Export from Brazil to the USA
The United States is now Brazil’s second largest trading partner, behind only China.
Brazil’s relationship with the North American giant is historic, the USA was one of the first nations to recognize our country’s independence in 1824.
If your company plans to explore more of this relationship and enter one of the main markets in the world, we are sure that this article will help you providing fundamental tips for your exports in the land of Uncle Sam to be a success.
TRADE SCENARIO BETWEEN BRAZIL AND THE UNITED STATES
In order to be able to visualize more precisely the possibilities that the US market offers, let’s first “zoom out” and analyze the panorama of the trade balance between the two economies.
Trade balance data for 2021 has got Brazilian exporters excited.
Brazil broke the historic record in terms of trade volume exported to the US, reaching a level of US$31.1 billion.
This export value, compared to 2020, represent an increase of 45%. Even knowing that 2020 was an atypical year due to the pandemic, the amount exported in 21 cannot be minimized.
The main factors driving this growth were the increase in American domestic demand and the high prices of some Brazilian sectors such as steel and oil.
Among the most relevant products in terms of exported volumes are semi-finished iron and steel products, crude oil, aircraft, pig iron, unroasted coffee, and cellulose. In addition to these, some products with lower added value, but which are handled in large quantities, have experienced high adhesion from the American market, such as wood for American civil construction, for example.
WHAT ARE THE FIRST STEPS?
When starting to expand your business in the United States, if your company haven’t got professionals with know-how in this market yet, the first step would be to find specialized companies in American territory. Another important step is to hire key professionals who already have this experience.
In addition to commercial and logistics advisory companies, some organizations whose purpose is to promote Brazilian international trade can bring the help your business needs in the initial moments.
This is the case of Apex-Brasil and Invest Export Brasil, which works as a kind of international showcase for Brazilian exporters.
After structuring your team of professionals and strategic partners, a good way to prepare is to get to know some aspects of American customs legislation and the main documents required in the export operation.
Another crucial point in the initial moments of negotiation is the definition of which INCOTERM will be used, DDP operations for example involve many risks and extreme attention, which make this negotiation term one of the most expensive when formulating the final negotiated price.
MAIN PRECAUTIONS WITH LEGISLATION
A first precaution is to study the type of legal treatment given to the specific product that will be marketed. The United States has its own tax classification system called the Harmonized Tariff Schedule of the United States (HTSUS).
Depending on the classification of the exported goods in the US customs table, there will be a requirement for specific documentation and will be subject to taxes that are also specifically applicable to each case.
Due to the 9/11 attacks, the US Government has created a rule that the US Customs Authority must be notified of all cargo that will be exported to the country 24 hours before its shipment, for prior analysis and due customs treatment.
Another legal aspect to be observed is the requirement by US Customs to contract a Bond, which is a mandatory insurance for any merchandise imported into the United States.
MAIN DOCUMENTS
Within a Foreign Trade operation, several documents are required, but operations involving the United States go beyond the ordinary and the exporters need to be very careful.
The main documents are:
Commercial Invoice (CI) – This is the most important of the documents involved, it contains the information that will be considered by the Brazilian and North American customs for due conferences and legal applications.
Packing List (PL) – The so-called packing list with detailed information on the transported cargo, very important for defining the handling, packaging, and transport of the product.
Importer Security Filing (ISF) – This is the registration required by Customs and Border Protection (CBP – US) for all goods entering the United States. This record contains at least 12 information related to customs nature for the release of the cargo on American soil to be carried out. It is important to note that the ISF must be informed to CBP at least 24 hours before the departure of the shipment.
Power of Attorney (POA) – This document is highly necessary especially in DDP operations, where the exporter is responsible for all clearance fees at destination. The POA is issued by the exporter authorizing an American agent (customs broker) to represent him before the American tax authority.
Bond – This is the mandatory insurance required for legal importation into the US to be authorized. It is important to highlight that it is only possible to issue the ISF and POA upon presentation of a Bond, which can be in the Continuous Bond or Single Bond modality.
Customs Entry – Upon receiving the Arrival Notice, the customs broker in the USA submits the cargo release record, at this moment the Customs Entry is registered containing all customs and commercial data relevant to the operation.
Entry Summary – After registering the Customs data (cargo clearance) and confirming the release, the Entry Summary is registered, which is the official document attesting that the import was authorized, it would be the equivalent to the Brazilian DUIMP (Single Import Declaration – BR).
CULTURAL ASPECTS AND OTHER IMPORTANT TIPS
The United States is one of the countries with the highest immigration rate in the world, that factor and its rich continental extension results in a very high cultural complexity.
Some tips that may help:
– Study well the specific region where you will operate – there are commercial regions where buyers tend to be more aggressive in negotiations and others where they tend to be more conservative. In addition to the commercial profile of each region of the country, the United States has different time zones, for example, which can affect the planning of possible commercial visits.
– Invest in commercial travels – the American market values and invests in business generated through trade fairs, workshops. Americans appreciate physical presence when negotiating. An important tip is to pay attention to American national holidays when making your schedule, and to avoid the summer vacation periods (June, July and August) so that you won’t waste time on unproductive trips.
– Be prepared to negotiate with everyone – as already mentioned, the United States is full of immigrants, so it is very common for Brazilian exporters to do business with entrepreneurs of other nationalities.
– Be sharp – most especially on the American East Coast, around New York, the punctuality factor and advance booking are seriously appreciated by executives in the region, so be aware of the schedule.
– Seek to share responsibilities – despite having one of the largest logistical structures in the world, the service provider segment in the US constantly suffers, such as the lack of truck drivers for example. The tip is, when negotiating responsibilities within an international operation, it is desirable to avoid INCOTERMS where the exporter is responsible for the operation on American soil, DAP and DDP for example.
– Have a reliable business partner – it is common for Brazilian exporters to engage close relationships with partners that can offer all the necessary support for the best performance of operations at the destination. In this case, mainly International Cargo Agents are strategic partners that have the necessary expertise to provide the support your company needs.
Now that you are an expert on the American market, shall we export to America together?
Talk to one of our experts and find out more about our know-how in one of the biggest markets in the world.