The measure, which had been in effect since August 2023, expired on January 31 and was not renewed, sources told the Hong Kong newspaper South China Morning Post, ending an incentive that particularly benefited Chinese automakers operating under pre-assembly schemes.
With the exemption lifted, companies are once again required to pay import tariffs of 35% on SKD (semi-knocked down) and CKD (completely knocked down) assembly kits, which had previously been subject to rates of 18% and 16%, respectively.
In practice, SKD kits arrive in the country almost fully assembled and require little local labor. CKD kits, by contrast, include separate parts for assembly in Brazil, but still rely largely on imported components.
The reduced tariff had been approved following a request from the Chinese automaker BYD, which was preparing to begin large-scale operations in Brazil.BYD
The decision prompted protests from traditional manufacturers established in the country, who accused the government of unfairly favoring foreign companies with limited local production.
With the end of the exemption, companies such as BYD and Great Wall Motor now face significantly higher costs to operate in the Brazilian market, unless they accelerate investments in domestic production.
The decision marks the end of months of friction between the Brazilian government, Chinese automakers, and Brazil’s automotive industry, which had been calling for equal competitive conditions.
