U.S.-Brazil Trade War Escalates: Trump Slaps 50% Tariffs, Lula Vows "Mirror" Retaliation

TradingKey - On July 9, 2025, U.S. President Donald Trump announced via social media that a 50% tariff would be imposed on goods imported from Brazil starting August 1. This rate is significantly higher than the 25% to 40% tariffs he announced this week for 21 other countries. In a letter to Brazilian President Lula, Trump stated that one reason for the higher tariffs on Brazilian goods is dissatisfaction with the Brazilian government's trial of former President Jair Bolsonaro.

Trump described the trial as an "international disgrace" and "political persecution," arguing that it is a witch hunt that should be halted immediately. Bolsonaro faces accusations of instigating a coup after losing the 2022 election and is currently on trial for alleged conspiracy to assassinate the current Brazilian President Lula.

Lula also highlighted that the U.S. has accumulated a $410 billion trade surplus in goods and services with Brazil over the past 15 years, dismissing Trump’s claims of a "trade deficit" as "misinformation."

Brazil’s Vice President Alckmin criticized the U.S. tariff hikes as "baseless," noting that 80% of Brazilian exports to the U.S. currently face zero tariffs and that the move would harm U.S. supply chain interests.

The 50% tariff rate, announced on July 9, far exceeds the 10% rate imposed on "Liberation Day" (April 2) and represents the highest tariff in the U.S.’s latest round of trade penalties. The announcement triggered sharp declines in Brazilian equities and the currency, with the real (BRL/USD) plunging nearly 3% — the worst performer among emerging-market currencies.

[BRL/USD; Source: Google Finance]

[Brazilian stock index; source: Google Finance]