By Luciana Magalhaes and Ricardo Brito

BRASILIA (Reuters) -When U.S. President Donald Trump linked 50% tariffs on Brazil to the trial against his ally, the country’s former far-right leader, Washington left Latin America’s largest economy with few options to deescalate but may have overestimated the country’s vulnerability to the levies.

Brazil President Luiz Inacio Lula da Silva has neither the political will nor the legal authority to interfere in the case against his predecessor Jair Bolsonaro, who faces charges of plotting a coup in the aftermath of a fierce and bitter 2022 election which Lula won.

Brazil is in a stronger position than many developing nations given the country’s relatively lower trade exposure to the U.S., even if high tariffs would still be painful.

Unlike most countries in the world, Brazil actually has a trade deficit with the U.S.

The U.S. takes in some 12% of Brazil’s exports, less than half what China buys, and worth only around 1% of GDP. Mexico – Latin America’s second largest economy – sends 80% of its exports to the U.S.

“We are a long way from having the same vulnerability that other countries have in regards to the U.S.,” said one Brazilian diplomat on condition of anonymity as they are not authorized to speak publicly on the matter.

“We regret this measure has been taken but… we won’t suffer in the short term the brutal impact other economies would.”

The tariffs would also cause pain in the U.S.

Brazilian coffee in particular is a huge U.S. import and a 50% tariff could send coffee prices soaring. Other products like orange juice could also be hit.

ARX investment firm said it saw only “marginal and manageable macroeconomic impact on the Brazilian economy,” though others like Goldman Sachs said they expected the tariffs could shave 0.3% to 0.4% off Brazil’s GDP if maintained.

POLITICAL TARIFFS

With the U.S. tariffs more clearly politically motivated than other levies threatened by Trump, Lula is bereft of clear negotiating options.

The political motivation behind the tariff threat makes it “harder to see an off-ramp for Brazil compared with other countries that received tariff letters,” wrote William Jackson, chief emerging markets economist at Capital Economics.

In Trump’s letter outlining the Brazil tariffs he decried what he described as a “witch hunt” against far-right ally Bolsonaro, saying the levies were imposed due “in part to Brazil’s insidious attacks on Free Elections, and the fundamental Free Speech Rights of Americans.”

In a move seen by many – including Brazil’s president – as an attack on the country’s sovereignty, the US president, Donald Trump, announced on Wednesday that he intends to impose an additional 50% tariff on Latin America’s largest country from 1 August.

Not only was this the highest rate among this week’s announcements – and aimed at a country with which the US has maintained a trade surplus for 17 years – but the letter sent to the Brazilian president, Luiz Inácio Lula da Silva, also stood out for its intemperate tone, in contrast to the standard format adopted in letters to other countries.

Trump portrayed the new tariff as retaliation for the legal cases faced by former president Jair Bolsonaro, who is now on trial and could soon be jailed for allegedly leading an attempted coup to overturn his 2022 electoral defeat to Lula. Bolsonaro denies the charges.

What is happening? On Monday, Trump issued his strongest defence to date of Bolsonaro, claiming that the far-right former Brazilian president, often referred to as the “Trump of the Tropics”, was the victim of a “witch-hunt” aimed at keeping him out of next year’s election. Brazil summoned the US envoy in response to the extraordinary intervention. On Wednesday, while announcing the new 50% tariff, the US president repeated many of the same arguments and also claimed that Brazil’s supreme court had issued “censorship orders” against US tech companies, accusing the country of “ongoing attacks on the digital business activities of American firms”. Brazil once again summoned the US envoy and symbolically rejected the letter, while Lula, who on Monday said that Brazil does not accept external interference, issued a new statement rebutting Trump’s claims point by point. His staff are now assessing whether to retaliate against the new tariff.

How is it going down inside Brazil? Given the US’s longstanding trade surplus with Brazil, which had received the minimum 10% tariff in the April round, the general reaction was one of surprise. One of Bolsonaro’s politician sons, however, was quick to claim credit for the tariff hike. Eduardo Bolsonaro hailed it as a “success” resulting from the “intense dialogue” he has maintained with members of the Trump administration since March, when he took leave from the lower house and moved to the US. Business leaders who typically support Bolsonaro, however, were among those most likely to be affected by the tariffs – including sectors such as coffee, meat, textiles, plastics and footwear – and have raised concerns. Bolsonaro’s inner circle was reportedly now working to ensure that the political and economic fallout does not fall on the former president.

New Delhi: A high-voltage clash is playing out across continents, pitting Brazil’s President Luiz Inácio Lula da Silva against U.S. President Donald Trump. The trigger is Trump’s decision to impose a 50% tariff on Brazilian imports from August 1 – a step that has jolted Brazil’s leadership and raised tensions between two of the Americas’ biggest economies.

Lula did not mince words. He called Trump’s action “an attack on Brazil’s sovereignty and judicial independence”. He said in a statement that the move was “discriminatory interference” and accused the U.S. president of “meddling in Brazil’s democratic institutions”.

As news of the tariff hit headlines, the Brazilian president fired back, announcing that his government would impose reciprocal tariffs on the United States. He declared publicly that Brazil would retaliate.

The timing of Trump’s tariff salvo is no coincidence. Last week, leaders from BRICS nations gathered in Rio de Janeiro. Since then, the U.S. president has ramped up criticism of the bloc, targeting not just Brazil but all BRICS members, including India, with an additional 10% tariff.

“Any country that embraces BRICS’ anti-America policy will have to pay,” Trump had said.

Lula did not hold back in his response. “He needs to understand the world has changed. We do not want emperors,” Lula said.

But the tariff is not the only fuel in this fire. Trump went a step further, accusing the Brazilian government of carrying out a “witch hunt” against former President Jair Bolsonaro- who is presently facing trial for allegedly plotting to overturn the 2022 election results.

Lula was not having it. “Democracy in Brazil is a matter for the Brazilian people. We are a sovereign country. We do not accept surveillance by anyone. We have strong and independent institutions. No one is above the law, especially those who attack freedom and the rule of law,” he wrote on X.

Trump had doubled down on Bolsonaro’s behalf. In a letter posted on Truth Social, he said Bolsonaro’s treatment was “an international disgrace”.

The Trump-Bolsonaro bond is well known. They shared power at the same time, even meeting at the White House in 2019. Now residing in the United States, Bolsonaro continues to reject all charges against him. His trial is underway for allegedly inciting a violent uprising in January 2023, when thousands of supporters stormed Brazil’s government buildings.

Lula has stood firm, reiterating that all proceedings against Bolsonaro fall under the jurisdiction of Brazil’s judiciary.

Trump’s attacks have not stopped at politics. He accused Brazil of “attacking American tech companies”.

Lula dismissed the claim, saying, “Freedom of expression in Brazil does not mean violence or abuse. All companies, domestic or foreign, must follow our laws if they wish to operate here.”

Trump also claimed the United States was losing in trade with Brazil. Lula countered with facts.

“American statistics themselves show that over the past 15 years, the United States made a profit of $410 billion from trade in goods and services with Brazil,” Lula posted on X.

He said if the United States imposes any unilateral tax hikes, Brazil will respond in kind.

This is not their first economic showdown. Earlier this year, Trump slapped a 25% tariff on Brazilian steel and aluminium. Lula immediately promised to take the matter to the World Trade Organization (WTO).

Speaking from Tokyo during that time, he had said, “We will take two actions – appeal to the WTO, which we will do, and impose high tariffs on U.S. goods. We cannot remain silent.”

Despite the escalation, Lula’s minister Alexandre Padilha maintained that Brazil “does not encourage trade wars” and does not want to be part of one.

But Trump’s repeated barbs have not helped. Lula has criticised what he sees as Trump’s pattern of threatening sovereign nations over trade and internal policies.

The Brazilian president has been working to carve out a strong, independent voice for his country within BRICS and other Latin American alliances. His strategy is widely seen as a counter to Trump’s unilateralism.

Trump’s latest 50% tariff is a dramatic jump from the 10% hike he announced in April. That announcement had already rattled Brazil’s stock markets and caused a slump in major companies’ shares.

Lula called Trump’s move “baseless” and reaffirmed Brazil’s plan to respond with its own tariffs. Before the BRICS summit, Lula had already warned, “There are no winners in a trade war.”

Once geographically distant, the two leaders are now locked in a fierce war of words – one that is already spilling over into markets, diplomacy and global headlines.

Brazil’s ‘Silva’ Lining: As Trump Threatens Tariffs, Lula Hits Back At ‘Emperor’

Last Updated: July 10, 2025, 22:46 IST

In response, the US president sent a letter to the South American nation, announcing a 50% additional tax on goods made in Brazil

Brazilian President Lula da Silva threatened to reciprocate Trump’s tariffs. (Image/Reuters)

Donald Trump has a new thorn in his side: Brazil’s socialist president, Lula da Silva. It all began when Trump threatened to impose a 10% additional tariff on nations aligning themselves with the “anti-American policies of BRICS”. Trump has been lashing out at the BRICS group, suspecting that its member nations are attempting to undermine the dollar. As expected, Trump targeted BRICS after its joint declaration indirectly criticised trade wars and recent military attacks in Iran.

The Brazilian president, who is also hosting this year’s BRICS, quickly retaliated against his US counterpart. Lula da Silva took a dig at Trump, stating that the world does not want an “emperor” who lashes out over the internet. In response, the US president sent a letter to the South American nation, announcing a 50% additional tax on goods made in Brazil. In the letter, Trump declared a “witch hunt” against former far-right president Jair Bolsonaro, Lula’s predecessor, who is facing prosecution over his alleged role in a plot to overturn the 2022 election.

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Trump also accused the Brazilian government of “insidious attacks on free elections and the fundamental free speech rights of Americans”, including censorship of “US social media platforms.” It’s worth noting that Trump’s company, Trump Media, which operates his Truth Social platform, is among the US tech companies fighting Brazilian court rulings over suspended social media accounts. The country had also temporarily banned Elon Musk’s social media site X after the platform refused to ban accounts accused by Brazil of spreading misinformation about the country’s 2022 presidential election. Last month, Brazil’s Supreme Court ruled that social media companies can be held responsible for content posted on their platforms.

Interestingly, in his letter to Brazil, Donald Trump spoke favourably of Bolsonaro, who had enjoyed a friendly relationship with him during Trump’s previous presidency. Bolsonaro is often dubbed “Trump of the Tropics”. Both men subsequently lost presidential elections and refused to publicly acknowledge defeat. Bolsonaro, who governed Brazil between 2019 and 2022, is standing trial for allegedly attempting a coup with thousands of his supporters storming government buildings in the capital in January 2023 after Lula’s election victory—a stunning parallel to Trump’s behaviour.

However, Bolsonaro was in the United States at the time of the attempted coup and has denied any links to the rioters or involvement in the plot. Earlier this week, Trump compared Bolsonaro’s prosecution to the legal cases he has similarly faced. But Brazil’s Lula has hit back hard. Not one to back down, the Brazilian president has made it clear to his US counterpart that Brazil will not accept any tutelage.

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In a post on X, Lula rejected what he described as external interference in Brazil’s democratic institutions. He further countered Trump’s claims of a US trade deficit with Brazil by citing United States government statistics showing a surplus of $410 billion in trade of goods and services over the past 15 years. Lula added that any unilateral tariff increases will be addressed in accordance with Brazil’s economic reciprocity law.

The US president has linked the 50% additional tariffs on Brazil to what he calls the witch hunt of the country’s former president, Jair Bolsonaro. What’s clear from the public spat between the two presidents is that diplomatic relations between Brazil and the United States have hit an all-time low.

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First Published: July 10, 2025, 22:46 IST

News world Brazil’s ‘Silva’ Lining: As Trump Threatens Tariffs, Lula Hits Back At ‘Emperor’

The EU expects trade relations with the US to remain difficult, even once a principle agreement is reached to resolve the tariff dispute between the two transatlantic partners, according to EU diplomats.

“We are working non-stop to find an initial agreement with the US – to keep tariffs as low as possible, and to provide the stability that businesses need,” Commission President Ursula von der Leyen said on Thursday, adding: “But we are also not naïve. We know the relationship with the US may not return to what it once was.”

The EU is awaiting a decision from US President Donald Trump, who has an EU-US trade agreement on his desk with a view to resolve the tariff dispute that has been ongoing since mid-March, according to remarks by his trade secretary Howard Lutnick in the US media.

The US currently imposes 50% tariffs on EU steel and aluminium, 25% on cars and 10% on all EU imports.

But though a framework agreement now appears within reach, that will only constitute a first step toward a more comprehensive trade deal, and what comes next is causing concern among Europeans.

On 14 July, EU trade ministers will meet to discuss the future of their relation with the US.

EU Member states will not be satisfied by the agreement

“Even if there’s a trade agreement, that would probably not be the end of it,” one EU diplomat said, “trade relations with the US have become fragile, unpredictable.”

Having long advocated a zero-rated tariff offer on all industrial goods from both sides of the Atlantic, the Commission has now settled on a baseline tariff rate of 10% on EU goods arriving in the US. Exemptions may apply to aircraft and spirits, but progress on negotiations on other strategic sectors—such as cars, aluminium, steel, and pharmaceuticals—remains faltering.

The EU diplomat said that member states will not be satisfied with the agreement in principle said now to be in reach.

“Most people expect a deal, but if there’s a deal that doesn’t bring us to a better place from a European perspective than where we were before, we’ll have increased tariffs, it will affect negatively trade between the EU and the US,” he said.

Another EU diplomat predicted difficult negotiations among the 27 EU countries. Once the agreement in principle is approved, each country will take out its calculator to assess how its economy is affected, and what will need to be negotiated in a more comprehensive agreement to limit the negative impact on its trade.

In the short term, tensions could be high over whether the EU should implement the €21 billion retaliation list targeting US products, which has been suspended until July 14. Some countries, like Germany and Italy—highly exposed to trade with the US—favour a flexible, non-escalatory approach. Others, like France, want to show strength.

A second retaliation list is also reportedly ready. According to diplomats, the amount proposed by the Commission—€95 billion worth of US products—has been reduced. However, the Commission said that its implementation has not yet been determined.