Brazilian President Jair Bolsonaro will arrive in the US today for his fourth visit since his election in 2019.
Bolsonaro has pushed to strengthen trade and investment ties with the US over the past year. As part of his pro-business agenda, the president will meet with electric vehicle manufacturer Tesla to negotiate the building of a plant in Brazil.
A Tesla plant in Brazil would be a significant victory for Bolsonaro. Elected on a conservative platform to combat the aftereffects of a two-year recession, his attempts to promote private business have not had an immediate effect on Brazil’s growth. The largest economy in Latin America grew just 1.1% in 2019—a significant underperformance compared to early-year projections of 2-3%. Brazil’s auto industry was among the sectors most affected by the slowdown.
Brazil is an enticing location for Tesla. Rota 2030, a government plan unveiled in 2018, provides a 3%+ tax break for hybrid vehicle production. The country is also the largest supplier of cars to Latin America, and the region’s electric vehicle market is expected to increase 30% by 2025.
If Bolsonaro can convince Tesla to take a risk of significant structural investment in a less stable economic climate, the deal could further solidify closer economic relations between the two largest economies in the Americas.
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William analyses global economic and political events for the Current Developments Team, focusing his research on Europe and the Middle East. He contributes regularly to the Daily Brief