In letter to US Trade Representative Ron Kirk on Friday, Brazilian Foreign Minister Antonio Patriota denounced US farm subsidies and "massive monetary expansion" in response to a similarly critical letter sent by Kirk to the Brazilian government earlier in the week, which dealt with recent Brazilian tariff hikes deemed harmful to US exports.
The Brazilian tariff hikes covered industrial sectors such as steel, petrochemicals, pharmaceuticals and capital goods. Tariffs on some items were raised by as much as 25 percent.
In his letter Friday, Patriota wrote, "The US has managed in a short period to remarkably increase its exports to Brazil and continues to reap the benefits of our expanding market." The foreign minister said US exports to Brazil nearly doubled from 2007 to 2011 from $18.7 billion to $34 billion.
In his own letter Kirk told Brazilian officials the tariff hikes would likely hurt US exports and urged a rollback of the duties. He said the higher tariffs "will significantly hit US exports to Brazil in key areas" and "historically, such action has often led to trading partners responding in kind, which would amplify the negative impact."
On monetary policy, Mr. Patriota said the recent decision by the US Federal Reserve Board to boost purchases of bonds via so-called quantitative easing is likely to lead to an unwanted appreciation of the Brazilian real against the US dollar. He wrote, "As a result, Brazil has had to cope with an artificial appreciation of its currency and with a flood of imported goods at artificially low prices."