply chains. Rethinking material sourcing and transportation logistics. Integrating tariff, export control, and sanctions forecasting into their budgets. Updating contracts to minimize the risk of indirect violations and to account for cost volatility and tariff exposure. Specifically assigning responsibilities for tariffs. Aligning public disclosures with material risks related to tariffs and trade.

Flexibility in trade strategy will be crucial in 2026. Brazil’s Focus report provides new projections for that year, while the J.P. Morgan report suggests that American consumers have largely borne the increased costs of tariffs. The U.S. government’s current approach to trade and investment differs significantly from that of 2017, now prioritizing domestic economic benefits over multilateral engagement through executive orders and emergency powers. If new tariffs exceed those of 2018-2019, they could significantly impact consumer prices. Research indicates that previous tariffs led to a near dollar-for-dollar increase in import prices, with a substantial portion of the cost passed on to consumers. Today’s economic situation reflects these changes, with certain categories experiencing tariff rates far exceeding earlier expectations, particularly for China.

This revised trade and investment approach is more assertive, prioritizing U.S. interests over global cooperation through a mercantilist, transactional system emphasizing economic nationalism and hard-power trade tools over soft-power diplomacy. These shifts stem from macroeconomic, policy, and geopolitical factors, increasing commercial complexity. Tariffs have elevated costs for companies, complicated tariff change prediction, and slowed decision-making. Ongoing supply chain disruptions stem from global conflicts, evolving tariff regulations, and expanded export controls. Businesses also face conflicting ESG and DEI requirements at various levels, while immigration-related workforce issues are complicated by stricter visa controls, increased enforcement, and shifting compliance expectations. Conversely, deregulation and policy support are evident in sectors like oil, gas, coal, artificial intelligence, and digital assets, while renewable energy, life sciences, and automotive-retail supply chains face increasing pressure. Legal and compliance teams operate in an environment where policy shifts can significantly alter contract rights, pricing models, investment strategies, and disclosure requirements. Organizations must stay informed about rapidly changing executive actions. Many businesses are proactively addressing these challenges by updating contracts to account for cost volatility, tariff exposure, and related risks, and aligning their public disclosures accordingly.

According to J.P. Morgan, a 10% increase in U.S. tariffs, coupled with countermeasures from Europe and China, could decrease U.S. GDP by 1%. Tariffs and trade policy uncertainty could negatively affect global GDP through 2026, with half the GDP decline attributed to reduced consumer sentiment caused by growing trade policy uncertainty.

The Trump administration’s imposition of an additional 50% tariff on China brought the total to over 104%. In response, China imposed an 84% tariff on U.S. imports. J.P. Morgan senior global economist Nora Szentivanyi estimates this tariff equates to a $400 billion tax increase for American households and businesses before substitutions. Since mid-March, the Chinese yuan (CNY) has increased 1.6% to 7.34, with predictions of a more significant devaluation in response to Trump’s tariffs. J.P. Morgan Global Research has revised China’s full-year growth forecast for 2025 down to 4.4%, a 0.2 percentage point decrease, anticipating that declining Chinese exports to the U.S. and a weaker global economic outlook will slow growth by about 0.3 percentage points due to trade. The indirect impact of weaker consumption and investment in export-related sectors might also reduce growth by 0.4 percentage points. A potential announcement of an additional 1 trillion yuan in government bonds in the third quarter of 2025 could partially offset this. The Focus report’s inflation estimate retreated slightly from 4.05 to 4.02, while the median Selic rate advanced from 9.88 to 10.

Escalating US-EU Trade Tensions Over Greenland and Potential Tariff Response

In the U.S., Monday is the Martin Luther King Jr. Day holiday, resulting in the stock market remaining closed and reduced liquidity, with trading resuming the following day. Despite the holiday, European markets and Wall Street futures are operating under pressure following President Trump’s threats to impose additional 10% tariffs on eight European countries. In response, EU countries are considering applying $93 billion in tariffs to the U.S. or restricting American companies’ access to the bloc’s market amid tensions over Greenland. Information from G1.

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