Just as the United States looks to take a more protectionist tilt, Brazil is talking up its push towards free trade.
At this weekend's meeting of G-20 finance ministers, Brazil was one several nations to point out dangers of anti-globalization — a message crafted largely for listeners in the United States. The country's finance minister, Henrique Meirelles, said in an interview with The Wall Street Journal that, "we had adopted during the last years some protectionist measures for some sectors of the economy, and the net result was not positive."
"At the end of the day, the products became more expensive and Brazil…became less competitive," he told the newspaper. "In Brazil, we are moving toward a more open trade policy."
The Latin American giant is attempting to recover from an economic recession which hit under the 13-year leadership of the populist Workers' Party. That control ended last year when President Dilma Rousseff of the Workers' Party was impeached. Her successor, President Michel Temer, has called for greater openness on trade.
Ease of Doing Business ranking
Source: World Bank "Doing Business in 2017" survey, JPMorgan Asset Management.
"As a result of many years of a wary attitude to trade, the comments you hear from Brazilian officials today have a different flavor, a more open flavor," said Alejo Czerwonko, emerging market strategist at UBS Wealth Management.
"The new rhetoric toward more trade openness in Brazil is important," he said. But, "Brazil remains a relatively closed economy. Opening up takes time."
Other analysts agree.
"There are very many different models and in Latin America specifically, Brazil is learning from the countries Mexico, Colombia and Chile," said Gabriela Santos, global market strategist at J.P. Morgan Asset Management.
As for any lessons on how protectionism might affect U.S. growth, "it's much too early for us to speculate," Santos said. "Looking forward, the shift in tone is important but you also have to see the implementation of change."
Brazil got hit by more than just protectionism
It's important to note that there are few if any economists who suggest that Brazil entered a recession because of trade barriers alone. The country is largely dependent on commodities exports, and those prices have plunged from where they were two years ago. Brazil also is hampered by rampant corruption — though it has made serious progress going after bad actors in government and industry in recent years.
Still, Brazil's efforts toward opening up its borders to trade contrast with U.S. President Donald Trump's threats of tariffs on imports and an "America First" policy.
As a result of that stance from the world's largest economy, the G-20 finance ministers this weekend removed a commitment made in China last year to "resist all forms of protectionism." Instead, leaders said they will "strive to reduce excessive global imbalances" and seek fairer policies in "pursuit of economic growth."
That said, the economic consequences for the U.S. likely stop at rhetoric for now.
"You cannot really make a straight comparison between what happened in Brazil under the Brazilian Workers' Party and what could happen in the U.S.," Czerwonko said. "One of the reasons the Brazilian recession was so deep was this corruption scandal that erupted."
"It looks like the U.S. has a different level of institutional development that should prevent such widespread practices," he said.
UBS generally likes Brazilian assets, particularly the currency and local bonds, but is neutral on stocks. After five years of sometimes sharp double-digit declines, the Brazil Bovespa index jumped nearly 69 percent last year in U.S. dollar terms and is up more than 13 percent so far this year.
