President Donald Trump late Wednesday said he will impose a 50% tariff on Brazil over political concerns, especially the "Witch Hunt" vs. former Brazilian President Jair Bolsonaro. Brazil said it would respond in kind. A key Brazilian ETF and jet maker Embraer fell in premarket trade.
The U.S. actually has a modest trade surplus with Brazil, so there was speculation that Trump would only keep his 10% baseline tariff on the Latin American country. Instead, the 50% rate set to start Aug. 1 is higher than any of the tariff letters that Trump has issued so far this week.
In his letter to Brazil, Trump blasted the upcoming trial of Bolsonaro, saying it's a "Witch Hunt that should end IMMEDIATELY." Bolsonaro is on trial for allegedly trying to overthrow the government to stay in power.
Trump also claimed that Brazil has attacked free elections and Americans' free speech rights.
Brazil President Luiz Inacio Lula da Silva said his country will respond with reciprocity vs. Trump's new tariff.
The iShares MSCI Brazil ETF fell 2% before the open. EWZ fell 1.9% in Wednesday's session, with a big drop around 1:30 p.m. ET, suggesting there may have been buzz about Trump's upcoming tariff move.
Embraer stock tumbled 6.8% in extended trade, as the Brazilian jet maker faces potential lost business. ERJ stock sank 4.1% in Wednesday's session, also kicking in hard around 1:30 p.m. ET.
Latin American e-commerce and payments giant MercadoLibre, whose largest market is Brazil, dipped less than 1%. Brazilian bank Nu Holdings fell 2.5%.
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