NAB Morning Call Markets ignore a 50% hit on Brazil
Jul 10, 2025
Ray Attrill, NAB's market economist and strategist, shares his expertise on recent market happenings. He discusses President Trump's unexpected 50% tariff on Brazilian imports and how markets surprisingly remained unfazed, even as US equities rose. Attrill delves into the implications for global trade and inflation, noting how exporters are adapting to tariff challenges. The conversation also touches on US job data, the Federal Reserve's stance on interest rates, and the Australian dollar's rise amidst shifting economic winds.
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Japanese Firms Absorb Tariffs
- Japanese automakers are cutting margins to keep prices low in the US despite a 25% tariff.
- Exporters absorb tariffs to maintain market share, limiting the inflationary impact on US consumers.
Manage Tariff Impact Carefully
- Exporters tend to absorb lower tariff rates to preserve market share.
- Sustained tariffs above 10% to 15% risk profitability and may force price increases or market exits.
Tariffs May Cause Disinflation
- Tariffs create disinflationary effects as exporters divert goods to other markets at lower prices.
- China's producer price deflation highlights broader downward price pressure globally.