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Trump Tariffs Goods From Brazil at 50% 07/10 06:14
President Donald Trump singled out Brazil for import taxes of 50% on
Wednesday for its treatment of its former president, Jair Bolsonaro, showing
that personal grudges rather than simple economics are a driving force in the
U.S. leader's use of tariffs.
WASHINGTON (AP) -- President Donald Trump singled out Brazil for import
taxes of 50% on Wednesday for its treatment of its former president, Jair
Bolsonaro, showing that personal grudges rather than simple economics are a
driving force in the U.S. leader's use of tariffs.
Trump avoided his standard form letter with Brazil, specifically tying his
tariffs to the trial of Bolsonaro, who is charged with trying to overturn his
2022 election loss. Trump has described Bolsonaro as a friend and hosted the
former Brazilian president at his Mar-a-Lago resort when both were in power in
2020.
"This Trial should not be taking place," Trump wrote in the letter posted on
Truth Social. "It is a Witch Hunt that should end IMMEDIATELY!"
There is a sense of kinship as Trump was indicted in 2023 for his efforts to
overturn the results of the 2020 U.S. presidential election. The U.S. president
addressed his tariff letter to Brazilian President Luiz Inacio Lula da Silva,
who bested Bolsonaro in 2022.
Lula responded in a forceful statement that said Trump's tariffs would
trigger the country's economic reciprocity law, which allows trade, investment
and intellectual property agreements to be suspended against countries that
harm Brazil's competitiveness.
He noted that the U.S. has had a trade surplus of more than $410 billion
with Brazil over the past 15 years.
"Brazil is a sovereign country with independent institutions that will not
accept being taken for granted by anyone," Lula said.
Bolsonaro testified before the country's Supreme Court in June over the
alleged plot to remain in power after his 2022 election loss. Judges will hear
from 26 other defendants in the coming months, and legal analysts say a
decision could come as early as September. The country's electoral authorities
have already barred Bolsonaro from running for office until 2030.
The former president did not comment about Trump's tariff decision on his
social media channels, but wrote that he is being politically persecuted.
In his statement, Lula defended the country's legal system, saying the
"proceedings against those who planned the coup d'etat is a competence of the
Brazilian judiciary and is not subject to interference or threats that harm the
independence of national institutions."
For Trump, the tariffs are personal
Trump also objected to Brazil's Supreme Court fining of social media
companies, saying the temporary blocking last year amounted to "SECRET and
UNLAWFUL Censorship Orders." Trump said he is launching an investigation as a
result under Section 301 of the Trade Act of 1974, which applies to countries
with trade practices that are deemed unfair to U.S. companies.
Among the companies the Supreme Court fined was X, which was not mentioned
specifically in Trump's letter. X is owned by Elon Musk, Trump's
multibillionaire backer in the 2024 election whose time leading Trump's
Department of Government Efficiency recently ended and led to a public feud
over the U.S. president's deficit-increasing budget plan. Trump also owns a
social media company, Truth Social.
"In Brazil, freedom of speech is not mistaken by aggression or violent
behavior," Lula said in his statement. "To operate in our country, every
company, local or foreign, must be subjected to Brazilian legislation."
Brazilian lawmakers allied with Lula blamed Bolsonaro and two of his sons,
congressman Eduardo Bolsonaro and Sen. Flvio Bolsonaro, for Trump's tariff
action. Sen. Lindbergh Farias, the whip of Lula's Workers' Party in the Senate,
said on social media that the Bolsonaros "must be very happy to harm Brazil,
our economy and our jobs."
The Brazil letter was a reminder that politics and personal relations with
Trump matter just as much as any economic fundamentals. And while Trump has
said the high tariff rates he's setting are based on trade imbalances, it was
unclear by his Wednesday actions how the countries being targeted would help to
reindustrialize America.
The tariffs starting Aug. 1 would be a dramatic increase from the 10% rate
that Trump levied on Brazil as part of his April 2 "Liberation Day"
announcement. In addition to oil, Brazil sells orange juice, coffee, iron and
steel to the U.S., among other products. The U.S. ran a $6.8 billion trade
surplus with Brazil last year, according to the Census Bureau.
Trump initially announced his broad tariffs by declaring an economic
emergency, arguing under a 1977 law that the U.S. was at risk because of
persistent trade imbalances. But that rationale becomes problematic in this
particular case, as Trump is linking his tariffs to the Bolsonaro trial and the
U.S. exports more to Brazil than it imports.
Trump also targeted smaller trade partners
Trump also sent letters Wednesday to the leaders of seven other nations.
None of them -- the Philippines, Brunei, Moldova, Algeria, Libya, Iraq and Sri
Lanka -- is a major industrial rival to the United States.
Most economic analyses say the tariffs will worsen inflationary pressures
and subtract from economic growth, but Trump has used the taxes as a way to
assert the diplomatic and financial power of the U.S. on both rivals and
allies. His administration is promising that the taxes on imports will lower
trade imbalances, offset some of the cost of the tax cuts he signed into law on
Friday and cause factory jobs to return to the United States.
Trump, during a White House meeting with African leaders, talked up trade as
a diplomatic tool. Trade, he said, "seems to be a foundation" for him to settle
disputes between India and Pakistan, as well as Kosovo and Serbia.
"You guys are going to fight, we're not going to trade," Trump said. "And we
seem to be quite successful in doing that."
Trump said the tariff rates in his letters were based on "common sense" and
trade imbalances, even though the Brazil letter indicated otherwise. Trump
suggested he had not thought of penalizing the countries whose leaders were
meeting with him in the Oval Office -- Liberia, Senegal, Gabon, Mauritania and
Guinea-Bissau -- as "these are friends of mine now."
Countries are not complaining about the rates outlined in his letters, he
said, even though those tariffs have been generally close to the ones announced
April 2 that rattled financial markets. The S&P 500 stock index rose Wednesday.
"We really haven't had too many complaints because I'm keeping them at a
very low number, very conservative as you would say," Trump said.
Tariff uncertainty returns with Trump's letters
Officials for the European Union, a major trade partner and source of
Trump's ire on trade, said Tuesday that they are not expecting to receive a
letter from Trump listing tariff rates. The Republican president started the
process of announcing tariff rates on Monday by hitting two major U.S. trading
partners, Japan and South Korea, with import taxes of 25%.
According to Trump's Wednesday letters, imports from Libya, Iraq, Algeria
and Sri Lanka would be taxed at 30%, those from Moldova and Brunei at 25% and
those from the Philippines at 20%. The tariffs would start Aug. 1.
The Philippine government's reaction has been relatively tame. Its
ambassador in Washington, Jose Manuel Romualdez, said the country will seek new
negotiations with the U.S. to lower the 20% tariff.
The Census Bureau reported that last year the U.S. ran a trade imbalance on
goods of $1.4 billion with Algeria, $5.9 billion with Iraq, $900 million with
Libya, $4.9 billion with the Philippines, $2.6 billion with Sri Lanka, $111
million with Brunei and $85 million with Moldova. The imbalance represents the
difference between what the U.S. exported to those countries and what it
imported.
Taken together, the trade imbalances with those seven countries are
essentially a rounding error in a U.S. economy with a gross domestic product of
$30 trillion.
The letters were posted on Truth Social after the expiration of a 90-day
negotiating period with a baseline levy of 10%. Trump is giving countries more
time to negotiate with his Aug. 1 deadline, but he has insisted there will be
no extensions for the countries that receive letters.
The president threatened additional tariffs on any country that attempts to
retaliate.
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