When Tariffs Slow Down Innovation

The Brazilian Automotive Industry at a Crossroads

There was a time when progress on the road was measured by speed. Faster cars, shorter delivery times, more efficient supply chains. Today, progress seems to be measured by something else entirely: the number of trade barriers along the way. A true nightmare for the most inventive industrials.

Across the world, antidumping duties and other trade barriers have multiplied under banners like “reindustrialization” and “fair trade.” In practice, many of these measures have reshaped industries such as the automotive sector, not by promoting fairness, but by erecting domes that slow innovation, delay modernization, and raise costs for companies and consumers alike.

The Hidden Costs Behind the Wheel

In Brazil, a growing list of products used in the automotive industry is subject to multiple trade barriers, including antidumping duties that can reach 145% ad valorem or even USD 3,224 per ton. These measures affect components like carbon steel tubes, rubber hoses, flat glass, polyester fibers, and titanium dioxide, each a small but tested, validated, homologated, and a vital element in modern vehicle production. For manufacturers, this means higher costs and greater uncertainty. For consumers, it means vehicles that are not only more expensive but also slower to incorporate global advances in safety, sustainability, and performance.

Innovation Blocked at the Border

Modern automotive design depends on global integration: lightweight materials from Asia, precision components from Europe, digital systems from North America. When antidumping duties disrupt these flows, innovation stalls. The result is a familiar paradox we have been facing for far too long, in different shapes and forms: while electric vehicles and smart manufacturing race ahead in open markets, industries behind high tariff walls risk falling behind, unable to access the same materials, technologies, and economies of scale. Instead of protecting industry, these measures end up fermenting nasty inefficiency.

A Sector That Deserves Better

Within Latin America’s economic landscape, Brazil’s automotive industry stands as a powerhouse, employing millions, driving exports, and sustaining regional supply chains. Yet, like Sisyphus, this sector seems condemned to push the same stone uphill: every time competitiveness nears the summit, new barriers appear, forcing the climb to begin again. Originally (or supposedly) conceived to defend local production, most of these measures have become a weight too heavy to be carried, slowing the very progress they were meant to protect. When the costs of key inputs like steel, rubber, and plastics surge, innovation sputters.

The factories of tomorrow will not rise where policy punishes efficiency. They will flourish where competitiveness is cultivated and openness is rewarded. Do we even care about long-term goals? If Brazil could reimagine its trade policy as an engine rather than a brake, it could spark a true renaissance in its automotive sector and others, turning obstacles into momentum and transforming policy into progress, policies for progress.

Driving Change — Strategically

We should view trade policy not just as a set of tariffs and regulations but as a framework that influences competitiveness, innovation, and industrial renewal. Each policy measure, no matter how technical, has significant implications for how industries develop, connect, and create value. Our role as policymakers is to help companies and associations understand these connections, how a single antidumping duty can impact a supply chain by altering cost structures, investment decisions, and even the geography of production. By combining legal, economic, and strategic perspectives, we must turn complexity into clarity, enabling decision-makers to anticipate changes rather than merely react to them. The future of mobility will be shaped not by those who resist integration forces but by those who learn to navigate them with intelligence and foresight.