<\/p>\n
The US decision to impose 25% tariffs on Brazil has reignited a trade dispute with President Luiz Inacio Lula da Silva\u2019s government just months before October\u2019s presidential election, potentially shaping the outcome of a deeply polarized race.<\/p>\n
While the Trump administration said the tariffs, due to take effect on July 22, were in response to unfair trade practices, their biggest impact may prove political.<\/p>\n
Lula, as Brazil\u2019s president is known, has successfully rallied public opinion behind him when faced with earlier US trade pressure. He is set to face off with right-wing Senator Flavio Bolsonaro, who flew to the US earlier this month to testify against the trade penalties then under consideration, saying they\u2019d only help the leftist leader\u2019s re-election bid.<\/p>\n
\u201cThe proposed tariffs would reward the very offenders they are meant to punish,\u201d Bolsonaro wrote in his submission to the Office of the US Trade Representative.<\/p>\n
Those appeals from the son of former President Jair Bolsonaro, an ally of Donald Trump, appear to have been set aside during the US investigation. Brazilian business groups have already started criticizing the measure, warning it could deal a significant blow to the country\u2019s exporters.<\/p>\n
The yearlong inquiry \u201cfound a number of Brazil\u2019s practices to be unreasonable and discriminatory, restricting the competitive position of American farmers, workers, innovators, and exporters,\u201d the Office of the US Trade Representative said in a post on X late Wednesday.<\/p>\n
US Trade Representative Jamieson Greer said the action was necessary \u201cto address these unfair trade practices to ensure American workers and companies can compete on a level playing field.\u201d The US remains open to negotiations to address the issues identified, he said in a statement.<\/p>\n
Amcham Brasil, the American Chamber of Commerce for Brazil, said the tariffs would place Brazil among the countries facing the most restrictive conditions to access the US market, affecting more than $11 billion in industrial and agricultural exports.<\/p>\n
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Imports of coffee, beef, and certain ethanol products would be exempt from the new duties, a senior administration official told reporters ahead of the announcement. Ethanol would be subject to the new tariffs, however. The country\u2019s National Confederation of Industry, known as CNI, also raised concerns, noting that 20 of Brazil\u2019s 27 states saw exports to the US decline in the first half of the year.<\/p>\n
Line of attack<\/p>\n
While exempting key Brazilian exports potentially limits the fallout for Latin America\u2019s largest economy, the politics look harder to set aside.<\/p>\n
Lula\u2019s poll ratings rose after he cast US pressure as an attack on Brazil\u2019s sovereignty, and he\u2019s now been gifted a potent line of attack against his opponent, whose father sat at the center of Trump\u2019s initial efforts to hammer Brazil with trade levies.<\/p>\n
Lula\u2019s campaign will revive the strategy it adopted when the tariffs were first announced in early June, instructing its supporters to use social media to link the tariff hike to Bolsonaro, reinforcing the narrative that he betrayed the country, according to a person involved in the plan.<\/p>\n<\/p>\n
The campaign plans to center its messaging on the slogan \u201cTariFl\u00e1vio,\u201d the person said, asking not to be named because they were not authorized to discuss campaign strategy publicly.<\/p>\n
\u201cIt does not look good for Flavio as his visit to the US didn\u2019t really prevent the outcome,\u201d said Dan Pan, an economist at Standard Chartered Bank in New York. \u201cIt could even give Lula more firing power against Flavio amid his close ties with the Trump administration.\u201d<\/p>\n
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Markets largely shrugged off the news, with the Brazilian real opening lower in line with other emerging-market currencies following the US tariff announcement.<\/p>\n
\u2018No justification\u2019<\/p>\n
Brazil\u2019s government denounced the tariffs and said it would take measures to insulate its economy from their effects. It also accused the Bolsonaro family of working with the US government to enable them.<\/p>\n
\u201cThere is no justification for unilateral measures against our country,\u201d the government in Brasilia said in a statement. \u201cWe will continue to diversify our trade partnerships and open new markets for our products.\u201d<\/p>\n
Lula\u2019s administration will meet Thursday morning to discuss the situation and how it plans to invoke Brazil\u2019s reciprocity law, according to a person familiar with the matter. This allows the government to adopt countermeasures against countries that implement hostile unilateral trade practices.<\/p>\n
The US administration proposed an additional 25% duty on imports from Brazil in a June 1 report following an investigation pursued under Section 301 of the Trade Act of 1974. The report specifically calls out the central bank\u2019s electronic payments service known as Pix which is used by millions of Brazilians every day.<\/p>\n
The US argued that Brazil has \u201cunfairly disadvantaged\u201d US providers of electronic payment services by adopting policies that favor Pix, a platform Lula has repeatedly portrayed as a symbol of technological sovereignty and financial independence.<\/p>\n
Brazil said the allegations related to Pix had no merit, and vowed to pursue reciprocal tariffs and relief via the World Trade Organization.<\/p>\n
In his submission, Flavio Bolsonaro also defended Pix, describing it as \u201cone of the hallmarks of Jair Bolsonaro\u2019s administration.\u201d<\/p>\n
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In a post on X, Secretary of State Marco Rubio accused the Brazilian government of not negotiating in good faith. He said Lula\u2019s \u201ceconomic policies are bad for Americans and bad for Brazilians. For the past year, Lula has put his own ego ahead of making a deal for the welfare of the Brazilian people, and these tariffs are the price for that.\u201d<\/p>\n
Flavio Bolsonaro retweeted Rubio\u2019s post.<\/p>\n
Today, President Trump directed USTR to impose a 25% tariff on most Brazilian imports. Let there be no confusion about why: President Lula and his government have not negotiated with the US in good faith.<\/p>\n
His economic policies are bad for Americans and bad for Brazilians. For\u2026<\/p>\n
\u2014 Secretary Marco Rubio (@SecRubio) July 16, 2026<\/p>\n
Last year, Trump imposed 50% tariffs on a broad range of Brazilian goods in an effort to pressure Brazilian authorities over the prosecution of Jair Bolsonaro, who is under house arrest serving a 27-year sentence for attempting a coup following his 2022 election defeat to Lula.<\/p>\n
Most of those duties were later rolled back after negotiations between Bras\u00edlia and Washington, in a diplomatic victory for Lula.<\/p>\n
The stakes are also high for US exporters, which last year sold more than $45 billion of goods to Brazil.<\/p>\n
Despite the escalating dispute, both governments are still trying to avoid a broader trade conflict. Greer has met repeatedly with Brazil\u2019s Trade Minister M\u00e1rcio Elias in recent months to seek a resolution. Lula\u2019s government intends to keep negotiating, but has ruled out concessions it considers politically or legally unacceptable, including changes to Pix, according to a person familiar with the talks.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#tariffs #Brazil #risk #election #gift #Lula<\/p>\n","protected":false},"excerpt":{"rendered":"
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