The latest flurry of tariffs threatened by US president Donald Trump come laden with potentially contradictory geopolitical consequences.
His warning that he will impose an additional 100 per cent tariff on Russia if it does not agree a ceasefire in Ukraine has the potential to shift the calculus on Europe’s bloodiest conflict since the second World War.
This, though, runs in the opposite direction of his previous announcement of a 30 per cent tariff on imports from the European Union (EU) from August 1st, which EU officials warn would torpedo trade with some of Washington’s oldest and closest allies.
But arguably the most diplomatically destabilising tariff threat issued by Mr Trump in the last week was his first one – against Brazil.
[ A timeline of key tariff-related eventsOpens in new window ]
In a letter posted on social media, the US president vowed to slap a 50 per cent tariff on all Brazilian imports (also from August 1st), partly in retaliation for the prosecution of former far right president Jair Bolsonaro for an alleged coup attempt after he lost 2022’s presidential election.
Trump’s letter also cited the campaign by Brazilian courts to hold US social media companies responsible for what they consider illegal content published on the companies’ platforms in Brazil, which he classified as an “insidious” attack on “the fundamental Free Speech Rights of Americans”.
This clear interference in Brazil’s internal affairs marks a significant broadening in Trump’s understanding of the goals that tariffs can be employed to achieve. His claim that Bolsonaro is the victim of “a Witch Hunt that should end IMMEDIATELY!” caused immediate and grave offence in Brazil, a democracy where the judiciary jealously guards its independence.
Brazilian president Luiz Inácio Lula da Silva denounced the threat, stating: “Brazil is a sovereign nation with independent institutions and will not accept any form of tutelage”.
So unusual was Trump’s move that officials in Brasília at first had to be convinced his letter was genuine. Having confirmed it was, president Lula told his foreign ministry to return it to US diplomats, telling them it was offensive. Part of the incredulity stemmed from the fact that Trump’s complaint about his country’s “very unfair trade relationship” with Brazil flies in the face of the rare trade surplus it has run with the country for years, totalling US$7.4 billion (€6.4 billion) in 2024.
Nobel Prize-winning economist Paul Krugman warned Trump is abusing his tariff-setting authority as the tariff threat against Brazil has no economic basis. “That letter is basically a Confession that he is imposing a tariff for non-economic reasons. And that’s not legally allowed,” he wrote in a post on Substack.
White House officials have barely attempted to justify the threat against Brazil because of the prosecution of Bolsonaro on the grounds that this somehow poses a national security threat to the US.
When asked in an interview if the move amounted to extortion, Trump ideologue Steve Bannon replied, “It’s MAGA, baby” in reference to Trump’s ‘Make America Great Again’ movement.
This lack of justifiable grounds means the Brazil tariff could be in contravention of the International Emergency Economic Powers Act, the legislation that Trump has cited to justify his new tariff regime.
But with the Republican-controlled congress in Washington surrendering control over trade policy to the president, there is little to stop Trump taking aim at Brazil.
“You’re about to pay more for beef not just because Trump wants to protect his corrupt friend ... but also because Republicans in Congress have decided to cede their power over trade policy to him,” former US secretary of state Hillary Clinton warned Americans.
Brazil is the second biggest exporter of beef to the US and almost a third of all coffee consumed there is Brazilian.
[ Brazil’s former president Jair Bolsonaro to stand trial for alleged coup attemptOpens in new window ]
How much economic pain Brazil might suffer from a 50 per cent tariff on exports to the US is unclear. Its relatively closed economy means exports to the US amount to only two per cent of the country’s GDP. But a trade war has the potential to hurt sectors such as steel and aerospace as well as coffee growers and beef ranchers.
Brazil has moved to retaliate based on its reciprocity law that authorises the government to retaliate against barriers to its exports. Given the Brazilian economy’s reliance on US inputs, especially of machinery and technology, this is unlikely to be a broad like-for-like 50 per cent tariff of its own on US goods. Instead the administration has created a ministerial body to study targeted responses, such as breaking US medical patents.
But if the economic impact is still uncertain, the political one has been immediate. Just as his campaign against Canada’s sovereignty saved its Liberal party from electoral ruin, Trump has now reinvigorated Lula’s flagging political fortunes in advance of his expected run for re-election next year.
Lula has seized on the defence of national sovereignty and quickly moved to blame the self-styled “patriots” of the Bolsonaro family and their supporters as responsible for Trump taking aim at the country’s economy. Bolsonaro’s son Eduardo had to deny that his months of lobbying in Washington on behalf of his father is responsible for Trump’s tariff threat. He instead sought to blame Lula’s call at the recent Brics summit in Rio de Janeiro for the group’s members to move away from reliance on the US dollar as the trigger for Trump’s ire.
Meanwhile Bolsonaro, increasingly desperate in advance of a possible condemnation for his abortive coup attempt, has been roundly criticised for his claim that Brazil can avoid Trump’s tariff if authorities would just grant him a political amnesty.
Such blatant blackmailing of his own country on the back of Trump’s threats has only stiffened resistance in Brazil’s congress to efforts by the ex-president’s supporters to arrange an amnesty for him before his trial at the supreme court finishes.
