It's bad and it's going to get worse: Record defaults are boosted by US tariff hikes

The combination of high domestic interest rates and tariffs imposed by the US government is creating a perfect storm for Brazilian companies, with corporate default rates reaching historic levels.

Brazilian companies are facing their worst liquidity crisis in eight years. Unpaid corporate debt reached R$182.4 billion in May 2025, the highest figure recorded by Serasa Experian since 2016.

There are 7.7 million companies—nearly a third of active CNPJs—with accounts overdue for more than 90 days, marking the fifth consecutive month of record payments. Each company has, on average, 7.3 overdue accounts.

Restrictive monetary policy should maintain adverse scenario

The root of the problem lies in high interest rates. The Selic rate at 15% per year—expected to remain at this level until the end of 2025 and decline only gradually from 2026 onward—has made credit difficult to obtain for most Brazilian companies.

The quarterly results of major banks already show signs of moderation in lending. According to the Brazilian Federation of Banks (Febraban), the growth rate of the credit portfolio has been slowing, especially among households. The annual growth rate fell from 11.9% in June to 11.3% in July.

"Both the concession data and the behavior of the portfolio balance indicate that the trend throughout the second half of the year is one of moderation, reflecting the contractionary effects of monetary policy," explains Rubens Sardenberg, director of Economics, Prudential Regulation and Risks at Febraban.

The general expectation is that corporate default rates will continue to rise in the short term. Febraban itself projects that the default rate for banks' free-resource portfolios will remain at 5% in both 2025 and 2026, a higher level than in 2024.

US Tariffs: Protectionism Accelerates Corporate Default Crisis

In this already challenging context, US trade policy emerges as an additional aggravating factor, intensifying pressure on exporters and their supply chains. According to BTG Pactual calculations, the average tariff on Brazilian products jumped to 30.9%, a 30-fold increase.

The impact of the "tariff hike" on the export chain

The United States' adoption of the surcharge on Brazilian imports radically transformed the landscape for exporters. Even with the adoption of the list of exceptions, a survey by the CNI (National Institute of Industrial Property) shows that 77.8% of Brazilian exports to the United States are subject to some type of US taxation, and more than half of exports will face 50% surcharges.

The impact goes far beyond direct exporters. "This tariff increase generates a direct impact on the working capital of domestic exporters. By having to reduce prices to maintain contracts or withdraw from the American market, these companies trigger a domino effect, in which input suppliers, carriers, and service providers may experience payment delays, putting the entire chain at risk," warns Silvano Boing, CEO of Global, the country's largest corporate debt recovery agency.

Faced with these surcharges, many Brazilian exporters find themselves forced to choose between two equally damaging alternatives: drastically reducing prices and margins to try to maintain contracts—which can lead to operating at a loss—or simply abandoning the North American market, losing revenue earned through years of investment in commercial relationships. Both options result in severe cash flow compression and can trigger a devastating domino effect.

Brazilian GDP could lose R$25.8 billion in two years

The scale of the problem is significant. A study by the Federation of Industries of the State of Minas Gerais (Fiemg), published earlier this month, projects that the tariff hike could reduce Brazil's GDP by R$25.8 billion within two years. The Dom Cabral Foundation (FDC) estimates that approximately 10,800 medium-sized exporting companies will be most directly affected.

These companies, which form the basis of the supply ecosystem of large exporters, have less capacity to absorb financial shocks, less working capital flexibility, and more limited access to international credit lines that could mitigate the impact.

Small and medium-sized businesses: at the epicenter of the perfect storm

The R$182.4 billion in corporate debt is most dramatically concentrated among micro, small, and medium-sized enterprises. These figures become even more worrying when we consider that, of the 7.7 million delinquent CNPJs registered by Serasa Experian, 7.3 million are MSMEs, which account for approximately 90% of corporate defaults.

Among the sectors most vulnerable to this combination of pressures, retail stands out as one of the most critical, according to an analysis by the Center of Excellence in Retail at the Getulio Vargas Foundation (FGVcv). The explanation is structural: with traditionally tight margins and a high reliance on working capital to finance inventory and customer payment terms, the sector is seeing its profitability evaporate. Chains are already reviewing expansion plans.

The service sector leads the ranking, with 53.7% of companies reporting negative credit ratings, followed by commerce (34.1%) and industry (8%). These include beauty salons, restaurants, auto repair shops, small neighborhood shops, and accounting firms—businesses that employ millions of Brazilians and are now struggling to survive in a hostile economic environment.

The vulnerability of MSMEs is not accidental, but structural. These companies operate on much tighter margins than large corporations, have limited access to capital markets, rely almost exclusively on the traditional banking system for financing, and have less bargaining power with suppliers and customers. When credit dries up and interest rates soar, they are the first to feel the impact.

"Many of these companies were already operating at their limits before the tariff hike," explains Leandro Turaça, managing partner at Ouro Preto Investimentos. "With margins squeezed by fierce competition and rising costs, any additional shock pushes them over the edge. The American tariff hike is the final straw that turns their difficulties into insolvency."

Camila Abdelmalack, an economist at Serasa Experian, warns of an increasingly worrying scenario of corporate default in Brazil. Indebted companies face significant restrictions on obtaining new financing or renegotiating debts, increasing the risk of worsening their situation. This scenario, in addition to default, could contribute to an increase in the number of judicial reorganizations and bankruptcies.

Time is money: what can be done in the corporate default crisis?

Faced with this scenario of multiple converging pressures, experts warn that passivity can be fatal. Carlos Ottoni, a partner at KPMG, emphasizes that there is no longer time for defensive strategies. He emphasizes the urgent need for companies to seek alternatives.

"We can no longer wait for a magic solution from the government or a sudden reversal in the international scenario. Companies need to be proactive: seek new markets, renegotiate contracts, optimize costs, diversify revenues. Those who remain idle will be swallowed up by the crisis."

Agility in credit recovery becomes a matter of survival. Elias Sfeir, president of the National Association of Credit Bureaus (ANBC), presents revealing data: 82% of business-to-business debts are recovered if addressed within the first ten days of arrears, but this rate plummets to a mere 12% after 180 days.