Brazil's free-market economic policies are drawing rave reviews from American officials and economists, who see them as the only way for that country to get out from under its crushing debt and crippling price spiral.
But for many American companies doing business in Brazil, economic reforms have begun to squeeze profits back home.
Just this week, Ford Motor Co., General Motors Corp. and Whirlpool Corp. blamed sharp declines in their second-quarter profits on adverse economic conditions in Brazil.
Earlier, Danaher Corp., the Washington-based holding company for a variety of industrial operations, said the largest part of a 9 percent drop in second-quarter earnings was due to changes in the Brazilian economy. This is true even though only 1 percent of Danaher's revenue comes from Brazil, the company said.
Caterpillar Inc. also reported that its second-quarter global earnings will be cut in half as a result of losses in Brazil.
And Sundstrand Corp., another manufacturer of equipment for farms, construction products and industry, announced that losses in Brazil were dragging down its profits.
The reasons for the decline in profits are varied, although they usually include the effect of translating income earned in Brazilian cruzellos into U.S. dollars at the new exchange rate.
The anti-inflation measures also have sparked a recession, cutting demand for Whirpool's refrigerators, cars made in Brazil by GM and Ford, and other consumer goods produced by American-owned firms.
Ford, which together with Volkswagen A.G. owns Autolatina, a Brazilian automaker, felt the effects of the economic contraction with lost sales. And when Brazilians started buying again, they downscaled their choices, picking less expensive models.
Caterpillar was hurt by the inflation-reduction program, which also dried up capital that would otherwise go for new construction projects that would use the company's products.
Further, the reforms have resulted in some measure of labor unrest: Workers at Whirlpool's Brazilian factories, once considered models of labor stability, disrupted production by going on strike.
Yesterday, the government responded to labor unrest by ordering companies to give lower-paid workers a $45-a-month inflation bonus.
Still, most American executives support the policies of President Fernando Collor de Mello as the best hope in the long run to stabilize and improve the Brazilian economy.
"It's a whole new ball game in Brazil and the companies are willing to bite the bullet," said William T. Archey, international vice president of the U.S. Chamber of Commerce.
Whirlpool Chairman David Whitwan called the Brazilian economic reforms "necessary and vital" even though they are lessening his company's profits.
Looking ahead, he said that Whirlpool affiliates in Brazil "have responded aggressively to the tough economic conditions and their combined efforts resulted in an overall profitable quarter in local currency."
It's not easy doing business in Brazil. Before Collor instituted his economic reforms, inflation was spiraling out of control at more than 1,700 percent a year and corporate managers complained that they spent more time managing money than improving production.