Trump imposes 50% tariffs on Brazil after spat with Lula

Brazil's President Luiz Inacio Lula da Silva fired back on Wednesday, saying new tariffs would be met with reciprocal measures.

In a letter, Trump linked the tariffs to Brazil's treatment of former President Jair Bolsonaro, who is on trial over charges of plotting a coup to stop Lula from taking office in 2023.

The levies were imposed due "in part to Brazil's insidious attacks on Free Elections, and the fundamental Free Speech Rights of Americans," the letter said.

Brazil's real currency added to earlier losses to fall over 2% against the dollar after the announcement, and companies such as planemaker Embraer EMBR3.SA and oil major Petrobras PETR4.SA also suffered setbacks in the stock market.

Lula, his vice-president, his finance minister, and others held an emergency meeting in Brasilia on Wednesday night to discuss the new levies.

In a lengthy post to social media after the meeting, Lula said Trump's accusations that trade between the two countries was unfair to the U.S. were false, stressing the U.S. runs a trade surplus against Brazil.

"Sovereignty, respect, and the unwavering defense of the interests of the Brazilian people are the values that guide our relationship with the world,” Lula wrote.

The U.S. is Brazil's second-largest trading partner after China and the tariffs are a major increase from the 10% announced in April. Trump's letter said the 50% tariff will start August 1 and will be separate from all sectoral tariffs.

On Monday, Lula pushed back against Trump after the U.S. leader threatened to impose an additional 10% tariff on the BRICS group of developing nations, which he called "anti-American."

"The world has changed. We don't want an emperor," Lula told reporters when asked at a BRICS summit in Rio de Janeiro about the possible BRICS tariff.

BOLSONARO 'WITCH HUNT'

Tensions between the United States and Brazil had already intensified on Wednesday after Brazil's foreign ministry summoned the U.S. Embassy chargé d'affaires over a statement defending Bolsonaro.

Around the same time, Trump, speaking to reporters at an event with West African leaders at the White House, said Brazil "has not been good to us, not good at all," adding the tariff rates would be based on "very, very substantial facts" and past history.

The U.S. Embassy in Brasilia confirmed on Wednesday its chargé d'affaires had a meeting with officials from Brazil’s foreign ministry, though it declined to share details about the conversation.

Trump's support for Bolsonaro echoed his support for other global leaders who have faced domestic legal cases like French far-right leader Marine Le Pen and Israeli Prime Minister Benjamin Netanyahu. Trump has called cases against those leaders a "witch hunt," a term he used for cases he faced himself in the U.S. after the end of his first term in office.

Trump said in a social media post on Monday that Bolsonaro was the victim of such a "witch hunt." The U.S. Embassy in Brasilia issued a statement on Wednesday to the local press echoing his remarks.

"The political persecution of Jair Bolsonaro, his family and his supporters is shameful and disrespectful of Brazil's democratic traditions," it said.

In a post on social media, Bolsonaro did not mention Trump, but said he "is persecuted because he remains alive in the public consciousness. Even out of power, he remains the most remembered—and most feared—name."

In his letter, Trump also directed U.S. Trade Representative James Greer to initiate a probe into what he called unfair trade practices by Brazil, particularly on U.S. companies' digital trade. Trump also criticized decisions from Brazil’s Supreme Court that he said censored social media firms.

Brazil's Supreme Court has long been criticized by Bolsonaro's allies for ordering social media websites to take down content from leaders of their far-right movement. The court also imposed more responsibilities on those companies last month.

In his post on Wednesday, Lula rebuffed Trump’s accusations of a witch hunt and said the case against Bolsonaro was up for the courts to decide and not subject to any “threats that could compromise the independence of national institutions.”

Lula also defended his country’s Supreme Court and its ruling on social media and said “freedom of expression must not be confused with aggression or violent practice.”

IMPACT ON FOOD EXPORTS

The tariffs on Brazil could have a significant impact on food prices in the United States. Around a third of the coffee consumed in the U.S., the world's largest drinker of the beverage, comes from Brazil, which is the world's largest coffee grower. Annual Brazilian coffee exports to the U.S. are close to 8 million bags, according to industry groups.

More than half of the orange juice sold in the U.S. comes from Brazil, which has an 80% share of the juice's global trade. The South American agricultural powerhouse also sells sugar, beef and ethanol to the U.S., among other products.

"This measure impacts not only Brazil, but the whole U.S. juice industry that employs thousands of people and has had Brazil as its main supplier for decades," said Ibiapaba Netto, the executive director of Brazilian orange juice industry group CitrusBR