Brazil plans retaliation to Trump tariffs as analysts predict growing China ties
Source: South China Morning Post | Original Published At: 2025-07-10 20:18:51 UTC
Key Points
- Brazil seeks measured retaliation against Trump's 50% tariff hike on exports
- US-Brazil trade relations face strain amid ideological accusations
- Analysts predict tariffs may push Brazil closer to China
- Lula administration considers patent suspensions and profit taxes under Reciprocity Law
- Trump links tariffs to alleged 'persecution' of Bolsonaro and Brics alignment
Brazil scrambled to craft a measured but strong response to US President Donald Trump’s surprise tariff hike on Thursday in hopes of shielding key industries, while analysts predicted the tariffs would drive the country closer to China.
Trump sent a letter to President Luiz Inácio Lula da Silva on Wednesday confirming that Brazilian exports would face 50 per cent duty starting August 1. He claimed the measure would punish what he called “unfair trade barriers” and political “persecution” of former president Jair Bolsonaro, now on trial for allegedly plotting a coup.
The ideological language surprised officials in Brasilia, since over the past 15 years the United States has recorded consistent trade surpluses with Brazil, reaching a cumulative total of US$410 billion. Last year alone the US surplus was US$28.6 billion, its third-largest worldwide for the year.
Trump’s announcement came at a delicate moment, just days after he threatened 10 per cent duties on countries supporting what he described as “anti-American” policies of the Brics bloc. Lula, who hosted the Brics summit in Rio de Janeiro, dismissed his words as “irresponsible” and said Brazil “would not be intimidated”.
Inside Lula’s government, officials said they were wary of direct retaliation that could backfire. Many imports from the US are machines and parts needed by Brazilian factories, so higher Brazilian tariffs might raise local industries’ costs instead of hurting US firms.
In response, the Lula administration is weighing moves such as suspending medicine and seed patents, halting royalty payments, or taxing US profits, all permitted under Brazil’s Reciprocity Law, approved in April.