What's behind Trump's 50 percent tariff for Brazil despite trade surplus?

Al Jazeera

5 days ago

United States President Donald Trump has threatened Brazil with a 50 percent tariff, citing the criminal charges against its former president and his political ally Jair Bolsonaro, who is accused of plotting a coup.
In a letter to Luiz Inacio Lula da Silva, Brazil's current president, Trump said on Wednesday that the treatment of Bolsonaro, who refused to publicly concede the presidential election that he lost to Lula in 2022, 'is an international disgrace'.
The letter was one of 22 tariff notices Trump sent this week to various countries. On Monday, the president extended a pause on his sweeping global tariffs from Wednesday to August 1.
For the most part, Trump says he is trying to rebalance large trading deficits, whereby the US imports more from a country than it exports there.
But the US has a trade surplus with Brazil, and the tariff threatened against South America's largest economy was higher than those received by other countries, which have mostly fallen in the range of 25 to 40 percent.
The escalation in tensions between the US and Brazil came as Lula hosted representatives from China, Russia, Iran and other nations for a BRICS summit of emerging economies in Rio de Janeiro this week.
Leaders attending the summit criticised Trump's tariffs and the recent US and Israeli bombing of Iran, drawing threats from Trump of a 10 percent additional tariff for 'anti-American' BRICS-aligned countries.
What has Trump announced in relation to Brazil?
Trump has continued to publish letters informing US trading partners of tariffs planned to begin on August 1 if they can't reach trade deals with his government before that. So far, he has sent 22 letters to heads of state. More could still come.
While the letters have mostly denounced trade between those countries and the US as 'far from reciprocal', Trump's letter to Lula was stronger.
He wrote that 'due in part to Brazil's insidious attacks on Free Elections, and the fundamental Free Speech Rights of Americans', he planned to levy a 50 percent tax on Brazilian goods exported to the US.
'Please understand that the 50 percent number is far less than what is needed to have the Level Playing Field we must have with your Country,' Trump added. 'And it is necessary to have this to rectify the grave injustices of the current regime.'
He said: 'The way that Brazil has treated former President Bolsonaro, a Highly Respected Leader throughout the World during his term, including by the United States, is an international disgrace.'
How has Brazil responded?
Lula promised to hit back with tariffs of his own if Trump follows through with his threat.
'Brazil is a sovereign nation with independent institutions and will not accept any form of tutelage,' Lula said in a post on X.
He added that the criminal case against Bolsonaro, who challenged the outcome of Brazil's 2022 election, is a matter solely for the justice system and 'not subject to interference or threat'.
Why is Trump targeting Brazil when the US has a trade surplus?
According to the Office of the US Trade Representative, the US imported $42.3bn of goods from Brazil in 2024 and exported $49.7bn.
In short, Brazil's purchases from the US amounted to roughly $7.4bn more than US purchases from Brazil.
Ever since the announcement of his 'Liberation Day' tariffs, on April 2, Trump has consistently stated his desire to reduce America's trade deficits with its trading partners.
In Trump's view, deficit countries, such as the US, import goods that could have been produced at home, harming domestic employment and economic growth in the process.
However, 'Brazil has historically run a small trade deficit with the US', said Elizabeth Johnson, an economic analyst at TS Lombard, a strategy and political research firm. 'It is very much political. … It is part of the Bolsonaro family's effort to get Trump to weigh in on the ongoing trial of Jair Bolsonaro.'
Indeed, this is not the first time Trump has used the threat of tariffs to try to alter other countries' domestic policy decisions.
Since returning to office in January, he has threatened a 25 percent tariff on Colombian goods and said he would double that if the country refused to accept deportees from the US. Colombia ultimately accepted his terms.
What trade does the US do with Brazil?
In 2023, the balance of trade (imports plus exports) between the US and Brazil amounted to $104bn, making Brazil the US's 15th largest trading partner.
Top US exports to Brazil last year included aircraft and spacecraft (amounting to about $7bn), fossil fuels ($9bn) and industrial machinery such as nuclear reactors and electrical equipment (roughly $10bn), according to US Census Bureau data.
Brazil's exports to the US in 2023 were led by crude oil and fossil fuels (about $8.8bn), iron and steel products ($5bn) and soya beans ($3.3bn).
What impact could a 50 percent tariff have on Brazil's economy?
It could severely hurt companies highly exposed to the US market. In particular, firms in the base metals and agricultural sectors could be badly hit.
According to Johnson, Trump's tariff threat could be a drag on economic growth because the US is Brazil's second largest export market after China.
Indeed, Goldman Sachs has calculated that Brazil's exports to the US represent 2 percent of its gross domestic product and Trump's tariffs could cut its economic growth by 0.3 to 0.4 percentage points.
What impact could this have on the US economy?
If the tariffs are implemented, US firms that buy Brazilian goods would most likely have to find alternative sources for those products, and this could take time.
In the meantime, 'the semifinished steel products from Brazil used in American manufacturing mean [that higher tariffs would be] a negative,' Johnson told Al Jazeera.
In addition, 'beef, orange juice, coffee' and other farm products travelling from Brazil into the US would become much more expensive, she said.
On the other hand, Johnson suggested, 'There's room for Trump to score a win with Brazil by allowing more ethanol exports into the US, which would help [American] farmers.'
What charges is Bolsonaro facing in Brazil?
Bolsonaro, who was president of Brazil from 2019 to 2023, refused to concede his presidential election loss to his left-wing rival in 2022.
Bolsonaro raised questions about the accuracy of the election result, claiming that some electronic voting machines had been faulty.
Shortly after Lula took office in January 2023, thousands of Bolsonaro's supporters angered over the election result stormed the presidential palace, Congress and the Supreme Court in the capital, Brasilia.
Now, Bolsonaro is facing criminal charges for allegedly plotting a coup and for alleged actions he took to overturn the 2022 election result.
Bolsonaro and 33 other people were charged this year, and the ex-president's case is being heard by the Supreme Court. He could face 40 years in prison if found guilty.
Bolsonaro has denied any wrongdoing and has framed the trial as a politically motivated attack.
Trump, who also falsely claimed he had beaten Joe Biden in the 2020 presidential election, had faced criminal charges related to seeking to overturn that election. His supporters also stormed the US Capitol before Biden took office, seeking to stop the certification of the election results.
Trump has highlighted what he regards as parallels between himself and Bolsonaro. On Monday, he wrote on social media that he empathised with what was happening to Bolsonaro: 'It happened to me, times 10.'
Which other countries were notified of new tariffs?
Other than Brazil, recipients of tariff letters on Wednesday included the Philippines, Moldova, Sri Lanka, Brunei, Libya, Algeria and Iraq. They were notified of tariffs as high as 30 percent.
The rates Trump said would be imposed on Sri Lanka, Moldova, Iraq and Libya were lower than those he initially announced in early April.
Tariffs on goods from the Philippines and Brunei were higher. The rate for goods from Algeria remained the same.
Trump has said companies that move production to the US will be exempt from tariffs. But he also warned that if countries retaliate, they could face even higher US duties.
The US and its largest trading partners have been negotiating trade deals since Trump announced the tariffs. But so far, only Vietnam and the United Kingdom have reached new deals while a partial agreement has been reached with China.
More recently, Trump administration officials have indicated that deals with India and the European Union may be imminent.