Brazil moves to shield exporters from U.S. tariffs

The Brazilian government announced a wide-ranging support plan on Wednesday to help exporters impacted by a 50% import duty applied by U.S. President Donald Trump on several Brazilian goods. The program, known as “Sovereign Brazil,” provides 30 billion reais ($5.5 billion) in credit along with other steps intended to ease the blow.

Just hours later, U.S. Secretary of State Marco Rubio announced more sanctions on Brazilian officials, showing that tensions between the two countries were rising, as reported by Associated Press.

President Luiz Inácio Lula da Silva outlined the initiative as an initial effort to assist affected exporters, with a legislative proposal to be sent to Congress for approval. Lawmakers from different political factions attended the event in Brasília, the first such gathering in months, which observers viewed as a sign of greater political cohesion in response to U.S. trade actions.

The plan involves postponing certain tax obligations for companies harmed by the U.S. tariffs, assigning 5 billion reais ($930 million) in tax credits to small and medium-sized enterprises until the close of 2026, and broadening insurance coverage for orders that get cancelled. It also directs public institutions to purchase goods that can no longer be shipped to the U.S.

A one-year extension will be granted for tax credits under Brazil’s “drawback” scheme, allowing companies to import materials without tax if used in producing goods for export.

Lula calls U.S. move “unpleasant”

“We cannot be scared, nervous and anxious when there is a crisis. A crisis is for us to create new things,” Lula said. He called the U.S. move “unpleasant” and argued the justifications for the sanctions “do not exist.”

Trump has tied the tariff decision to legal proceedings against his political ally, former Brazilian president Jair Bolsonaro, who is currently under house arrest. Lula accused Washington of using human rights rhetoric as a political instrument, adding that Brazil would seek out new markets for its products.

Trump has repeated claims made by Bolsonaro’s supporters that the former president’s prosecution for allegedly attempting to overturn the 2022 election is a violation of due process and a politically motivated effort.

Lula responded that Brazil’s judiciary functions independently, free from interference by the executive branch. He emphasized that Supreme Court justices have publicly affirmed they will not yield to political pressure. Bolsonaro’s trial is expected to reach sentencing between September and October.

Earlier this month, Justice Alexandre de Moraes, who is presiding over Bolsonaro’s case, was sanctioned under the U.S. Magnitsky Act, which targets major human rights violators. De Moraes stated that all defendants were afforded due process and pledged to continue his work despite the sanctions.

Shortly after Lula’s remarks, Rubio said the U.S. would restrict visas for officials from Cuba and other governments connected to what he called Cuba’s “exploitative labor export program.” He singled out Brazil’s “Mais Médicos” (More Doctors) program, introduced in 2013, which brought thousands of Cuban medical professionals to underserved parts of the country.

Rubio labeled the initiative a “diplomatic scam,” while Brazil’s government maintains that nearly 25,000 doctors are currently working in the program, though it did not specify the number of Cubans among them.

Despite the rising tensions, Lula said he would not immediately trigger Brazil’s reciprocity law to raise tariffs on U.S. products. “We like to negotiate. We don’t want conflict,” he said. “The only thing we need to demand is that our sovereignty is untouchable.”

Finance Minister Fernando Haddad told attendees that Brazil “is being sanctioned for being more democratic than its aggressor.”

The diplomatic dispute shows no signs of cooling, with both countries continuing to exchange measures and accusations while Brazilian exporters wait to see the effects of the new support program.

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