Brazil exploring retaliatory measures against Trump's 50% tariffs

federative republic of brazil launched a treat to explore retributory measures against the 50% tariffs Donald ruff imposed, although chairperson Luiz Inacio Lula da Silva emphasized that he’s still seeking negotiations with the US.

Lula authorized the start of a 30-day review of the effects of the higher US levies on a variety of Brazilian goods, followed by a government examination of potential countermeasures.

But rather than an immediate escalation to the trade war, the plan is meant as an initial step designed to encourage talks. And Brazil is likely to consider options like the treatment of US intellectual property rather than retaliatory tariffs if it does respond, according to two officials familiar with the matter.

“This is a somewhat lengthy process, and I’m in no hurry to do anything about reciprocity against the US,” Lula said in a Friday morning radio interview.

Also read: In hour-long phone call, Brazil’s Prez Lula and PM Modi discuss US’ 50% tariffs

The move is the first step in allowing Brazil to take action under a reciprocity law approved by its Congress earlier this year. While the statute permits retaliatory tariffs, the view inside Lula’s government is that such levies would only hurt Brazilian consumers and the nation’s economy, according to one of the officials, who requested anonymity to discuss internal matters.

No final decision has been made, the officials said. If it chooses to respond, measures could include the suspension of patents, according to one of the officials. Brazil’s government had previously weighed ending licensing of US drug patents in response to the tariffs.

Brazil earlier this month filed a complaint with the World Trade Organization, and Lula has repeatedly stressed that he will not retaliate against the country’s second-largest trading partner until all other options have been exhausted.

But the leftist leader has expressed increasing frustration with a lack of dialogue with the Trump administration since US Treasury Secretary Scott Bessent canceled an early August meeting with Finance Minister Fernando Haddad.

Officials have argued that there is no logic to the levies, given that Brazil runs a trade deficit with the US, unlike most of Trump’s targets. Lula has also accused his counterpart of attempting to intervene in Brazilian affairs after Trump demanded its Supreme Court end a trial of Jair Bolsonaro, the former president who is facing charges that he attempted a coup after losing the 2022 election.

The move nevertheless carries risks, even if it is primarily aimed at bringing the US to the table. Trump has responded aggressively to China and other nations that have retaliated against his tariffs, potentially leaving Brazil vulnerable to additional escalations from Washington.

What Bloomberg Economics Says

Brazil may be hoping that the move helps accelerate negotiations, but it could lead to escalation from the US, especially considering Trump’s impulsive approach to tariff policy and given that Brazil’s capacity to damage the US is far more limited than, say, China’s. It would be hard for Brazil to force the US’s hand, unless it touches on key US interests with lobbying capacity that can tip the odds, said Jimena Zuniga, Latin America geoeconomics analyst.

The timing of the decision may intensify the dangers.

Bolsonaro’s trial is scheduled to begin on Tuesday, creating another potential flashpoint in Brazil-US relations. Trump has already revoked the US visa of and placed Magnitsky Act sanctions on the Supreme Court justice spearheading proceedings against the right-wing former leader.

Bolsonaro’s son, Eduardo, meanwhile, has spent months in the US lobbying it to target Brazil, and has continued pushing the Trump administration for additional pressure as his father’s legal woes deepen.

Trump exempted hundreds of goods from the increased levies before they went into effect in early August, including airplane parts and orange juice. That provided relief to major Brazilian exporters like planemaker Embraer SA while limiting the potential damage to Latin America’s largest economy.

But the US also launched an investigation of Brazil’s trading practices and whether the country is unfairly restricting US exports, leading to pushback from Lula’s government.

Brazil has continued pushing for additional exceptions for goods like coffee and beef, two of its major exports, while working to redirect affected products to new markets and providing relief to sectors that will face the brunt of the levies.

Lula, however, suggested Friday that doesn’t want to wait for WTO proceedings that he said could take more than a year to play out.

“I took this step because we have to move forward with the process,” he said.

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