Brazil’s government on Friday minimized concerns over the economic fallout from US President Donald Trump’s threat to impose a 50% tariff on Brazilian imports, expressing hope for future negotiations even as tensions flared over legal proceedings involving former president Jair Bolsonaro.
Trump told reporters he might eventually speak to Brazilian President Luiz Inácio Lula da Silva but criticized Brazil’s judiciary for prosecuting Bolsonaro, who faces charges of attempting to overturn Lula’s 2022 election victory. “Maybe at some point I’ll talk to him. Right now I’m not,” Trump said before departing for flood-hit Texas, reiterating his belief that Bolsonaro is being treated “very unfairly.”
In response, Lula reaffirmed Brazil’s willingness to negotiate but warned of retaliation if diplomacy fails. “We’ll first try to negotiate, but if there’s no negotiation, the law of reciprocity will be put into practice,” Lula said in a Thursday interview with Record TV.
Brazil downplays economic risk amid market jitters and US tensions
Despite the tariff threat, Brazil’s Finance Ministry projected limited economic impact, maintaining its 2.5% GDP growth forecast for 2025. Officials said only specific sectors, like aerospace and energy machinery—heavily reliant on US buyers—might suffer.
A White House official, speaking anonymously, said that critical sectors such as oil and minerals would remain exempt, aligning with broader tariff policies announced in April. Oil is Brazil’s top export to the US, but local industry groups expressed uncertainty about whether exemptions would continue.
The US also imports significant volumes of Brazilian steel, coffee, pulp, beef, and orange juice—goods Brazil believes can be redirected to other markets. “It is not like we cannot survive without the US,” Lula said, reiterating Brazil’s ongoing efforts to diversify its trade partnerships. China already accounts for 28% of exports, compared to 12% for the US.
Still, Brazilian exporters are wary. The country’s beef lobby warned the tariffs would make trade with the US “economically unfeasible.”
In a letter to Lula earlier in the week, Trump linked the proposed tariffs to Bolsonaro’s ongoing prosecution, leaving little room for Brazil to maneuver. Lula, speaking to TV Globo, condemned Trump’s rationale as “extremely outrageous,” stating that Bolsonaro “didn’t just try to stage a coup—he tried to prepare my death.”
Bolsonaro denies all accusations.
Markets react cautiously as tensions weigh on investor confidence
Financial markets reflected the unease. The Brazilian real slid 0.7% against the dollar on Friday, while the Bovespa stock index dipped 0.5%, with the weekly decline for the real on track to be the steepest since February.
Meanwhile, US President Donald Trump’s promised 50% copper tariffs are set to include all refined metal. This shows the president’s far-reaching efforts to bolster American production of one of the world’s most ubiquitous materials.
Trump’s announcement of the levy, which he said would begin Aug. 1, lacked much detail. Still, refined copper will be included, according to people familiar with the matter who asked not to be named, as discussions are private.
Refined copper is critical to various industries, including construction, electric vehicles, power grids, and consumer electronics. Bloomberg reported that levies are also expected to apply to semi-finished copper products, which could further widen the policy’s impact across the supply chain.
While the plan underscores Trump’s aggressive push to protect and revive American manufacturing, it is not yet finalized. A White House official noted that the tariff measures are still being evaluated and should not be considered definitive until officially announced by the president.
In response to the announcement, the White House’s Council of Economic Advisers met with industry stakeholders hours later. Sources say the industry urged the administration not to apply export restrictions on copper scrap, a byproduct of which the US is a major global supplier. With domestic scrap output exceeding local demand, much of the excess is shipped abroad, making it a critical component of international trade for the US metals sector.
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