Trump's 50% Brazil tariff stretches emergency powers already facing court challenge
Trump said in a letter Wednesday that he is imposing the massive new tariff at least partly in retaliation against Brazil's treatment of its former president, Jair Bolsonaro.
But to do so, he is citing a law that only grants him emergency economic powers in order to deal with certain foreign threats to the United States, a White House official told CNBC Thursday.
That same law — the International Emergency Economic Powers Act, or IEEPA — is at the center of an ongoing lawsuit over Trump's "reciprocal" tariffs that is currently before a federal appeals court.
Trump's lawyers say his invocation of the law to impose those tariffs was an appropriate move to address multiple national emergencies, including "America's exploding trade deficit."
The White House did not immediately respond to CNBC's questions about Trump's letter to Brazil, including how Bolsonaro's circumstances relate to Trump's stated authority under IEEPA.
While the latest levy on Brazilian imports may not have a direct impact on the lawsuit already underway, critics say it could further erode the administration's credibility as Trump pursues an aggressive trade agenda.
Trump's letter announcing the tariff on Brazil "takes abuse of power to a whole new level," said Sen. Tim Kaine, D-Va., in a statement Thursday.
Kaine vowed to "use all available means to block these latest job-killing tariffs."
Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, accused Trump of attempting to "sacrifice the economy to settle his own personal scores, and it is far outside his legal authority."
IEEPA gives the president some powers to deal with national emergencies stemming from "any unusual and extraordinary threat" that comes in whole or in large part from outside the U.S.
Trump previously cited IEEPA in early April, when he slapped 10% tariffs on nearly all other countries' imports, plus higher rates on dozens of individual nations. His April 2 executive order announcing those tariffs also formally declared a national emergency.
According to the order, foreign trade practices that "contribute to large and persistent annual United States goods trade deficits" have caused the loss of America's "industrial capacity" and "compromised military readiness."
Trump temporarily suspended the higher tariffs a week later, following a trading frenzy in global markets.
In late May, the U.S. Court of International Trade struck the reciprocal tariffs down, ruling that IEEPA did not authorize Trump to impose them.
The judges in that case found that Trump's assertion of "unbounded" tariff-making power "exceeds any tariff authority delegated to the President under IEEPA."
But in June, judges on the U.S. Court of Appeals for the Federal Circuit paused that decision from taking effect while the case is still pending.
"We'll have to see" if Trump's tariff letter to Brazil could factor into the appeal, said Ilya Somin, a law professor who is representing plaintiffs in the case against the Trump administration.
"For the moment, these new Brazil tariffs are not part of the case," Somin said in a phone interview.
But he added that the letter "further underscores the indefensible nature" of Trump's assertion that he has virtually "unreviewable discretion" on tariffs.
This week, Trump began a new strategy: firing off individual letters to world leaders that set new tariff rates on their countries' U.S. imports, starting Aug. 1.
The nearly two dozen letters sent so far include identical language complaining about trade policies that have created "persistent" and "unsustainable Trade Deficits against the United States."
"This Deficit is a major threat to our Economy and, indeed, our National Security!" they read.
But Trump's letter to Brazil takes things much further, by explicitly declaring that he is imposing tariffs because he opposes the recent political and legal developments in the country.
Trump specifically decried Brazil's treatment of Bolsonaro, who is facing trial over his role in an alleged coup to overturn his 2022 reelection loss.
"This Trial should not be taking place," Trump wrote in the letter to current President Luiz Inacio Lula da Silva. "It is a Witch Hunt that should end IMMEDIATELY!"
He said the 50% tariff was coming in part due to "Brazil's insidious attacks on Free Elections." He also alleged that the country has attacked the "fundamental Free Speech Rights of Americans," accusing Brazil's Supreme Court of unlawfully censoring U.S. social media platforms.
Trump also knocked Brazil's trade policies. Echoing his language from prior letters, Trump claimed that Brazil's persistent U.S. trade deficits pose a national security threat.
Except that Brazil is one of the few trading partners with whom the U.S. maintains a goods trade surplus, not a deficit.
That surplus totaled $7.4 billion in 2024, according to the Office of the U.S. Trade Representative.
"He's either lying or misinformed," Somin said of Trump's incorrect claim.
Somin also asserted, contra Trump and his lawyers, that the U.S. having trade deficits with its partners is not unusual and does not constitute an emergency.
So "it's particularly stupid when we actually have a trade surplus," he said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNBC
8 minutes ago
- CNBC
EU chief to meet Trump in Scotland in push to avoid a transatlantic trade war
European Commission President Ursula von der Leyen will meet with U.S. President Donald Trump in Scotland over the weekend, seeking to reach a framework trade agreement shortly before a 30% tariff on EU imports comes into effect. In a post on social media platform X on Friday, the EU's von der Leyen said she had agreed to meet with the U.S. president on Sunday "to discuss transatlantic trade relations, and how we can keep them strong." Trump later confirmed the meeting would take place as he arrived in Scotland on Friday evening, saying "we'll see if we can make a deal." "I think we have a good 50/50 chance. That's a lot," he added. It comes amid a sense of growing optimism about the prospect of a tariff breakthrough, with sources telling CNBC that the current base-case scenario for a deal includes a 15% tariff on EU imports to the U.S. Trump has threatened to impose tariffs of 30% on EU goods from Aug.1, prompting the EU to consider countermeasures as part of its response. The U.S. and EU have the largest bilateral trade and investment relationship in the world, representing almost 30% of global trade in goods and services, and accounting for 43% of global gross domestic product (GDP), according to EU figures. Trump's four-day and golf-heavy Scotland visit is also expected to see him hold an informal meeting with U.K. Prime Minister Keir Starmer. Unlike the EU, the U.K. recently struck a trade deal with the Trump administration, one which is centered on a 10% tariff baseline on British goods arriving in the U.S. Hopes of the U.S. and EU averting a transatlantic trade war from Aug. 1 have been buoyed at least in part by the recent announcement of a framework agreement between the U.S. and Japan. The U.S.-Japan deal, which Trump described in a social media post as "perhaps the largest Deal ever made," includes a baseline tariff rate of 15%. Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics, said Friday that a similar framework for the EU might be seen as case where a bad deal is better than no deal. "Reports this week suggest that the EU and US are on the brink of agreeing a trade deal with a 15% baseline tariff on US imports from the bloc. It's hard to spin it as a good deal, but it would at least avoid much higher US tariffs and retaliation from the EU," Allen-Reynolds said in a research note.
Newsweek
8 minutes ago
- Newsweek
China's Xi Makes Trump Wait for Leader Talks
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The White House has been optimistic about the prospects for an in-person summit with Chinese President Xi Jinping—the first of President Donald Trump's second term. Yet analysts say the Chinese leader is likely holding out for concrete deliverables before agreeing to the high-profile meeting. All Eyes on Sweden Trump dramatically escalated the trade war with the world's second-largest economy in April, rolling out sweeping new tariffs that prompted China to respond with its own export duties and other measures. While Trump has said that "the confines of a deal" are in place ahead of a third round of talks between U.S. and Chinese negotiators, set for Sweden next week, several contentious issues remain unresolved. These include ongoing U.S. curbs on advanced chip exports to China and persistent geopolitical friction over influence in Asia and Beijing's threats toward Taiwan. Newsweek reached out to the White House and Chinese embassy in the U.S. via email for comment. Europe's Role Patrick Cronin, Asia-Pacific security chair at the Hudson Institute, told Newsweek: "A Xi-Trump summit is highly probable, but withholding final approval until Beijing can button down more information and as many concessions as possible is no doubt part of Xi's calculus." "What China and the United States can each negotiate with the EU will also help inform the China-US trade bargain that will be at the heart of any Xi-Trump summit," Cronin said. After months of efforts with dozens of countries, the White House recently secured a handful of deals with Japan, Vietnam, the Philippines and Indonesia, Cronin added. In a picture combination created on May 14, 2020, Chinese President Xi Jinping, left, and U.S. President Donald Trump are shown. In a picture combination created on May 14, 2020, Chinese President Xi Jinping, left, and U.S. President Donald Trump are shown. Dan Kitwood, Nicholas Kamm/AFP via Getty Images Among the deals Trump hopes to achieve is with the EU—a traditionally U.S.-aligned bloc that has become increasingly alienated by Trump's unpredictable trade moves and controversial domestic policies. Analysts say China has been seeking to exploit this rift and achieve a thaw in ties with Brussels that has deteriorated over issues like alleged Chinese market flooding with state-subsidized electric vehicles, human rights concerns and Beijing's support for Russia amid the war in Ukraine. Sean King, an Asia scholar and senior vice president at Park Strategies, told Newsweek: "PRC [People's Republic of China] leaders have long seen Europe as a comparatively easier mark, as the continent doesn't have America's Asian security concerns and obligations." He added, "It's probably better for Trump to first line up what he says are trade deals with friends and allies before going for the big one with Beijing." While European Commission President Ursula von der Leyen's visit to Beijing this week yielded a memorandum of understanding on climate change and an agreement to facilitate rare-earth exports, analysts note that a fundamental shift in EU-China ties remains elusive. Timetable Uncertain U.S. Secretary of State Marco Rubio, visiting Malaysia earlier this month for meetings with his Chinese counterpart Wang Yi, said that "the odds are high" a Trump-Xi summit will take place by the end of the year. Rosemary Foot, professor and senior research fellow at the University of Oxford's Department of Politics and International Relations, told Newsweek it's unlikely Xi is counting on Europe as leverage in his dealings with the White House. "I think that it is to do with China's more general approach to the Trump administration which is to wait for some intention to offer a serious deliverable from the meeting and perhaps also to paint President Trump as supplicant," she said. Trump and Xi last met in 2019 at the G20 summit in Osaka, Japan.
28 minutes ago
US-China trade talks: Can China reduce its export dependence?
BEIJING -- China's high dependence on exports will likely be a key focus of a new round of U.S.-China trade talks this coming week in Stockholm, but a trade deal would not necessarily help Beijing to rebalance its economy. U.S. Treasury Secretary Scott Bessent has said he hopes the negotiations can take up this issue, along with China's purchases of oil from Russia and Iran, which undercut American sanctions on those two countries. Hopes rose for a breakthrough in talks after U.S. President Donald Trump announced deals with Japan, Indonesia and the Philippines this week. The U.S. wants China to do two things: Reduce what both the U.S. and the European Union see as excess production capacity in many industries, including steel and electric vehicles. And secondly, to take steps to increase spending by Chinese consumers so the economy relies more on domestic demand and less on exports. 'We could also discuss the elephant in the room, which is this great rebalancing that the Chinese need to do,' Bessent told financial news network CNBC. He said China's share of global manufacturing exports at nearly 30%, 'can't get any bigger, and it should probably shrink.' The issues are not new, and China has been working to address them for years, more for domestic reasons than to reduce its trade surpluses with the U.S. and other countries. Bessent's predecessor as treasury secretary, Janet Yellen, made industrial policy a focus of a trip to China last year. She blamed government subsidies for flooding the global market with 'artificially cheap Chinese products.' The European Union, whose top leaders met their Chinese counterparts in Beijing on Thursday, has cited subsidies to justify EU tariffs on electric vehicles made in China. In the 1980s, the U.S. pressured Japan to boost consumer spending when American manufacturing was overwhelmed by exports from the likes of Toyota and Sony. Economists have long argued that China likewise needs to transform into a more consumer-driven economy. Consumer spending accounts for less than 40% of China's economy, versus close to 70% in the United States and about 54% in Japan. Chinese leaders have spoken about both factory overcapacity and weak consumer spending as long-term problems and have sought over the past 20 years to find ways to rebalance the economy away from export manufacturing and massive investments in dams, roads, railways and other infrastructure. Fierce price wars have prompted critical reports in official media saying that companies are 'racing to the bottom,' skimping on quality and even safety to reduce costs. With strong government support, they've also expanded overseas, where they can charge higher prices but still undercut local competitors, creating a political backlash. All that competition and price cutting has left China battling deflation, or falling prices. When companies receive less for their products, they tend to invest less. That can lead to job cuts and lower wages, sapping business activity and spending power — contrary to the long-term goal of increasing the share of consumer spending in driving overall growth. To counter that, the government is spending billions on rebates and subsidies for people who trade in their cars or appliances for new ones. But acknowledging a problem and solving it are two different things. Economists say more fundamental changes are needed to boost consumption and rein in overcapacity. Such changes can only come incrementally over time. Private Chinese companies and foreign-invested companies create the most jobs, but they've suffered from swings in policy and pressures from the trade war, especially since the pandemic. Demographic changes are another challenge as China's population shrinks and ages. Many experts advocate expanding China's social safety net, health insurance, pensions and other support systems, so that people would feel freer to spend rather than save for a medical emergency or retirement. Yan Se, an economist at Peking University's Guanghua School of Management, warned at a recent forum that deflation will become a long-term issue if China doesn't step up its welfare benefits. 'Chinese people deserve a better life," he said. One possibility, put forward at the same forum by Liu Qiao, the dean of the business school, would be to change incentives for local government officials, rewarding them for raising consumption or household incomes instead of meeting an economic growth target. He doesn't see that happening nationwide but said it could be tested in a province. 'That would send out a message that China needs a different approach,' he said. Chinese leader Xi Jinping has made transforming the country into a technology superpower a top priority. It's a goal that has gained urgency as the U.S. has tightened restrictions on China's access to high-end semiconductors and other advanced knowhow. Output in high-tech manufacturing is growing quickly, adding to potential overcapacity, just as what happened with the government's encouragement of 'green' technologies such as solar panels and wind turbines. Various industries, including EV makers, have pledged to address the issue, but some local governments are striving to keep money-losing enterprises afloat, reluctant to lose tax revenues and jobs, or to fail to meet economic growth targets. Going forward, the government is calling for more coordination of economic development polices in fields such as artificial intelligence so that not every province champions the same industry. But government moves to counter the impact of higher tariffs tend to support sectors already in overcapacity, and the share of consumption in the economy has fallen in recent years.
