Trump Hits Brazil with Tariffs, Sanctions but Key Sectors Excluded
Trump announced the tariffs, some of the steepest levied on any economy in the U.S. trade war, as his administration also unveiled sanctions on the Brazilian supreme court justice who has been overseeing Bolsonaro's trial on charges of plotting a coup.
'Alexandre de Moraes has taken it upon himself to be judge and jury in an unlawful witch hunt against U.S. and Brazilian citizens and companies,' Treasury Secretary Scott Bessent said in a statement.
Bessent said Moraes 'is responsible for an oppressive campaign of censorship, arbitrary detentions that violate human rights, and politicized prosecutions — including against former President Jair Bolsonaro.'
Last week, the Brazilian justice levied search warrants and restraining orders against Bolsonaro over allegations he courted Trump's interference in his criminal case, in which he is accused of plotting to stop President Luiz Inacio Lula da Silva from taking office in 2023.
Trump's final tariff order and the sanctions followed weeks of sparring with Lula, who has likened the U.S. president, a close ideological ally of Bolsonaro's, to an unwanted 'emperor.'
On Wednesday, Lula and his government closed ranks behind Moraes, calling the U.S. sanctions 'unacceptable.'
'The Brazilian government considers the use of political arguments to defend the trade measures announced by the U.S. government against Brazilian exports to be unjustifiable,' it said in a statement.
Lula added that Brazil was willing to negotiate trade with the U.S., but that it would not give up on the tools it had at hand to defend itself, hinting that retaliation was possible.
Still, Trump's tariff order threatened that if Brazil were to retaliate, the U.S. would also up the ante.
DIPLOMACY AT WORK
Despite Trump's effort to use the tariffs to alter the trajectory of a pivotal criminal trial, the range of exemptions came as a relief for many in Brasilia, who since Trump announced the tariff earlier this month had been urging protections for major exporters caught in the crossfire.
'We're not facing the worst-case scenario,' Brazilian Treasury Secretary Rogerio Ceron told reporters.
The new tariffs will go into effect on August 6, not on Friday as Trump announced originally.
Trump's executive order formalizing a 50% tariff excluded dozens of key Brazilian exports to the United States, including civil aircraft, pig iron, precious metals, wood pulp, energy and fertilizers.
Planemaker Embraer EMBR3.SA, whose chief executive has met with officials in Washington and U.S. clients in recent days to plead its case for relief, said an initial review indicated that a 10% tariff imposed by Trump in April remains in place, with the exclusion applying to the additional 40%.
The exceptions are likely a response to concerns from U.S. companies, rather than a step back from Trump's efforts to influence Brazilian politics, said Rafael Favetti, a partner at political consultancy Fatto Inteligencia Politica in Brasilia.
'This also shows that Brazilian diplomacy did its work correctly by working to raise awareness among U.S. companies,' he said.
Brazil's minister of foreign affairs, Mauro Vieira, said he met with U.S. Secretary of State Marco Rubio on Wednesday to express the nation's willingness to discuss tariffs after negotiations stalled in June, though he stressed Bolsonaro's legal troubles were not up for debate.
It remains unclear what Brazilian authorities 'are bringing to the negotiating table to, for instance, open the domestic market,' Goldman Sachs said in a note to clients.
IMPACT SMALLER THAN EXPECTED
The effective tariff rate on Brazilian shipments to the U.S. should be around 30.8%, lower than previously expected due to the exemptions, according to Goldman.
Oil shipments to the U.S., which had been suspended, are set to restart after being spared, lobby group IBP said. Meanwhile, mining lobby Ibram said the exemptions covered 75% of mining exports.
However, it was still too soon to celebrate, said former Brazilian trade secretary Welber Barral, estimating that Brazil exports some 3,000 different products to the United States.
'There will be an impact,' Barral said.
Trump's tariff exemptions did not shield two of Brazil's key exports to the U.S., beef and coffee.
Meatpackers expect to log $1 billion in losses in the second half of the year on the new tariffs, lobby group Abiec, which represents beef producers including JBS JBS3.SA and Marfrig MRFG3.SA, said.
Coffee exporters will also continue to push for exemptions, they said in a statement.
The government said it was readying measures to protect Brazil's businesses and workers.
If Brazil were to retaliate against Trump's measures, that 'would generate a larger negative impact' on activity and inflation, Goldman said.
'The political inclination may be to retaliate, but exporters and business associations have been urging the Brazilian administration to engage, negotiate and de-escalate.'
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Diplomat
12 minutes ago
- The Diplomat
Trump's Tariffs on India Imperil India-US Strategic Relationship
In addition to a 25 percent tariff on Indian exports, Trump has announced an 'unspecified penalty' on India for buying Russian oil and arms. President Donald Trump has announced a 25 percent tariff on all Indian exports to the United States, starting August 7. He also announced an 'unspecified penalty' on India for buying oil and weapons from Russia. The tariffs on India are higher than those Trump imposed on India's export peers in Asia, which will likely make Indian goods less competitive in the U.S. market. American importers will choose suppliers in Vietnam or Indonesia, whose goods will come under lower tariffs. Indian goods worth some $87 billion could be affected if the Trump administration implements the new tariffs. It would shave off 0.5 percent from India's GDP growth, according to some estimates. 'They have one of the highest tariffs in the world now, they're willing to cut it very substantially,' Trump told reporters after his social media post on July 30. 'We're talking to India now – we'll see what happens … You'll know by the end of this week,' he added, seemingly keeping a door open for more talks. A U.S. delegation is to arrive in India for more discussions but that will be well past the August 1 deadline set by Trump for countries to seal bilateral deals with Washington. India's reaction was measured. Its Commerce and Industry Ministry said the government had taken 'note' of Trump's remarks and was examining its implications. Both countries were engaged in talks for arriving at a 'fair, balanced and mutually beneficial' bilateral pact, and India remained 'committed' to that goal, it said. The ministry's statement placed India's red lines front and center – i.e., national interest would take precedence during talks with the U.S., as it had for pacts like the Comprehensive Economic and Trade Agreement concluded between India and the U.K. on July 23-24. In his weekly media briefing today, Indian External Affairs Ministry spokesman Randhir Jaiswal said ties between the two countries had 'weathered several transitions and challenges.' The focus, he said, was on the substantive agenda that India and the U.S. have committed to. Trump's announcement of punitive tariffs on India came after he announced trade deals with the Philippines, Japan, Indonesia, the European Union (EU), and South Korea. Pakistan also secured a trade deal that saw its tariff rate lowered to 19 percent. U.S. talks with India's strategic rival, China, are said to be at an advanced stage. Beijing is expected to get off easier as it controls the rare earth elements supply chain that the U.S. industry cannot do without. In his 'Liberation Day' announcement on April 2, Trump had slapped India with 26 percent tariffs. Two Indian officials, whom The Diplomat spoke to separately, said that taking a cue from U.S. deals with Japan, Indonesia, and others, New Delhi had been expecting Washington to impose a 15-17 percent tariff rate on India. India is also upset with the 'unspecified penalty' Trump has imposed on it for its purchase of oil and weapons from Russia. After all, New Delhi has not made any big-ticket arms purchases from Russia since the $5.5 billion S400 Triumf missile system deal in 2018. As a result of its strong ties with the former Soviet Union during the Cold War, a large part of India's defense hardware continues to be of Soviet/Russian origin. However, Moscow's share in Indian defense purchases has fallen over the years. According to the Stockholm International Peace Research Institute, India's arms imports from Russia fell from 72 percent of its total defense purchases in 2010-14 to 55 percent in 2015-19 and 36 percent in 2024. India has been diversifying its defense acquisitions, and France, Israel, and the United States have emerged among its top procurement sources. Additionally, India is also stressing self-reliance in defense procurement. It hopes to purchase more military hardware manufactured by local companies. It does seem that India's refusal to condemn Russia's war in Ukraine, its purchase of discounted Russian oil, and participation in BRICS meetings underlie Trump's imposition of an 'unspecified penalty' on India. Trump's harsh treatment of India has taken New Delhi by surprise. In February, Indian Prime Minister Narendra Modi and Trump had what seemed to be a successful White House meeting, when the start of talks for a trade pact was announced. Both Modi and Trump had then agreed to boost bilateral trade, which is currently worth $129 billion, to $500 billion by 2030. 'Recognizing that this level of ambition would require new, fair-trade terms, the leaders announced plans to negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by fall of 2025,' a joint statement issued after the Modi-Trump talks said. However, things did not unfold as India expected. Several rounds of talks have followed since then in New Delhi and Washington. But these have not narrowed the differences between the two sides. U.S. demands that India open up its sensitive farm and dairy sectors to U.S. imports, and its seeking of relaxed laws on data storage and digital trade, remain sticking points. Ironically, India was among the few countries that was not worried about Trump's second stint in the White House. It had worked well with the first Trump administration, and New Delhi expected Trump 2.0 to be easy to handle. However, Trump's focus on trade, righting deficits, and abandoning friend-shoring for onshoring has put India in a difficult spot. Trump's tariffs will have implications that go beyond trade. It is likely to have a dampening effect on the India-U.S. strategic relationship, which has been carefully nurtured over the past 25 years by the leadership of both countries across administrations, including Trump himself during his first term in office (2017-2021). In recent decades, India and the U.S. have described themselves as 'engaged democracies' rather than 'estranged democracies' as they were known during the Cold War years, when they were on opposite sides. India-U.S. ties have been warming since the year 2000. The high-water mark came when they signed the 2008 India-U.S. civil nuclear deal that helped integrate Asia's third-largest economy into the global nuclear commerce. With the enhancement of strategic trust, India has also been buying defense hardware from the United States. Since 2008, defense procurement from India has shot up to over $20 billion. U.S. Navy ships now make regular calls at Indian ports, and both sides engage in joint military exercises in India and the U.S. India has been looking to emerge as a pole in a multipolar world with help from strategic partners like the U.S. to achieve its ambition of becoming a developed economy by 2047. Trump's intemperate remarks against the India-Russia partnership, his outreach to Pakistan, which he berated in his first term for its support for terrorism, and his overtures to China, besides pressuring India with high tariffs, have cast a shadow over the India-U.S. strategic partnership. Trump is said to have sought a telephone call with Modi. But it is unclear what the Indian prime minister can offer Trump at this stage to get him to reduce the tariff rate. India had been counting on measures like increased purchases of fuel and military hardware from the U.S., besides making changes in its civil nuclear liability law to remove provisions that penalize suppliers of equipment than operators of plants, to woo Trump. Amendments to India's civil nuclear pact would open the doors for U.S. companies to set up plants in energy-starved India, which currently imports more than 80 percent of its fuel requirements. India does not have the resources to promise reciprocal investments, the central offering made by the EU, Japan, and South Korea in their trade deals with the United States. In the short term, India will have to focus on minimizing the consequences of Trump's punitive tariffs, particularly the ones relating to Russian oil. That is because any disruption in supplies will have a major impact on the Indian economy. In the medium term, a Trump visit to India, planned for September-October, may be deferred if there is no trade deal. This could place a question mark over the future of the Quad and the Indo-Pacific. And in the long run, India may have to examine the consequences of an increasingly unreliable United States. There is talk of a revival of the Russia-India-China or RIC trilateral. Russia has been keen to revive the grouping, while India has seemed noncommittal without an explicit no. Any move to revive the group is likely to anger Trump who sees groupings like RIC and BRICS as anti-U.S. In times of global uncertainty, middle and smaller powers do hedge their bets. In India's case though, China is not a partner it can rely on, given its largely acrimonious relationship with Beijing. Given Russia's current heavy dependence on China, Moscow too may not be the partner to India that it once was. That leaves India with not too many options except for making the best of an existing bad situation — a daunting challenge indeed for Indian diplomacy.
Nikkei Asia
12 minutes ago
- Nikkei Asia
5 takeaways from new US tariffs: Trump and UK win, South Korea loses
U.S. flags flutter in front of shipping containers at the Port of Long Beach in California on July 11. © Reuters KEN MORIYASU and PAK YIU WASHINGTON/NEW YORK -- President Donald Trump's self-imposed trade deadline expired on Friday, putting in place a new trade landscape -- one in which countries pay for the right to access the American market. Since Trump announced "reciprocal" tariffs on countries around the world on April 2, nations have been negotiating with Trump administration officials on terms to reduce the tariff burden.
Japan Today
42 minutes ago
- Japan Today
US employers slash hiring as Trump advances a punishing trade agenda
By Paul Wiseman and Christopher Rugaber U.S. hiring is slowing sharply as President Donald Trump's erratic and radical trade policies paralyze businesses and raise doubts about the outlook for the world's largest economy. U.S. employers added just 73,000 jobs last month, the Labor Department reported Friday, well short of the 115,000 expected. Worse, revisions shaved a stunning 258,000 jobs off May and June payrolls. And the unemployment rate ticked higher to 4.2% as Americans dropped out of the labor force and the ranks of the unemployed rose by 221,000. 'A notable deterioration in U.S. labor market conditions appears to be underway,'' said Scott Anderson, chief U.S. economist at BMO Capital Markets. 'We have been forecasting this since the tariff and trade war erupted this spring and more restrictive immigration restrictions were put in place. Overall, this report highlights the risk of a harder landing for the labor market.'' Economists have been warning that the rift with every U.S. trading partner will begin to appear this summer and the Friday jobs report appeared to sound the bell. 'We're finally in the eye of the hurricane,' said Daniel Zhao, chief economist at Glassdoor. 'After months of warning signs, the July jobs report confirms that the slowdown isn't just approaching—it's here.' U.S. markets recoiled at the jobs report and the Dow tumbled more than 600 points Friday. But President Donald Trump responded to the weak report by calling for the firing of Erika McEntarfer, the director of the Labor Department's Bureau of Labor Statistics, which compiles the jobs numbers. 'I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY,' Trump said on Truth Social. 'She will be replaced with someone much more competent and qualified.' Trump questioned the big revisions, but they are a standard part of the monthly jobs report. The Labor Department revises its numbers as more data comes in. Particularly since COVID-19, responses to its surveys of businesses and households have declined, making the data more subject to revision. Revelations in the new data raise questions about the health of the job market and the economy as Trump pushes forward an unorthodox overhaul of American trade policy. Trump has discarded decades of U.S. efforts to lower trade barriers globally, instead, imposing hefty import taxes — tariffs — on products from almost every country on earth. Trump believes the levies will bring manufacturing back to America and raise money to pay for the massive tax cuts he signed into law July 4. Mainstream economists warned that the cost of the tariffs will be passed along to Americans, both businesses and households. That has begun. Walmart, Procter & Gamble, Ford, Best Buy, Adidas, Nike, Mattel, Shein, Temu, Stanley Black & Decker, have all hiked prices due to U.S. tariffs. Economists at Goldman Sachs estimate that overseas exporters have absorbed just one-fifth of the rising costs from tariffs, while Americans and U.S. businesses have picked up the lion's share of the tab. Trump has sowed uncertainty in the erratic way he's rolled the tariffs out — announcing, then suspending them, then coming up with new ones. Overnight, Trump signed an executive order that set new tariffs on a wide swath of U.S. trading partners to that go into effect on Aug. 7, and that comes after a flurry of unexpected tariff-related actions this week. 'There was a clear, significant, immediate, tariff effect on the labor market and employment growth essentially stalled, as we were dealing with so much uncertainty about the outlook for the economy and for tariffs,' said Blerina Uruci, chief U.S. economist for the brokerage T. Rowe Price. Still, Uruci said the data suggests we could be past the worst, as hiring actually did pick up a bit in July from May and June's depressed levels. 'I'm not overly pessimistic on the U.S. economy based on this morning's data,' she said, though she does think that hiring will remain muted in the coming months as the number of available workers remains limited due to reduced immigration and an aging population. 'Because of immigration policy, labor supply growth has nearly ground to a halt,' said Guy Berger, senior fellow at the Burning Glass Institute, which studies employment trends. 'So we're going to have very weak employment growth. And we look like southern Europe or Japan.' Still, with fewer workers available, the economy doesn't need to generate many jobs to soak up the unemployed. That could keep the unemployment rate from climbing much, Berger added. Trump has sold the tariffs hikes as a way to boost American manufacturing, but factories cut 11,000 jobs last month after shedding 15,000 in June and 11,000 in May. The federal government, where employment has been targeted by the Trump administration, lost 12,000 jobs. Jobs in administration and support fell by nearly 20,000. Healthcare companies added 55,400 jobs last month – accounting for 76% of the jobs added in July and offering another sign that recent job gains have been narrowly concentrated. The department originally reported that state and local governments had added 64,000 education jobs in June. The revisions Friday slashed those jobs to less than 10,000. Those revisions also revealed that the U.S. economy has generated an average of just 85,000 jobs a month this year, barely half last year's average of 168,000 and well below an average 400,000 from 2021-2023 as the economy rebounded from COVID-19 lockups. The weak jobs data makes it more likely that Trump will get one thing that he most fervently desires: A cut in short-term interest rates by the Federal Reserve, which often -- though not always -- can lead to lower rates for mortgages, car loans, and credit cards. Fed Chair Jerome Powell and other Fed officials have repeatedly pointed to a healthy job market as a reason that they could take time to evaluate how Trump's tariffs were affecting inflation and the broader economy. Now that assessment has been undercut and will put more pressure on the Fed to reduce borrowing costs. Wall Street investors sharply raised their expectations for a rate cut at the Fed's next meeting in September after the report was released. On Wednesday, the Fed left its key rate unchanged for fifth consecutive meeting and Powell signaled little urgency to reduce rates anytime soon. He said the 'labor market is solid' with 'historically low unemployment.' But he also acknowledged there is a 'downside risk' to employment stemming from the slow pace of hiring that was evident even before Friday's weaker numbers. The current situation is a sharp reversal from the hiring boom of just three years ago when desperate employers were handing out signing bonuses and introducing perks such as Fridays off, fertility benefits and even pet insurance to recruit and keep workers. The rate of people quitting their jobs — a sign they're confident they can land something better — has fallen from the record heights of 2021 and 2022 and is now weaker than before the pandemic. Drees Homes, a homebuilder based outside Cincinnati in Fort Mitchell, Kentucky, has hired about 50 people over the past year, bringing its workforce to around 950. Pamela Rader, Drees' vice president for human resources, it's 'gotten a little bit easier'' to find workers. A couple of years ago, Rader said jobseekers were focused on getting more pay. Now, she said, they emphasize stable employment, a better work-life balance, and prospects for advancement. © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
