Trump's Brazil tariffs are more about political revenge: analysis
Much of the US administration's ire has been directed at Alexandre de Moraes, the Brazilian Supreme Court judge in charge of investigating Bolsonaro.In announcing the tariff hike, the White House also accused Brazil of "actions harming US companies", "free speech rights of US persons" and what it described as Brazil's "politically motivated persecution, intimidation, harassment, censorship and prosecution" of Bolsonaro.The "actions" and "free speech rights" mentioned in the White House statement are likely references to Moraes's previous court orders for some social media companies to shut down accounts associated with the former president, which Moraes accused of spreading harmful disinformation.Moraes is renowned in Brazil for his actions targeting misinformation. Last year, he temporarily shut down Elon Musk's X in Brazil– one of the platform's largest markets – for failing to appoint a legal representative in the country after he ordered the suspension of dozens of accounts for spreading disinformation, which Musk called "censorship". In Brazil, some hail Moraes as a champion of democracy. Others share Bolsonaro's view that he is "authoritarian", or even a "dictator", in Musk's words.Earlier this year, Trump's own media group, which operates his Truth Social platform, sued the Supreme Court judge over censorship accusations.Shortly before the tariff announcement, the US also imposed sanctions on Moraes and issued him and his family with a visa ban.Some analysts argue this row over policing social media companies is itself a trade issue.Fabio Andrade, a political scientist and professor of international relations at The Higher School of Advertising and Marketing in Brazil, argued the motivations for tariffs are "not solely" political.He said big tech companies are important in the US economy and were "crucial in financing Trump's campaign" and could now face significant cost increases from increased regulation in Brazil.
But these new US tariff and sanction policies are also partly the result of a long campaign by the former president's son Eduardo Bolsonaro, who has spent the last few months lobbying US officials on his father's behalf.Moraes has ordered that Eduardo, a federal lawmaker, be investigated for alleged obstruction of justice, and has instructed Jair Bolsonaro to wear an electronic ankle tag ahead of his trial, to comply with a curfew, to stay off social media and to avoid contacting his son.To support his friend, Trump has slapped Brasilia with these tariffs, sanctions and visa bans - all designed to exert pressure on Brazilian authorities to back down on criminal proceedings against Bolsonaro.So far, they don't seem to be working – and could harm both nations in the meantime.Left-wing President Lula has repeatedly rejected the moves and dismissed them as foreign interference, defending the Supreme Court's moves as judiciary independence and urged the US to negotiate."The interference of the American government in Brazilian Justice is unacceptable," Lula said on Wednesday in response, adding that while the country remains open to negotiating with the US on trade, they were preparing measures to "protect Brazilian workers, companies, and families". Relations remain icy – Lula and Trump have never even exchanged a phone call.On the upside for President Lula, he has enjoyed an opinion poll bounce domestically as he responds to Trump's tariff threats, similarly to Canada's Mark Carney.He has even taken to wearing a blue cap, not dissimilar to Trump's notorious red "Make America Great Again" one, which says "O Brasil é dos brasileiros" or "Brazil belongs to Brazilians".In fact, some analysts in Brazil say these tariffs, imposed on Bolsonaro's behalf, could backfire on the former president, who is currently barred from running again in next year's presidential election.Not least because some producers – including those more likely to support Bolsonaro – will be severely impacted by the new rate.
Brazil has an enormous agriculture business and sells a lot of beef, oil and steel products to the US.The US gets about a third of its coffee and more than half its orange juice from Brazil, including through major brands like Tropicana and Starbucks.Some items - including many oils, orange juice and some aircraft parts - have been excluded from the tariffs for now.But the new 50% tariff rate – set to take effect in October – will likely make other goods more expensive for Americans as companies pass on higher costs to consumers, and that Brazilian producers will have to absorb some of the higher prices themselves. Brazil may seek new buyers globally, but exporters say that won't offset the short-term impact.Cecafé, Brazil's coffee exporters council, said the impact on Brazilian roasters and exporters will be "significant", to expect price hikes for Americans too, as the US is Brazil's largest coffee customer.Brazilian producers and exporters are making contingency plans in anticipation of the 50% tariffs. But those I've spoken to stress that replacing US trade will not be possible in the short term.Cecafé told me it wouldn't be easy to find other markets for the 8.1 million tonnes of coffee currently exported to the US, which would require an increase in demand from other countries.New markets are opening to Brazil in Asia, which imported 19.4% more Brazilian coffee last year, as Arab countries also imported 31.5% more, according to Cecafé, but these increases are not enough to absorb any potential US shortfall.What's not clear yet is Brazil's next move: Will Brasilia and Washington negotiate a new deal, as other nations have? Or will Brazil retaliate, turning this spat into a mutual trade war?Lula says he won't be intimidated. Trump shows no sign of backing down. Both are big personalities, with supporter bases from opposite ends of the political spectrum to impress.What (else) could go wrong?
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
14 minutes ago
- Reuters
Gold succumbs to profit-taking after US jobs data-fuelled rally
Aug 4 (Reuters) - Gold prices slipped on Monday as investors booked profits after a sharp rise in the previous session following weaker-than-expected U.S. jobs data that boosted expectations for a Federal Reserve interest rate cut in September. Spot gold lost 0.3% to $3,354.17 per ounce as of 0229 GMT. Bullion had risen more than 2% on Friday. However, U.S. gold futures gained 0.2% to $3,407.10. "Gold has made a conservative start to the week following Friday's price jump. A combination of profit taking and dollar stabilisation has caused gold to ease marginally to kick-off the week," KCM Trade Chief Market Analyst Tim Waterer said. Asian markets tracked Wall Street lower as fears for the U.S. economy returned with a vengeance, prompting investors to price in an almost certain rate cut in September and undermining the dollar. Last week, U.S. job growth slowed more than expected in July, with nonfarm payrolls increasing by 73,000 jobs last month, after rising by a downwardly revised 14,000 in June, the Labor Department's Bureau of Labor Statistics said. This revived hopes of a Fed rate cut in September, with markets now pricing in an 81% chance, per CME FedWatch tool, opens new tab. The tariffs U.S. President Donald Trump imposed last week on scores of countries are likely to stay in place rather than be cut as part of continuing negotiations, Trade Representative Jamieson Greer said in comments aired on Sunday. "But with Trump on the tariff warpath once again, and the soft U.S. jobs report increasing the odds that we could see a September FOMC rate cut, any pullbacks in the precious metal could be of a shallow nature," Waterer added. Gold, traditionally considered a safe-haven asset during political and economic uncertainties, tends to thrive in a low-interest-rate environment. Spot silver fell 0.6% to $36.80 per ounce, platinum slipped 0.6% to $1,307.02 and palladium eased 0.9% to $1,197.76.
Reuters
14 minutes ago
- Reuters
India cenbank seen holding rates, but US tariffs raise odds of cut
MUMBAI, Aug 4 (Reuters) - India's central bank is expected to hold rates steady on Wednesday, but the odds of another cut have risen after the United States slapped steep tariffs on Indian exports last week, adding to pressure on growth even as inflation stays subdued. A large majority of economists, or 44 of 57, in a July 18–24 Reuters poll expect the Reserve Bank of India's monetary policy committee (MPC) to hold the repo rate at 5.50% on August 6. However, sentiment has shifted following the tariff announcement. "Even without that tariff announcement, a case could be made for a 25 basis point rate cut. The 25% tariff rate is an added growth shock," ANZ Research said, adding that both growth and inflation are likely to undershoot the RBI's forecasts. The RBI delivered a larger-than-expected 50bp cut in June and shifted its stance to "neutral", signalling that further moves would depend on incoming data. India's manufacturing sector expanded at its fastest pace in 16 months in July, with the HSBC-S&P Global PMI rising to 59.1. But business confidence fell to a three-year low, with firms citing competitive pressures and inflation concerns — a sign that underlying demand may be softening. India's annual retail inflation slowed to a more than six-year low of 2.10% in June, near the lower end of the central bank's tolerance band, as food prices continued to ease. Inflation is seen falling to a record low in July. "While this backdrop is conducive for further monetary easing, we believe it is not yet compelling enough to deliver a fourth straight rate cut and exhaust the policy arsenal," said Aastha Gudwani, India chief economist at Barclays. RBI Governor Sanjay Malhotra said last month the central bank had won the battle against inflation but the war was ongoing, and future policy decisions would be guided by the outlook for growth and inflation rather than current levels. Nomura also said the bar for an August cut is high after the June easing and stance shift, though it raised the probability of a cut to 35% from 10% earlier. "Neither bonds nor the swaps market is pricing in a rate cut on Wednesday, and if it happens, we could actually see a rally. Currently the base case is a dovish commentary and a pause on rates," a trader at a state-run bank said. Traders are also awaiting the announcement of a revised liquidity framework, which may come alongside the policy.
Reuters
14 minutes ago
- Reuters
Indian equity benchmarks to open higher after five weeks of losses
Aug 4 (Reuters) - India's equity benchmarks are expected to open higher on Monday, following five straight weeks of losses as investors assess U.S. tariffs and the Federal Reserve's future policy action after weak labour market data. Gift Nifty futures were trading at 24,678.5 points as of 7:42 a.m. IST, indicating that the Nifty 50 (.NSEI), opens new tab will open above its previous close of 24,565.35. The Nifty and Sensex (.BSESN), opens new tab indexes fell about 1.1% last week, marking their fifth straight weekly loss as the U.S. hit several trading partners with steep tariffs and imposed a 25% duty on India, stoking global growth worries. Meanwhile, data showed that U.S. employment growth was weaker than expected in July and the count for the prior two months was revised down significantly, increasing the probability of a September interest rate cut by the Federal Reserve. Lower U.S. interest rates are associated with lower Treasury yields and a weak dollar, making emerging market equities such as India's more attractive for foreign portfolio investors (FPIs), who have been on a selling spree recently. FPIs sold Indian shares worth $2.05 billion last month, taking their total selling in Indian equities in 2025 to $11.63 billion. Market participants will remain focused on tariffs until certainty emerges over a trade deal between the U.S. and India, analysts said. ** Conglomerate ITC ( opens new tab beats first-quarter profit estimates, buoyed by higher sales of cigarettes and packaged food, particularly in rural areas ** Tata Power ( opens new tab reports lower-than-expected quarterly profit due to weak electricity demand ** Multi Commodity Exchange of India ( opens new tab posts strong growth in profit and revenue for the first quarter, and announces a 1:5 stock split
