Brazil plans retaliation to Trump tariffs as analysts predict growing China ties

Brazil scrambled to craft a measured but strong response to US President Donald Trump’s surprise tariff hike on Thursday in hopes of shielding key industries, while analysts predicted the tariffs would drive the country closer to China.

Trump sent a letter to President Luiz Inácio Lula da Silva on Wednesday confirming that Brazilian exports would face 50 per cent duty starting August 1. He claimed the measure would punish what he called “unfair trade barriers” and political “persecution” of former president Jair Bolsonaro, now on trial for allegedly plotting a coup.

The ideological language surprised officials in Brasilia, since over the past 15 years the United States has recorded consistent trade surpluses with Brazil, reaching a cumulative total of US$410 billion. Last year alone the US surplus was US$28.6 billion, its third-largest worldwide for the year.

Inside Lula’s government, officials said they were wary of direct retaliation that could backfire. Many imports from the US are machines and parts needed by Brazilian factories, so higher Brazilian tariffs might raise local industries’ costs instead of hurting US firms.

In response, the Lula administration is weighing moves such as suspending medicine and seed patents, halting royalty payments, or taxing US profits, all permitted under Brazil’s Reciprocity Law, approved in April.