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US President Donald Trump said on Wednesday that he paused his plans to hike import tariffs on most countries other than China, a move that has eased fears for now of impending damage to the global economy. But issuers in two of Latin America’s biggest economies — Argentina and Brazil — warned that their investments may slow as the uncertainty makes it hard to raise financing. “What could slow things down is financing,” Horacio Marín, CEO of Argentine oil and natural gas producer YPF, said on Tuesday during a televised interview on Infobae en Vivo ahead of Trump’s pause. “If you want to issue a bond this week, it’s quite complex.” The fear is that the uncertainty stemming from the global trade war could tighten access to financing and boost borrowing costs, as well as curb economic growth and cut commodities prices. Trump’s timeout on the hikes has eased some of those concerns, however. Oil prices snapped back 4.6% on Wednesday after having plunged by 16% between April 2 — when Trump announced the tariffs — and Tuesday. US stock markets surged on Wednesday, with the S&P 500 posting one of its biggest single-day gains since World War II. Goldman Sachs economists said Wednesday they lifted their base-case forecast for a US recession in response to the interruption in the tariffs, yet they still warned that the US economy may only grow by 0.5% this year and that there is a 45% of a recession in the next 12 months. Big questions remain, however, in particular the 125% tariff on all goods imported from China, which could still hit the United States with more sluggish growth, a rise in inflation and a slower-than-expected cuts in interest rates by the US Federal Reserve. These concerns may have been behind Trump’s decision. Democratic Senator Chuck Schumer said on X that Trump retreated on the tariffs because of the “Trump slump,” the sharp decline in bond and stock prices since April 2 and the heightened concerns of a US recession. The pause has raised expectations that Trump may relax the tariffs. “As long as Trump continues to toughen his stance on China, these types of signals [like the pause in tariffs] can have a positive impact,” Damián Palais, a financial advisor at Cocos Capital in Buenos Aires, told Ámbito Financiero newspaper. “This is a sign that he may give in, which is very positive. We will have to closely monitor the next movements around tariffs and the relationship between the US and China.” On Wednesday after hiking the tariffs to 125%, Trump told reporters in the White House that “China wants to make a deal, they just don’t know quite how to go about it.” BRAZIL Before the pause, Brazilian companies called the import tariffs a “crazy Trump move,” and warned that financing their investments would become more difficult because of the jitters in the capital markets. “We have to wait a bit until we see things more clearly,” Roberto Barbuti, CEO of water and sanitation company Iguá Saneamento, told LatinFinance on Tuesday. “This environment of uncertainty and volatility plays against new relevant investment decisions. We are actually in a moment when it is more difficult to take decisions,” he said during a Bradesco BBI business conference in São Paulo. Water companies are expected to invest “dozens of billions” (of Brazilian reais) in the coming years to meet targets to deliver drinkable water and sanitation services to 90% of the population by 2033. Some of these plans may be put in jeopardy. “It may impact [new investment] decisions,” although short-term financing is already in place, Barbuti said. “We have a lot on our plate. We are about to take hold of a new operation in [the northeastern state of] Sergipe, which accounts for more or less a third of our portfolio. We already have a bullet bridge loan of four years and a half. So we are relatively calm to deal with this turmoil without feeling desperate,” he said. Iguá’s counterpart, Aegea Saneamento, is taking a relatively relaxed attitude. “No one could imagine these crazy Trump moves,” André Pires told LatinFinance . “It becomes always more difficult [to issue] in this case. But we have almost no short-term needs. It is not going to affect our plans.” Pires said Aegean signed a $600 million syndicated loan in March and refinanced a debt of its controlled company Parsan. Prolagos, one of its concessions in Rio de Janeiro, also issued BRL800 million ($130 million)in debentures on Monday, he said. POWER SECTOR Meanwhile, Brazilian power utility Equatorial Energia recently sold all its transmission assets for BRL9.4 billion and may use some of the proceeds to fund its investments. “This divestment is going to give us a comfortable buffer to give us some tranquility and also take advantage new opportunities,” Augusto Miranda, CEO of Equatorial, said at the event. Tatiana Queiroga Vasques, director of financial strategy of Equatorial, said the sale will bring “a lot of cash” into the company. “We always look a year ahead. Last year, we already completed this year’s refinancing. And this year we are working on refinancing next year’s debt. We are working with a level of liquidity to support short-term debt,” she said.
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