Brasil: Donald Trump's Tariffs On Brasil Are More Bark Than Bite

Donald Trump’s tariffs on Brazil are more bark than bite The Latin American giant may have avoided the worst—for now Save Share Summary A demonstrator holds an image of U.S. President Donald Trump with red horns during a protest against the tariffs on Brazilian products imposed by Trump. Photograph: Reuters Aug 8th 2025 | 4 min read When Donald Trump first announced his tariff barrage on April 2nd, it was pitched as payback against countries that had “looted” and “pillaged” the United States through trade. But when the latest round of levies came into force on August 7th, Brazil, a country which imports more from the United States than it exports to it, was hit with a rate of 50%, one of the steepest in the world. The reason was not economic. Mr Trump is incensed that his ally, Jair Bolsonaro, Brazil’s hard-right former president, is on trial, accused of plotting a coup. The tariffs, he claimed, were a response to that “witch hunt”. Brazil was not the only country targeted for political reasons. India faces a comparable rate for buying Russian oil. Mr Trump warned Mark Carney, Canada’s prime minister, that recognising a Palestinian state would make trade negotiations “very hard”. Brazil’s case, though, is the clearest yet of Mr Trump using trade as a cudgel to interfere in another country’s affairs. President Luiz Inácio Lula da Silva (known as Lula) has responded with defiance. He says Brazil will not be “tutored” by foreign powers, nor “humiliate” itself before an unwanted “emperor”. Yet he has stopped short of retaliation. Instead, significant relief has come from Brazilian firms and their customers in the United States lobbying the administration directly. Mr Trump blinked. The tariffs now in place against Brazil exempt nearly 700 products, including planes, oil, wood pulp and orange juice. Exporters of coffee, beef and fruit were not so lucky. Lula has declared a victory for “sovereignty” and received a modest bump in the polls. Even before the exemptions, the impact of Mr Trump’s tariffs on Brazil’s economy seemed likely to be limited. The largest economy in Latin America is relatively closed. Its exports were worth less than a fifth of GDP last year, compared with more than a third in Mexico, and over 70% in open Asian economies like Vietnam and Thailand. Brazil is also far less dependent on the United States than it once was. Just 13% of its exports are exposed to Mr Trump’s levies, down from a quarter two decades ago. Meanwhile, the share going to China has surged nearly six-fold to 28% (see chart). Chart: The Economist The exemptions soften an already light blow. Nearly half of Brazil’s exports to the United States will be spared, estimates TS Lombard, an investment-research firm. As a result, Itaú Unibanco, a Brazilian bank, expects the effective tariff rate to be around 30%. Goldman Sachs has kept its GDP growth forecast for this year unchanged at 2.3%, citing the “notable” exemptions. Some sectors will feel the pinch. Coffee is among the worst affected. Brazil ships almost half a million tonnes of beans to the United States each year, accounting for 16% of its coffee exports. The effect is already visible: shipments in July were down by a third from a year earlier, as importers delayed orders amid uncertainty. Cecafé, a coffee-producers’ trade body, warned of a “significant” impact on Brazilian roasters and traders. The beef industry will also suffer. Nearly 17% of Brazil’s beef exports went to the United States last year, and shipments have already slumped over the past few months. Fruit exporters—particularly of mangoes, açaí berries and other tropical fruits—face similar disruption. Yet even these sectors may prove resilient. Brazil has steadily diversified its markets in recent years, and the most affected exports are commodities that can be redirected quite easily. The European Union remains the biggest buyer of Brazilian coffee. Sales to East Asia and the Middle East and North Africa rose by 25% and 61% respectively last year. Trade with China continues to grow. It already buys most of Brazil’s beef and, on August 2nd, approved imports from 183 new Brazilian coffee firms. Some losses may also be absorbed through state support. Lula’s government has pledged targeted relief, including purchases of surplus stock from affected producers. Finally, there is hope that the tariffs could be eased. Rising prices in the United States could put pressure on the White House to change course. The bigger risk may lie in what Lula does next. On August 6th he said he would consult other members of the BRICS—a group of 11 emerging-market economies which includes India and China—on ways to counter Mr Trump’s tariffs. That could well prompt an escalating trade war. Mr Trump has already labelled the group “anti-American”. He threatened an additional 10% tariff on its members’ goods during the BRICS’ summit in Rio last month. As president-elect, he floated a 100% tariff if they sought to ditch the dollar for trade settlement. Confronting Mr Trump can be politically useful. Mark Carney’s tough talk helped propel him and his Liberal Party to an unlikely victory in Canada’s recent general election. Lula’s own poll numbers have been rising since Mr Trump began targeting Brazil, and Lula started framing himself as a defender of Brazil’s sovereignty. The damage the tariffs do to Brazil will probably be constrained. Lula should probably keep reaping the benefits of being attacked by Mr Trump, and try to avoid turning it into a bigger fight. ■ Sign up to El Boletín, our subscriber-only newsletter on Latin America, to understand the forces shaping a fascinating and complex region.