Trump’s Tariff Threat Looms Large Over Brazil’s Economy

Brazil’s government braces for a trade shock as President Donald Trump prepares to unveil his reciprocal tariff policy on April 2, 2025, a move confirmed by sources close to the Lula administration.

Fears escalate that tariffs could hit far beyond ethanol, steel, and aluminum, threatening Brazil’s $31.6 billion industrial exports to the U.S. Uncertainty grips Brasília as Trump’s team offers few hints, leaving the country vulnerable to a broad trade war strike.

Trump targets nations with high trade barriers, promising tailored tariffs based on each country’s practices. Brazil imposes an 11.1% average tariff, far above the U.S.’s 2.2%, sparking tension over ethanol, where Brazil levies 18% against America’s 2.5%.

Treasury Secretary Scott Bessent warns that countries refusing to lower barriers face a “tariff wall” to shield U.S. workers, with rates possibly reaching 25% or higher.

In addition, the stakes soar for Brazil whose U.S. exports support jobs in states like São Paulo and Minas Gerais. Aircraft parts and steel dominate trade, but copper and timber now risk tariffs after Trump orders investigations.

Trump’s Tariff Threat Looms Large Over Brazil’s Economy. (Photo Internet reproduction)

A flat tariff could slash Brazil’s 1.6 million tons of steel exports, costing billions and rattling an economy already stretched thin. President Lula vows retaliation if Trump acts, insisting Brazil won’t bow to pressure.

Yet, experts caution that hiking tariffs on U.S. goods like oil could raise costs for Brazilians, limiting leverage. Meanwhile, Canada and Mexico face 25% tariffs, pushing back with $20 billion in countermeasures, a path Brazil watches closely.

Brazil Faces High Stakes in Trade Tensions with U.S.

Trump’s first term saw $380 billion in tariffs, and projections suggest $1.4 trillion more by April 2025. Brazil’s ethanol talks with Washington stall as Bessent hints at a wider net, tying tariffs to labor rights and subsidies.

The U.S. views Brazil’s high tariffs across sectors as justification, though details remain scarce until the deadline. For businesses, the numbers tell a grim story: $200 million in ethanol exports dwarf the $52 million sent to Brazil, exposing trade imbalances Trump exploits.

Industrial states brace for losses, with governors pressing Lula to negotiate rather than escalate. Globally, the EU readies $28 billion in retaliation, while India cuts tariffs to dodge the fight.

Time ticks down as Brazil scrambles to predict Trump’s next move. A broad tariff could spike inflation, disrupt supply chains, and weaken growth, economists warn, with U.S. demand potentially dropping too. Lula balances defiance with pragmatism, knowing a misstep risks economic fallout in a world turning inward.

The April 2 reveal looms as a test of Brazil’s resilience. Trump’s trade gambit threatens to reshape a key partnership, forcing Brasília to weigh diplomacy against survival. Businesses and workers await the outcome, caught in a high-stakes game of tariffs and trust.