A Jittery Brazil Hikes Tariffs on Its Imports by Up to 70% : Latin America: Government takes the surprise action as nation’s trade deficit mounts.

Nervous about its mounting trade deficit, the Brazilian government has raised taxes on autos and some other imports to as much as 70%, stunning the country’s growing import industry, infuriating consumers and surprising U.S. government officials.

The Ministry of Finance increased tariffs on 100 items, mostly electronics and appliances such as refrigerators, washing machines, toasters and blenders. But the main target was cars, which accounted for more than half of Brazil’s $1.4-billion trade deficit in February.

The government had reduced import taxes in October, announcing that even lower tariffs could eventually be expected. On Thursday, the government said the new, higher tariffs will stay in effect for one year.

U.S. officials had recently been assured that Brazil, the world’s ninth-largest economy, would stay with its months-old policy of lower tariffs.

“They were telling us the same thing here in the embassy,” said one U.S. State Department official in Rio de Janeiro. “They said they wouldn’t go back to the old days of high tariffs. People are really surprised. And in the streets, everybody is upset.”

Brazilian stocks fell Friday for a fourth day amid concern that the increased tariffs would fuel inflation by encouraging domestic manufacturers to raise prices.

Retailers who specialize in imported appliances said they saw many of their plans disappear with the announcement.

“We saw a $15-million investment go down the drain today,” said Giuseppe Bizarro, president of a chain of 105 retail stores that carry primarily imported items. “We were going to bring in 80,000 refrigerators. Now we’ll only bring in 20% of that.”

The steepest hikes apply to imported autos, which will be taxed at 70% of their value, up from 32%. Auto importers say that as many as 60% of their 25,000 employees will be laid off as the projected number of imported cars is cut in half to 1 million this year.

Deputy Finance Minister Pedro Parente said the measures are essential to reverse the trade deficit.

“We’re talking about a list of 100 products, which is very small when we consider the total economy, and for only one year,” Parente said. “But we had to move now because we didn’t want our cash reserves to reach a crisis point.”