Dr. Yasmin Calmet

Following the Donald Trump administration’s decision to impose a 50% tariff on Brazilian products in July 2025, the decades-long economic cooperation between Brazil and the US started to crumble. The decision was justified by the prosecution of former Brazilian President Jair Bolsonaro who is accused of supporting censorship policies in Brazil. Therefore, Trump—a long-standing ally of Bolsonaro—imposed the tariffs for political and ideological motivations rather than economic ones. His decision reflects the US repositioning attempts that contradict multilateralism and threaten the World Trade Organization (WTO) rules. In response, Brazil has undertaken several diplomatic measures including regional mobilization.An Escalating CrisisThere are several aspects of the recent tensions between Brazil and the United States, which could be reviewed as follows: 1- Washington imposing high tariffs on Brazil: The high amount of the tariffs triggered a significant concern and was widely viewed as a retaliatory measure that disregards commercial norms. The US government justified the decision by citing the need to mitigate the barriers imposed by Brazil on US product. It claims that the tariffs against Brazil aim to reduce the accumulated trade deficit between the two countries. However, economic observers indicated that these barriers are not discriminatory practices, but rather policies to protect strategic sectors.2- Trump’s meeting with opposition figures in Brazil: It is noteworthy that Washington's decision to impose tariffs on Brazil came after a visit by Eduardo Bolsonaro, the federal representative and son of the former president, to Donald Trump. During the visit, Eduardo claimed that his father was being politically persecuted by the current Brazilian government and publicly questioned the integrity of the Supreme Federal Court, describing it as biased and politically exploited. This narrative was quickly embraced by Trump’s political allies, who view Bolsonaro as an ideological ally.3- Impactful repercussions on the Brazilian economy: The US tariff measures affect sensitive sectors of the Brazilian economy, such as agriculture, the metallurgical industry, and aviation, including coffee, orange juice, meat, steel, and aircraft manufactured by Embraer. It is estimated that this tariff could reduce Brazil's GDP growth by approximately 0.4 percentage points in 2025.4- Considering tariffs as a tool of US political pressure: Some analysts view the recent tariffs as a tool for political pressure aimed at conveying a geopolitical message: Countries that fail to align ideologically with Washington may face severe economic consequences, undermining the principle of stability in international trade partnerships.5- Brazil's Announcement of Recourse to the World Trade Organization: The Brazilian government responded quickly to the tariff decision, with President Lula submitting a formal complaint to the World Trade Organization. He also intends to establish a diplomatic mission headed by Vice President Geraldo Alckmin and the Ministry of Foreign Affairs to negotiate directly with the US State Department. The Brazilian Senate enacted the ‘Economic Reciprocity Law’ which allows for imposing equivalent tariffs on US goods such as ethanol, pharmaceuticals, and technology inputs. Brazilian private sector companies strongly condemned the American decision. Meanwhile, Brazilian and American businessmen criticized the decision for causing instability and increasing operating costs.Key ImplicationsThe US tariff crisis on Brazilian imports will bring several key implications, including:1- Growing debate about the resilience of the Brazilian economy: The repercussions of the crisis have gone beyond the bilateral dimension, reopening the debate about Brazil's vulnerability to external pressures and its dependence on traditional markets, especially since the United States remains one of its most important export partners for agricultural and industrial products.2- Impact on Brazil's ability to lead integration initiatives: The current crisis with Washington is affecting Brazil's actions on the international stage. At the BRICS summit in July 2025, tensions with Washington were seen as an example of the erosion of the rules-based multilateral system. In response, Brazil proposed the establishment of a chamber for arbitration of trade between countries of the Global South. What is clear is that the crisis with Washington will have an impact on the Brazilian economy and its capabilities, and consequently, its ability to lead regional initiatives. This is especially crucial given the divisions within Latin America over how to deal with Washington.3- Intensifying domestic political polarization in Brazil: The crisis has been used to influence Brazil’s internal political landscape. Lula’s government framed the situation as proof of its independence and used it to strengthen support among its social base, which has long opposed submission to Washington. On the other side, Bolsonaro’s opposition tried to use the crisis to claim that Lula’s leadership was isolating Brazil internationally. However, most Brazilians rejected the US involvement. Many saw its criticism of Brazil’s Supreme Court as a clear intrusion into national affairs.4- The increased importance of ties with BRICS countries: Brazilian President Lula da Silva appears to have exploited the crisis to bolster his political standing, defending Brazilian sovereignty, criticizing Washington, and emphasizing the need to diversify trade partnerships. Meetings with BRICS partners, such as China, India, and South Africa, have intensified as part of a strategy to forge alternative alliances.A Changing WorldThe current crisis highlights the risks of a shifting global order. Trade sanctions are increasingly being used as tools of ideological pressure, particularly under the Trump administration. This reflects a rise in American unilateralism, which stands in contrast to global trends that emphasize sovereignty and multilateralism. In response, Brazil needs a more flexible and independent foreign policy. It should avoid relying on temporary alliances or political figures. Strengthening partnerships with BRICS, the European Union, and Mercosur is essential to enhance Brazil’s negotiating power and reduce its vulnerability to the unpredictability of U.S. policy.On the other hand, Lula’s government must balance a firm response with protection for the most vulnerable sectors of the economy. If handled wisely, the crisis could become an opportunity for strategic repositioning. This will require a strong commitment to institutional stability, regional cooperation, and the uncompromising defense of national sovereignty.

Why Are Tensions Escalating Between the United States and Brazil?