Trump hits Brazil with 50% tariff over 'witch hunt' trial of ex-leader Bolsonaro
'I think he has been misinformed,' Brazil's vice-president says of U.S. president
U.S. President Donald Trump singled out Brazil for import taxes of 50 per cent on Wednesday for its treatment of its former president Jair Bolsonaro, suggesting that personal grudges rather than simple economics are playing a part in the U.S. leader's use of tariffs.
The president posted form letters to his social media account Wednesday informing certain countries that they would be facing tariff rates in the double digits starting Aug. 1.
Trump avoided his standard form letter with Brazil, specifically tying his tariffs there to the trial of Bolsonaro, who is charged with trying to overturn his 2022 election loss. Trump has described Bolsonaro as a friend and hosted the former Brazilian president at his Mar-a-Lago resort when both were in power in 2020.
Trump addressed his tariff letter to Brazilian President Luiz Inácio Lula da Silva, who bested Bolsonaro in the 2022 election.
The Brazilian real dropped as much as 2.8 per cent in overnight trading to hit 5.6047 per dollar for the first time since June 6, and was last changing hands at 5.5826 per dollar.
Michael Pfister, FX analyst at Commerzbank, said in a statement "the reasons are clearly politically motivated. Brazil is actually one of the very few countries with a trade deficit with the U.S."
"It's worrying not only for the Brazilian real but also for the U.S. dollar; you can't be sure which country might be next," he said.
In addition to oil, Brazil sells orange juice, coffee, iron and steel to the U.S., among other products, but the country exports more goods to the European Union and China according to the World Trade Organization figures.Top U.S. exports to Brazil are commercial aircraft, petroleum products and crude oil, coal and semiconductors
Brazil is the 15th largest U.S. trading partner, with total two-way trade of $92 billion US in 2024, and a rare $7.4 billion trade surplus, according to U.S. Census Bureau data.
Lula, as he is familiarly known in his home country, said in a statement that Brazil is "a sovereign country with independent institutions that will not accept being taken for granted by anyone." He promised reciprocal action if the U.S. moves took effect, and pointed out that the U.S. over the past 15 years had a $410 billion trade surplus with Brazil.
Trump's rationale for tariffs, at least initially, rested in no small part of U.S. trade deficits.
Brazil VP calls Trump 'misinformed'
Bolsonaro testified before the country's Supreme Court in June over the alleged plot to remain in power after his 2022 election loss. Judges will hear from 26 other defendants in coming months. A decision could come as early as September, legal analysts say.
Brazil's top electoral court has already ruled Bolsonaro ineligible to run for office until 2030, on the grounds that he abused his power during the 2022 campaign and cast unfounded doubts on the country's electronic voting system.
Trump was indicted in 2023 for his efforts to overturn the results of the 2020 U.S. presidential election.
Brazil's vice-president, Geraldo Alckmin, said he sees "no reason" for the U.S. to hike tariffs on the South American nation.
"I think he has been misinformed," Alckmin said of Trump. "President Lula was jailed for almost two years. No one questioned the judiciary. No one questioned what the country had done. This is a matter for our judiciary branch."
Trump also objected to Brazil's Supreme Court fining of social media companies, saying the temporary blocking last year amounted to "SECRET and UNLAWFUL Censorship Orders."
Among the companies the Supreme Court fined was X, which was not mentioned specifically in Trump's letter. X is owned by Elon Musk, Trump's multibillionaire backer in the 2024 election, whose time leading the president's Department of Government Efficiency recently ended and led to a public feud over the U.S. president's deficit-increasing budget plan.
Trump also owns a social media company, Truth Social.
Trump also targeted smaller trade partners
Trump said he is launching an investigation as a result under Section 301 of the Trade Act of 1974, which applies to companies with trade practices that are deemed unfair to U.S. companies.
The tariffs starting Aug. 1 would be a dramatic increase from the 10 per cent rate that Trump levied on Brazil as part of his April 2 "Liberation Day" announcement.
Trump initially announced his broad tariffs by declaring an economic emergency, using a 1977 law to argue that the U.S. was at risk because of persistent trade imbalances. But that rationale becomes problematic in this particular case, as Trump is linking his tariffs to the Bolsonaro trial, and the U.S. exports more to Brazil than it imports.
Trump also sent letters Wednesday to the leaders of seven other nations. None of them — the Philippines, Brunei, Moldova, Algeria, Libya, Iraq and Sri Lanka — is a major industrial rival to the United States.
Trump has said the high tariff rates he's setting are based on trade imbalances, but it was unclear how his targeting of the countries Wednesday would help to reindustrialize America.
Most economic analyses say the tariffs will worsen inflationary pressures and subtract from economic growth, but Trump has used the taxes as a way to assert the diplomatic and financial power of the U.S. on both rivals and allies. His administration is promising that the taxes on imports will lower trade imbalances, offset some of the cost of the tax cuts he signed into law on Friday and cause factory jobs to return to the United States.
With files from Reuters