President Donald Trump‘s decision to impose a 50% tariff on Brazil has raised concerns among economists, who fear the move sets a troubling precedent.
What Happened: Economists are raising alarms over Trump’s plan to implement a 50% tariff on Brazil starting August 1 — the highest country-specific tariff among the 22 announced this week, reported MarketWatch.
Despite the U.S. having a trade surplus with Brazil, Trump cited “unsustainable trade deficits against the United States” as a reason for the high import tax. This has raised concerns among economists, who argue that this reasoning is inconsistent with the basis for the other tariffs.
Trump imposed these tariffs as a response to Brazil’s treatment of its former president, Jair Bolsonaro, a Trump ally facing a trial on coup charges. However, economists have expressed concern over the tariff’s broader implications.
Trump also claimed the tariff was in response to alleged threats against U.S. companies by Brazil. Trump Media & Technology Group‘s (NASDAQ:DJT) Truth Social platform and the video-sharing site Rumble Inc. (NASDAQ:RUM) have filed lawsuits against a Brazilian judge over what they describe as “censorship.”
Richard Baldwin, an economics professor at Switzerland’s IMD Business School, said the tariff is “completely out of line with all the rest [of the tariffs].” According to data from the U.S. Trade Representative’s office, the U.S. recorded a trade surplus with Brazil in both 2023 and 2024.
Thierry Wizman, a strategist and economist at Macquarie Group, voiced concern noting that it marks the first instance in which Trump's tariffs aim to influence a country's internal political and judicial affairs. “The action against Brazil sets a scary precedent,” he stated.
Why It Matters: Lula Da Silva, in response to Trump, pointed out that the U.S. has had a trade surplus with Brazil for the past 15 years. He also warned of potential retaliatory tariffs if the U.S. proceeds with its planned 50% tax on Brazilian imports from Aug. 1.
Trump’s decision to impose tariffs on Brazil follows his threat to impose an additional 10% tariff on any country aligning with BRICS’ anti-American policies, further escalating trade tensions.
Meanwhile, shares of Brazilian aircraft maker Embraer S.A. (NYSE:ERJ) fell 4.65% on Thursday after Trump announced a 50% tariff on all Brazilian imports, a move that threatens the company’s U.S.-dependent jet sales.
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