Photo: The New York Times
Tensions are escalating between the U.S. and Brazil after President Donald Trump announced a 50% tariff on Brazilian imports, set to begin on August 1, 2025. The new trade measure—an aggressive escalation from the 10% tariff imposed in April—was framed not only as an economic action but also as a direct response to Brazil’s domestic legal proceedings against former president Jair Bolsonaro.
Brazilian President Luiz Inácio Lula da Silva responded swiftly, vowing reciprocal measures under Brazil’s newly passed law that authorizes proportional countermeasures against unilateral economic sanctions imposed by other countries.
“Brazil is a sovereign country with independent institutions that will not accept being lectured by anyone,” Lula posted on social media, in a message translated by CNBC.
In his letter addressed to Lula, which Trump publicly shared via Truth Social, the U.S. president cited the ongoing prosecution of Bolsonaro as part of the justification for the new tariff. He called the legal proceedings a “witch hunt,” echoing the language he often used to describe his own legal battles prior to his 2024 election victory.
Trump also criticized what he called Brazil’s “attacks on free elections” and “free speech,” pointing specifically to a recent Brazilian Supreme Court ruling that could hold social media platforms accountable for their users’ posts—an issue Trump linked to broader concerns over digital trade restrictions.
Furthermore, Trump accused Brazil of having “unsustainable trade deficits” with the U.S., claiming the imbalance threatens American economic and national security.
However, U.S. government data contradicts that claim. The Office of the U.S. Trade Representative reported a $7.4 billion U.S. goods trade surplus with Brazil in 2024, not a deficit.
Lula’s response cited a recently adopted economic reciprocity law that enables Brazil to impose mirror tariffs or other trade barriers in retaliation for punitive actions by foreign governments. Although he didn’t outline specific measures, Lula emphasized Brazil’s intention to defend its economy and sovereignty.
The Brazilian real dropped over 2% against the U.S. dollar after Trump’s announcement, signaling market concerns about potential disruption in trade between the two countries.
Brazil is a major exporter of agricultural products, iron ore, and industrial goods to the United States. Any reciprocal tariffs could impact U.S. agribusiness, tech manufacturers, and logistics firms with strong ties to the Brazilian market.
Trump’s letter to Lula included a preemptive warning: any reciprocal action taken by Brazil would be met with an equivalent increase in U.S. tariffs. This policy mirrors letters Trump has sent to 21 other countries since Monday, including Japan, South Korea, Moldova, and Brunei.
In each letter, Trump outlined that these tariffs are distinct from sector-specific duties on steel, aluminum, or automobiles. He insisted that these new rates are non-negotiable, though he left open the possibility of adjustment “depending on our relationship.”
“These Tariffs may be modified, upward or downward, depending on our relationship with your Country,” Trump wrote. “You will never be disappointed with The United States of America.”
The tariff rates in Trump’s letters range from 20% to 50%, with all set to take effect on August 1, and the administration has stated that “no extensions will be granted.”
While previous administrations have used tariffs as tools of economic leverage, Trump is now deploying them as political instruments—targeting countries not only over trade practices but also over internal governance decisions he disapproves of.
This strategy signals a shift in how tariffs may be used in global diplomacy—blending national security arguments, digital trade disputes, and political grievances into unified economic actions.
“This is not just about economics,” said a former U.S. trade official, “it’s about aligning the trade agenda with Trump’s broader political worldview.”
With both sides threatening retaliatory measures, the U.S.–Brazil trade relationship is entering a period of heightened uncertainty. Brazil’s next steps could escalate tensions further or open the door to behind-the-scenes negotiations aimed at diffusing the standoff.
For now, the global business community—and especially companies with cross-border interests in agriculture, technology, and raw materials—are bracing for a volatile summer in trade policy.
If both leaders follow through on their tariff threats, the ripple effects could reach well beyond Brazil and the U.S., potentially destabilizing global supply chains and further inflaming geopolitical tensions.