Trump slaps additional 40% tariff on Brazil over policy rift, says White House

US President Donald Trump has signed an executive order imposing a 40% additional tariff on imports from Brazil, raising the total levy to 50%, the White House announced on Wednesday. The move comes in response to recent Brazilian policies that the Trump administration says are at odds with US interests.

While the United States under President Donald Trump has softened its harshest trade rhetoric and clinched tariff agreements with key allies like Japan and the European Union, Brazil has found itself on the losing side of that shift.

South America’s largest economy, which was initially subjected to a 10% tariff in April, now risks being hit with a 50% levy unless it reaches a deal with Washington by the end of the week. This potential tariff is far higher than the 15% rates set in recent US trade pacts with Tokyo and Brussels and would tie with the highest tariffs imposed under Trump’s so-called ‘Liberation Day’ reciprocal trade programme excluding China.

Crucially, the standoff is not about trade imbalances. The US actually enjoys a consistent trade surplus with Brazil, totalling $6.8 billion last year on a bilateral trade volume of $91.5 billion, according to US Census Bureau data.

Instead, the escalating tensions stem from political friction. Trump has openly criticised judicial investigations into former Brazilian president Jair Bolsonaro, a close ideological ally, who is facing accusations of attempting to overturn the 2022 election results that brought leftist President Luiz Inácio Lula da Silva to power. “LEAVE BOLSONARO ALONE!” Trump declared on social media earlier this month, tying the tariff threat directly to the legal proceedings.

Diplomatic ties between Washington and Brasília have cooled considerably, and with Trump and Lula sharing little common ground, the likelihood of a breakthrough before the week’s end appears slim.

“There’s no real dialogue if the U.S. won’t even acknowledge our communications,” a Brazilian government official said, expressing concern over the stalled negotiations.

Brazil’s industrial association, CNI, warns that if the 50% tariffs are implemented, the country could lose more than 100,000 jobs and see a 0.2 percentage point drop in GDP growth. The agribusiness sector, represented by CNA, estimates that exports to the US—Brazil’s second-largest trading partner—could be cut in half.

The timing is particularly fraught for Brazil. After strong performance earlier this year, the real has faltered, foreign direct investment has slowed, and June and July saw net capital outflows. With the current account deficit now at 3.4% of GDP—more than double last year’s level—analysts warn that FDI may no longer be sufficient to cover the gap.

With inputs from agencies