Trump's Brazil Tariffs Over Bolsonaro Case: Relief Mixed with Economic Concerns
Former U.S. President Donald Trump levied 50% tariffs on most Brazilian goods, opposing what he called the "political persecution" of ex-President Jair Bolsonaro, but softened the blow by exempting industries like aircraft, energy, and orange juice.
The tariffs, one of the highest the U.S. has imposed on any economy, were announced alongside sanctions against Brazilian Supreme Court judges overseeing Bolsonaro’s trial for allegedly plotting a coup.
Justification from the U.S. Administration
Then-Treasury Secretary Scott Bessent stated that Alexandre de Moraes "has appointed himself judge, jury, and executioner, carrying out illegal political persecution against U.S. and Brazilian citizens and businesses." He added that de Moraes is responsible for "an oppressive censorship campaign, arbitrary detentions that violate human rights, and politically motivated prosecutions – including against former President Jair Bolsonaro."
Political and Economic Context
Trump's tariffs and sanctions stemmed from weeks of disputes with Brazil's current President Luiz Inacio Lula da Silva, who likened Bolsonaro to an unwelcome "emperor." Bolsonaro, who served as Brazil's president from 2019 to 2022, was dubbed the "Tropical Trump" or "Brazilian Trump" due to perceived similarities with the former U.S. leader.
Exemptions Offer a Measure of Relief
Despite Trump’s attempt to influence a key criminal trial through tariffs, the exemptions offered a measure of relief in Brasilia. Brazil had been calling for protection for impacted major exporters since Trump first announced the tariffs earlier this month. Shares of Embraer (EMBR3.SA) and Suzano (SUZB3.SA) rose.
Brazilian Finance Minister Rogerio Ceron said, "We didn't face the worst-case scenario," adding, "The result was more benign than what it could have been."
Tariff Details and Exemptions
The new U.S. tariffs on Brazilian goods took effect on August 6, rather than Trump’s initially announced date of August 1. The White House, in a note on Trump’s executive order, linked the tariffs to Bolsonaro’s trial for allegedly plotting to overturn the 2022 election loss.
Trump’s 50% tariff order exempted dozens of key Brazilian exports to the U.S., including civilian aircraft, pig iron, precious metals, wood pulp, energy, and fertilizers. Embraer said initial assessments showed Trump’s April 10% tariff remained in place, and the exemption applied to the additional 40% tariff.
Analysis of Potential Impact
Rafael Favetti, a partner at Brasilia political consultancy Fatto Inteligencia Politica, said the exemptions may be a response to U.S. corporate concerns rather than Trump abandoning efforts to influence Brazilian politics. "It also shows that the Brazilian foreign ministry did the right job by making U.S. companies aware of the problem," he said.
Brazilian Foreign Minister Mauro Vieira said he met with U.S. Secretary of State Marco Rubio and reiterated Brazil's willingness to negotiate on the tariff issue, signaling that stalled talks from June could restart. Vieira stressed Bolsonaro's legal troubles could not be part of negotiations. The U.S. State Department did not immediately respond to requests for comment.
Potential Scope of Impact
Despite the exemptions, ex-Brazilian Trade Minister Welber Barral cautioned against celebrating, estimating Brazil exports roughly 3,000 different products to the U.S. "This will have an impact," Barral said.
An analysis by the U.S.-Brazil Business Council showed nearly 700 products were exempted from the higher tariffs, accounting for 43.4% of total Brazilian exports to the U.S. by value.
Among the companies of most concern to Lula’s left-leaning government was Embraer, which exports 45% of its commercial aircraft and 70% of executive jets to the U.S.
Analysts had also warned that Suzano, one of the world's largest wood pulp producers, could be severely affected. Embraer's Sao Paulo shares rose 11%, and Suzano climbed over 1% in afternoon trading.
The Brazilian oil lobby IBP said temporarily suspended oil shipments to the U.S. would resume after oil products were listed as exempt from the new tariffs. Mining lobby Ibram said the exemptions covered 75% of mining exports.
Sectors Not Included in Exemptions
However, other key sectors did not escape Trump’s blow. Wednesday’s order did not exempt beef and coffee, both key exports to the U.S.
Roberto Perosa, head of Brazilian meatpacking lobby Abiec, which represents beef producers such as JBS and Marfrig, told reporters on Wednesday that the group estimates losses would reach $1 billion in the second half of this year due to the new tariffs. Cecafe, a Brazilian coffee exporters group, said in a statement that it would continue to push for coffee to be included in the exemption list.
Potential Legal Challenges
Controversy over Trump's tariffs is expected to persist, with the underlying political motivations providing ammunition for plaintiffs seeking to challenge them in court. Alex Jacquez, who served on the White House National Economic Council under the Biden administration, called the new tariffs a clear "violation of the law and of Trump's own stated trade policies." He added: "We run a trade surplus with Brazil - these punitive tariffs won't balance any unfair trade, they'll just make a cup of coffee more expensive."
Potential Consumer Impact
It is likely that these tariffs will result in increased prices for some Brazilian products in the United States, which may impact consumers. However, the exemptions that have been applied to some key sectors may mitigate this impact to some extent. It is important to monitor how these events unfold and their impact on trade between the two countries.
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