Tariff Duties on Imports from Brazil

Brazilian Raw Sugar Cane is Duty Free if Final Product is Wine

Oct 20, 2009

Frozen Orange Juice from Brazil is Duty Free, US Department of Agriculture (Wikimedia Commons)

Frozen poultry, tires and small cars exported from Brazil to Canada have the highest tariff rates yet Brazilian aluminum, orange juice, coffee and aircraft are duty free.

The top 25 Brazilian products exported generated US$1.7 billion of Brazil’s total $2.5 billion in sales to Canada during 2008.

This analysis presents rates for customs tariff duties that Canada Border Services Agency (CBSA) imposes on the top 25 product categories imported from Brazil.

While Canada requires tariff payments on roughly 30% of the value of its top 25 imports from South America’s largest nation, 15 of Brazilian product categories mentioned below require no customs duty at all.

Highest Tariff Duties on Brazilian Imports

Because Brazil and Canada have not signed a preferential tariff agreement, Brazilian imports are covered under the generic tariff classification known as Most Favored Nation (spelled Most Favoured Nation in Canada).

Presented below are Canada customs tariff rates for 7 of the most popular imported Brazilian products in 2008 that are subject to Canadian tariffs. The 6-digit international tariff classification code is shown within brackets.

In total, these categories represent about $320 million worth of made-in-Brazil products on which the CBSA assessed customs duties.

9% duty on frozen poultry cut in pieces (code 020714) … US$38.3 million in 2008 sales
7% duty on car tires (401110) … $24.7 million
6.1% duty on small passenger cars (870323) … $104.9 million
6% duty on motor vehicle brakes and brake parts (870830) … $18.6 million
2.5% duty on iron ferro-niobium used to alloy steel (720293) … $40.7 million
3.5% duty on cut granite building or monument stone (680223) … $31.2 million
4.92¢ per liter on ethyl alcohol (220720) … $58 million.

Note that the above per-liter rate for ethyl alcohol is in Canadian currency.

Import Categories from Brazil Partially Subject to Customs Duties

Rich in natural resources and farming products, Brazil is a world-leading supplier of raw sugar cane. When imported into Canada, Brazilian sugar cane is duty free if used as ingredients to make wine. Otherwise, imported sugar cane from Brazil is subject to the custom duty rates below.

The other 2 import categories below also include sub-classifications that are subject to Canadian tariffs and have product sub-types that are duty free.

CDN$22.05 to $24.69 per ton for raw sugar cane not used to make wine (code 170111) … US$255.8 million in 2008 sales
11% duty on women’s footwear that cost $30 or more, 18% for other footwear including slippers and work shoes, but duty free for corrective footwear (640399) ... $25.1 million
3.5% duty on oak flooring, but duty free for other shaped hardwood lumber … $24.5 million.

Duty-Free Imports from Brazil into Canada

The 15 product classifications below represent some of the largest and fastest-growing imported products from Brazil in 2008. Sales of graders and levelers more than doubled in 2008 from $7.6 million in 2007, while imported antibiotics in bulk spiked 93.8% from $31.1 million in 2007.

Yet while the leading imports below total about US$1 billion in sales for Brazil, Canada generates no tariff revenues from these Brazil-sourced goods.

The list is sorted based on imports with the highest sales in 2008.

Natural aluminum oxides (code 281820) … US$454.7 million in 2008 sales
Aircraft weighing over 15,000 kilograms (880240) … $86.3 million
Frozen orange juice (200911) … $86.26 million
Unroasted caffeinated coffee (090111) … $65.7 million
Aluminum ores and concentrates (260600) … $65.1 million
Semi-bleached or bleached wood pulp (470329) … $53 million
Diesel engines for vehicles excluding trains or streetcars (840820) … $45.9 million
Kaolin clays (250700) … $44 million
Natural uranium (284410) … $43.6 million
Dump trucks for off-highway use (870410) … $33.6 million
Other antibiotics in bulk (294190) … $31.1 million
Cocoa butter, fat and oil (180400) … $25.3 million
Non-monetary gold (710812) … $21.4 million
Graders and levelers including farming machines (842920) … $19.4 million
Instant coffee extracts and concentrates (210111) … $17.9 million.

Kaolin clay is typically a major component of porcelain, and is also used in light bulbs, cosmetics, coated paper, medicine and toothpaste.

Brazil’s Raw Resources Provide Competitive Advantages

To put the above statistics into perspective, Brazil’s $2.5 million in exports accounts for only 0.6% of the total value of Canadian imports from all countries in 2008.

In addition, Brazil supplies many raw resources like sugar cane and aluminum oxides and ores.

If Canada was to impose or raise customs duties on Brazilian imported supplies, importers would have to raise the prices charged to Canadian producers who manufacture finished products from those source inputs. In the end, those cost increases would be passed onto the consumer.

So it makes competitive sense to keep many of these imported source materials duty free.

On the other hand, large Brazilian aircraft makers like Aero Bravo provide fierce competition for Canadian aircraft manufacturer Bombardier. It would appear to make more sense to impose Canadian tariffs on aircraft weighing over 15,000 kilograms (tariff code 880240) rather than allowing those products into Canada duty free.

Sources: Industry Canada's Trade Data Online, based on Statistics Canada reports as of October 15, 2009 and Canada Border Services Agency's online customs tariff manual.

The copyright of the article Tariff Duties on Imports from Brazil in International Tariffs is owned by Daniel Workman. Permission to republish Tariff Duties on Imports from Brazil in print or online must be granted by the author in writing.