Earlier this year, Brazil’s economy faced mounting challenges, rising inflation, higher interest rates and a devaluation of currency, all of which threatened to slow gross domestic product (GDP) growth. Despite these headwinds, Brazil’s economy was projected to moderate in 2025, with a forecasted 2.2% growth in GDP, Reuters reports. 

However, Brazil has since defied those expectations, as economic activity declined more than anticipated in July, marking the third consecutive monthly drop. The IBC-Br index, a leading indicator and proxy for the country’s GDP, fell by 0.5% in July compared to the previous month on a seasonally adjusted basis. This was more than double the 0.2% decline forecasted in a Reuters poll. “This a slowdown in Latin America’s largest economy as borrowing costs remain high,” reads a Reuters article.

Adding further strain, the U.S. imposed a 50% tariff on certain Brazilian goods effective August 2025. While the overall impact on the Brazilian economy appears limited, specific sectors such as agriculture and manufacturing have taken a more noticeable hit.

According to a Crowell report, Brazil has yet to impose retaliatory tariffs under the Executive Order for reciprocal measures. However, it holds a powerful legal tool in reserve: Law No. 15,122, signed on April 14, 2025, by President Lula da Silva.

“This law allows reciprocal countermeasures to be assessed in response to unilateral tariff measures implemented by other countries,” the Crowell report reads. “These countermeasures are not limited to tariff increases but also include suspending the observance of copyright and other intellectual property rights. This new law carries significant weight in light of previous U.S.-Brazil trade disagreements.”

Payment behavior in Brazil has significantly improved as the year progressed. According to FCIB’s Credit and Collections Survey, customers in Brazil averaged just 11 days beyond terms in August, down by 34 days compared to February. Among survey respondents, 75% reported that payment delays remained the same, a marked improvement from 56% in the previous survey. Meanwhile, only 25% said delays were increasing, compared to 44% earlier in the year.

In August, half of the respondents cited billing disputes, cash flow issues and customer payment policies as the most common causes of delayed payments. This represents a shift from February, when 44% identified regulatory issues and government approval processes as the primary contributors to late payments.

To mitigate the risk of delayed payments from Brazilian customers, one survey respondent recommends conducting thorough Know Your Customer (KYC) procedures. This includes verifying the customer’s legal entity, operational performance and financial stability. The respondent also underscores the importance of applying the 5 C’s of Credit—character, capacity, capital, conditions and collateral—when evaluating customer creditworthiness.

Understanding Brazilian business culture is also key. It is relationship-driven, which often involves multiple meetings, conversations and negotiations. Foreign business partners should be prepared to invest time in building trust. Due to the language barrier, it is advisable to provide all written materials in Portuguese, the country’s official business language, even though many Brazilians also speak English and Spanish. One respondent further recommends partnering with a local collector who speaks Portuguese and understands both the culture and the unique needs of local customers.