Protection of domestic content at automakers harms consumers

One of the criteria that the government intends to adopt in its rescue package for automakers is the index of local content in vehicles. The idea is to grant greater benefits to models with a higher percentage of domestic parts. This type of measure, however, can harm the consumer, in the assessment of Júlia Aquino, an analyst at Rico Investimentos.

“Measures to protect the local industry through non-tariff barriers – such as local content rules – tend to harm the productivity of the industry and the final product for the consumer, in the long term”, he says.

The idea of ​​the new Lula (PT) government is similar to the policy aimed at the oil industry in previous PT administrations – which, for scholars, had negative effects on the development of the industry and raised costs for oil companies, in particular Petrobras.