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Trump’s 50% tariff on Brazilian goods takes effect, marking sharpest trade action yet

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August 6, 2025
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Trump’s 50% tariff on Brazilian goods takes effect, marking sharpest trade action yet
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A new round of US tariffs on Brazilian goods took effect on Wednesday, August 6, marking the highest tariff Washington currently imposes on any individual trading partner.

The 50% levy consists of a 10% reciprocal base rate and an additional 40% punitive surcharge.

It applies to roughly 35% of Brazilian exports to the United States.

The measure stems from an executive order signed by President Donald Trump on July 30, fast-tracking its implementation ahead of a broader global tariff rollout scheduled for August 7.

While the headline rate is steep, its immediate impact is softened by a list of 694 exempted products and a transition clause allowing tariff-free entry for shipments arriving in the US before October 5.

Still, the selective targeting of Brazilian goods and the overt political overtones of the move have raised concerns among economic analysts and diplomatic observers.

A politically charged trade move

Unlike traditional trade policy conflicts based on economic disparities, the United States government presented this measure as a direct response to Brazil’s domestic political circumstances.

The White House claimed “violations of freedom of expression” and “political persecution” in the country, referring to former President Jair Bolsonaro’s trial before the Brazilian Supreme Court, who is presently under house arrest.

The move comes amid growing US dissatisfaction with Brazilian judicial rulings, more regulation of social media platforms, and President Lula da Silva’s geopolitical overtures, such as pledges to reduce reliance on the US dollar in global trade.

Trump has framed the tariff increase as punishment for what he terms a “witch hunt.”

Economic impact softened by exemptions and diversification

Initial panic, however, gave way to more moderate forecasts for Brazil’s GDP over the following few days.

According to local media outlet InfoMoney, investment houses like Rio Bravo estimate the effective average tariff could be as high as 29%-31% — when exemptions for sectors such as energy and chemicals are taken into account.

Institutions like Kinea and XP now see 0.2 and 0.15 percentage point GDP losses, respectively—much less than feared at first.

Simone Tebet, the planning minister, also played down the risks, pointing out that only about 10% of Brazil’s agribusiness exports went to the US, and that Asia was still the main market for Brazilian agribusiness exports.

Goldman Sachs, on the other hand, decided to keep to its 2025 growth projection of 2.3%, arguing the measure would cause little structural disruption.

Sector-by-sector and regional impact

The tariff’s impact is expected to vary sharply by region and product:

• Northeast Brazil faces heavy exposure due to full tariffs on fresh fruit, fish, and footwear.
• Midwest producers stand to lose competitiveness in core exports like coffee and meat.
• Southern and Southeastern Brazil, more focused on high-value-added goods like aircraft and cellulose, benefit from targeted exclusions that shield key industries.

The strategic nature of these exemptions is no coincidence. Analysts believe that excluding vital imports like orange juice and aircraft gives Washington more flexibility in future negotiations while still acknowledging certain US reliance on Brazilian items.

Market reaction and government strategy

The exemption list was positive for markets. The Ibovespa climbed almost 1% and the real appreciated, going from R$5.60 to R$5.49 per US dollar.

Embraer shares soared by over 10% after news that aircraft will not be subject to the surcharge, while Suzano was also boosted by cellulose’s exclusion.

On Tuesday, there was some expectation of a bearish move following Bolsonaro’s detention, but this did not occur.

Analysts said the arrest was expected, and as of yesterday afternoon, Trump had not spoken on the topic, raising the prospect of a dip in US interest rates.

Brazilian authorities have also since shifted their focus to renegotiating debt relief for the non-exempt sectors, such as coffee, cocoa and meat.

Discussions had been ongoing between high-level US and Brazilian officials, including the potential for a Trump-Lula conversation.

Nevertheless, the backdrop of Bolsonaro’s legal circumstances and the sanctions against Justice Alexandre de Moraes have made the climate for diplomacy more complex.

WTO action and a potential new trade front

Parallel to discussions, Brazil has begun formal consultations with the World Trade Organisation.

Foreign Minister Mauro Vieira portrayed the move as critical to preserving Brazil’s sovereignty, albeit acknowledging that the WTO’s dispute resolution systems are now stalled.

Even as the dust settles on this round of tariffs, another potential trade conflict looms.

On Tuesday, Trump warned that nations that continue to deal with Russia, including Brazil, might face near-total tariffs from the United States, indicating the likelihood of an intensifying trade confrontation shortly.

The post Trump’s 50% tariff on Brazilian goods takes effect, marking sharpest trade action yet appeared first on Invezz

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