The Brazilian government has warned of possible retaliation and economic countermeasures after US President Donald Trump announced steep 50% tariffs on most Brazilian goods, set to take effect from August 6.
The move escalated trade tensions between the two countries, with Brazilian President Luiz Inacio Lula da Silva calling the US action unjustified. He also vowed to protect national interests under Brazilian law.
Following Trump’s announcement, President Lula abruptly left an animal rights event, stating that he needed to “defend the sovereignty of the Brazilians” in response to the tariff measures.
BRAZIL’S RESPONSE TO US TARIFF MEASURES
The Brazilian government issued a statement reiterating its willingness to engage in trade negotiations with the United States. However, it emphasised that Brazil will not give up the tools it has under national law to defend itself, hinting that retaliation could be possible.
The statement criticised the use of “political arguments” by the US to justify the tariffs. It also expressed support for Supreme Court Justice Alexandre de Moraes, who recently faced US sanctions, describing such measures as an “unacceptable” interference in Brazil’s judicial system.
Brazilian industry lobby, the CNI, has estimated that that the imposition of 50% US import tariffs could result in the loss of over 100,000 jobs and knock off 0.2 percentage points from Brazil’s annual economic growth, resulting in a downfall for economic growth and employment . Brazil’s agribusiness lobby, CNA, warns exports to the US — the country’s second-largest trading partner — could fall by half. And this is an especially delicate juncture for Brazil.
The tensions escalated on April 2, declared as the Liberation Day by Trump, Brazil faced the minimum 10% tariff rate, but if a deal is not reached by the end of this week, South America’s largest economy is staring at a whopping 50% levy imposed by US.
BRAZILIAN OFFICIALS FRUSTRATED OVER US RESPONSE
A Brazilian government official expressed frustration over the lack of dialogue from the US, saying, “Trade deals are a result of negotiations, but there is no dialogue if the US doesn’t respond to our letters. I’m worried.”
Despite the challenges, Brazilian Treasury Secretary Rogerio Ceron remained cautiously optimistic, stating, “We’re not facing the worst-case scenario. It’s a more benign outcome than it could have been.”
The tariffs imposed have excluded Brazilian exports to US in sectors like civil aircraft, pig iron, precious metals, wood pulp, energy and fertilizers. Despite the exemptions, Brazilian trade secretary Welber Barral stated that there will be an impact.
According to Rafael Favetti, a partner at the political consultancy Fatto Inteligencia Politica in Brasilia, the exceptions probably stem from worries of US firms, rather than representing a retreat from Trump’s attempts to manipulate Brazilian politics.
– Ends
With inputs from Reuters
Tune In