Brazil warns of retaliation after Trump imposes 50% tariff
What's the story
Brazilian President Luiz Inacio Lula da Silva has vowed to respond to US President Donald Trump's newly announced 50% tariff rate on Brazilian exports. Trump's tariff is a retaliation for the prosecution of former Brazilian president Jair Bolsonaro and to address what he calls an "unfair trade relationship" between the two countries. Lula said Brazil will respond with "reciprocity," citing a recently adopted law that allows his government to take proportional countermeasures against unilateral economic measures by other countries.
Diplomatic rebuttal
'Brazil will not accept being lectured by anyone'
In his response to Trump's letter, Lula said Brazil would act according to its new economic reciprocity law. He asserted that "Brazil is a sovereign country with independent institutions that will not accept being lectured by anyone." Following the announcement of the tariff, Brazil's currency, the real, fell over 2% against the US dollar.
Trade tensions
Why Trump announced tariffs
Trump has been critical of Brazil over its treatment of Bolsonaro, who is on trial for his alleged role in a coup attempt after losing the 2022 elections. In his letter to Lula, Trump called the situation "an international disgrace" and slammed the Bolsonaro trial as a "Witch Hunt." He also criticized Brazil's trade policies for causing "unsustainable Trade Deficits" against the US, which he said threaten US economy.
Economic disparity
Lula refutes Trump's claim of trade deficit
Despite Trump's allegations, the US had a goods trade surplus with Brazil of $7.4 billion in 2024, according to the Office of the US Trade Representative. Lula refuted Trump's false claim about a trade deficit in his response, citing US government figures. Trump also announced an investigation into potential unfair trade practices by Brazil over "continued attacks on the Digital Trade activities of American Companies."
Global impact
Trump has sent similar tariff letters to 21 other countries
Trump has sent similar tariff letters to 21 other countries, imposing rates between 20% and 40%. These tariffs will come into effect on August 1. The US President has warned that if these countries impose their own import taxes on American goods "for any reason," the US will raise its tariff rate by an equivalent amount.