Brazil Unveils US Tariff Countermeasures as Trade Conflict Worsens

Brazil has unveiled a series of countermeasures to soften the blow that national producers will have to endure as the Trump Administration imposes a 50% tariff regime on exports to the U.S. The measures do not include enacting reciprocal levies, as President Lula stated that these could worsen the already strained bilateral relations.

Brazil Directs Fresh Funding to Alleviate 50% Tariff Blow

Brazil, the eighth-largest economy in the world, is preparing to deal with the effects of the 50% tariff regime enacted by the Trump administration on its exports. On Wednesday, Brazilian authorities unveiled an aid package focused on helping producers of items that will have to pay these levies to soften the effects of these measures.

The Plan, called “Sovereign Brazil,” involves a $5.55 billion credit line that will be used to help these producers, and also another fund directed to issue tax rate cuts to smaller companies.

The plan was enacted by President Luiz Inacio Lula da Silva via an executive order that will have to be supported and approved by Congress. While Brazil had approved a regulation to allow the government to respond with reciprocal tariffs to this threat, Lula decided against it.

“We are not announcing reciprocity measures. We don’t want, at first, to do anything that could justify worsening our relations,” he stated.

The Trump Administration linked the new 50% regulatory regime to an alleged ongoing censorship campaign by the Brazilian government against U.S.-based social media companies and the “witch hunt” against former President Jair Bolsonaro, who is currently facing trial for his participation in a coup attempt.

Nonetheless, President Lula has rejected U.S. intervention in national policy issues. “We will insist on negotiating… but our sovereignty is untouchable,” he stressed.

More recently, Eduardo Bolsonaro, Brazilian congressman and son of Jair Bolsonaro, warned that the U.S. government would exert more pressure on Brazil by enacting a new set of sanctions and more tariffs.

Talking with Reuters, he said that Brazil “could expect more tariffs, because Brazilian authorities have not changed their behavior.”

Read more: Trump Administration Imposes 50% Tariff on Brazilian Imports