🇺🇸 Trump’s “Tariff Shock” on Brazil: Political and Economic Analysis

 

🇺🇸 Trump’s “Tariff Shock” on Brazil: Political and Economic Analysis

1. Political Context: Bolsonaro, Lula, and U.S. Retaliation

In January 2025, Donald Trump returned to the U.S. presidency, adopting an uncompromising protectionist stance. He directly linked the imposition of tariffs to accusations against Jair Bolsonaro, Brazil’s former allied president, currently on trial for attempted coup. In a letter to Lula, Trump labeled the process a “witch hunt” and justified the tariff hikes based on that (aljazeera.com, reuters.com).

Diplomatic tensions escalated with U.S. visa bans on Brazilian judges by Marco Rubio and Lula’s statements calling the move “unacceptable blackmail” (pt.wikipedia.org).

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2. Tariff Timeline

• March 12, 2025: Trump announces a 25% tariff on Brazilian steel and aluminum, effective immediately (brasildefato.com.br).

• April 2, 2025: A government document indicates possible tariffs on multiple Brazilian sectors (automotive, chemical, electronics, ethanol, etc.) (www1.folha.uol.com.br).

• April 5: Implementation of a 10% flat tariff on all Brazilian exports to the U.S., according to the Brazilian government (agenciabrasil.ebc.com.br).

• August 1, 2025: Scheduled start of a 50% tariff on all Brazilian exports to the U.S., announced on July 9 (pt.wikipedia.org).

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3. Economic Impacts: Key Sectors and Projections

• Steel and Aluminum: ArcelorMittal Brazil reported a 5–7% price drop for U.S.-bound products after the 25% tariff, with the U.S. being a key market (44% of its exports) (www1.folha.uol.com.br). Brazil’s steel industry employs about 121,000 workers (~2% of GDP), now facing lower demand and regional unemployment (brasildefato.com.br).

• Coffee and Orange Juice: Brazilian coffee exports to the U.S. totaled US$2 billion in 2024, accounting for 30% of U.S. consumption; orange juice supplies 42% of U.S. imports. With 50% tariffs, sales are projected to plummet, contracts canceled, and consumer prices rising (pt.wikipedia.org).

• Agribusiness Overall: Sharp declines are expected for beef (US$ 1.4 billion annually), soy, and citrus. FGVAgro estimated up to a 75% export loss in food products and a negative GDP impact of up to 0.4 p.p. in 2025 (upi.com).

• Chemicals and Resins: Exports worth US$ 2.4 billion in 2024 face contract cancellations and financing difficulties following tariff announcements (reuters.com).

• Macro Scenario: Projected annual export losses of US$ 12–17 billion (3.6–5% of total), GDP contraction of 0.3%–0.8% in 2025, and up to 100,000 jobs lost (upi.com, reuters.com).

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4. Brazil’s Political and Diplomatic Response

• The Brazilian government formally appealed to the WTO and passed the Commercial Reciprocity Act in July, preparing for retaliatory tariffs if the U.S. proceeds with the 50% hike (agenciabrasil.ebc.com.br).

• Lula declared Brazil would not accept “tutelage” and remained open to dialogue while preparing for a potential trade war, assembling an interministerial committee led by Vice President Alckmin to work with the private sector on negotiation proposals (upi.com, euronews.com, pt.wikipedia.org, reuters.com, apnews.com).

• International solidarity: BRICS countries, the EU, and China criticized the tariffs as coercive and WTO-inconsistent (pt.wikipedia.org).

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5. Political Shifts and Public Opinion

• Trump’s initiative inadvertently boosted Lula’s political standing, attracting support even from conservative and business sectors that see tariffs as an economic threat, while damaging Bolsonaro’s reputation, including among former allies who initially welcomed Trump’s move (apnews.com).

• The cultural phenomenon known as “vampetaço” went viral on social media, expressing public discontent through protests and memes defending Brazilian sovereignty (en.wikipedia.org).

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📌 Final Considerations

Trump’s “tariff shock” goes beyond traditional economic logic, entering the realm of international politics and diplomatic coercion.
Its economic effects are broad: key sectors such as agribusiness, steel, chemicals, and mining face real revenue losses, canceled contracts, and potential GDP decline. Politically, the move backfires on Bolsonaro while strengthening Lula’s image as a nationalist leader defending Brazil’s sovereignty, triggering strong domestic and international reactions.

The big question remains whether there is room for negotiation before the August 1, 2025 deadline. Otherwise, reciprocal measures under Brazil’s Commercial Reciprocity Act could escalate into a trade conflict.

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Main Sources:

• Reuters – economic impacts and trade balance (reuters.com, reuters.com, reuters.com, reuters.com)

• Folha de S.Paulo – steel industry and tariff outlook (www1.folha.uol.com.br, www1.folha.uol.com.br, brasildefato.com.br, upi.com)

• Agência Brasil and others – diplomatic responses and legal actions (pt.wikipedia.org)

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