Brazil Institutes IPI Tax Hike
Many critics believe the new taxes are a reaction the increase of Chinese cars in the country’s market.
A week prior to the decision for the tax hike, Brazilian media reported that nearly 44,000 Chinese cars had been sold in Brazil with in the first eight months of 2011, up from just 1,000 units in all of 2008. On September 12, Foton Motors, China’s largest producer of light trucks, announced it plans to invest $500 million in a Greenfield assembly plant in northern Brazil.
Many people believe that the announcement and media report coupled with a new tax on imported automobile products is not a coincidence. However, there is evidence that chinese carmakers are beginning to occupy parts of the Brazil for cheaper, faster manufacturing.
the IPI tax seeks to address two issues that President Roussef finds pressing: first, excessive imports, and second, the amount of imports China can grab within the market share. Since 2007, Chinese car production company has used less than high-quality plants in Uruguay to supply the Brazilian market within the Mercosur zone.
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