Brazil-US Trade Conflict May Escalate, Spurring Mutual Retaliation

Reports indicate that both Brazil and the U.S. are exploring ways to retaliate, escalating the trade feud initiated by President Trump when he imposed a 50% tariff on Brazilian imports. The political status of former President Jair Bolsonaro is also a factor influencing the situation.

Brazil-U.S. Trade Conflict Set to Escalate: Economic Sanctions May Result

The conflict between the U.S. and Brazil over trade tariffs and the judicial treatment of former President Jair Bolsonaro risks escalating into a full impasse, as both parties are reportedly exploring further retaliatory measures.

The bilateral relationship has deteriorated since President Trump imposed a 50% tariff on all Brazilian imports effective August 1. He cited concerns about a witch hunt against Bolsonaro and the censorship faced by U.S.-based social media companies operating in Brazil.

The U.S. government has already taken action in this regard, with Secretary Marco Rubio revoking the visas of Supreme Federal Court Justice Alexandre de Moraes and other judges involved in Bolsonaro’s trial.

Rubio stated that this political pursuit “not only violates the basic rights of Brazilians but also extends beyond Brazil’s shores to target Americans.” However, the Brazilian government views these measures as an intrusion into its internal affairs, with President Luiz Inácio Lula da Silva rejecting the actions taken against the judges.

Lula declared:

Interference by one country in another’s justice system is unacceptable and violates the basic principles of respect and sovereignty between nations.

Lula would be studying ways of increasing taxation for big tech in Brazil, including enacting a digital tax recently rolled back by Canada, and establishing restrictions on dividend payments by U.S. companies operating in Brazil. Nonetheless, the government would have a difficult time passing legislation for this, as a 15% multinational company tax was already passed this year.

The Trump administration could also retaliate, putting in danger a trade turnover that reached over $92 billion in 2024, with a surplus for the North American Nation of over $7 billion.

Read more: Trump Administration Imposes 50% Tariff on Brazilian Imports