Lula Strikes Back: Brazil Threatens to Sever US Trade Ties After Trump’s 50% Tariff Bombshell

Trade war escalates as Brazil's president responds to US tariff threats with nuclear option.

Trump's tariff tantrum meets Lula's Latin fire

When the White House slapped a 50% tariff threat on Brazilian goods, President Lula didn't just roll over. The leftist leader fired back with a threat to cut trade ties entirely—turning a trade skirmish into full-blown economic warfare.

Brazil plays its commodity ace

With China waiting in the wings as alternative trading partner, Lula holds stronger cards than most leaders facing Trump's protectionist bluster. The move could reshuffle global trade alliances—and leave Wall Street scrambling to price in yet another geopolitical risk.

Another fine mess for forex traders to clean up.

Lula condemns Trump’s trade strategy

In a letter on Wednesday, July 9, US President Donald Trump threatened Brazil and warned of a 50% tax on all its imports. The maneuver, he said, was retaliation for the continued legal problems of Jair Bolsonaro, a Military officer and former President of Brazil.

Additionally, the US levies — above the 10% first announced in April — came after the BRICS emerging market nations’ summit. The event had seen Lula and other leaders speaking out against tariffs and military actions in Iran, even though they did not directly mention Trump.

Lula had promised to respond by taking his own actions. His government and supporters backed him and accused Trump of meddling in Brazilian business through quick public relations efforts. 

Notably, the US is Brazil’s second biggest trading partner after China. Economists believe a 50% tariff could cause a 1% decline in Brazil’s economy.

Trump finds himself in trouble with the new tariff threats on Brazil 

President Trump’s tariff threat has subjected the conception of his power to a serious court test. After the US president sent a letter stating that the tariff was largely a response to Brazil’s treatment of its ex-president, he invoked the International Emergency Economic Powers Act (IEEPA) to justify imposing retaliatory tariffs on select foreign threats, a WHITE House official confirmed.

The administration’s invocation of IEEPA in this context has not gone unchallenged, and a case challenging Trump’s reciprocal tariffs is now before a federal appeals court.

Trump’s legal team defended his actions in court, saying that using the IEEPA was legal and meant to fix numerous national emergencies, including America’s increasing trade deficit.

US senators criticize Trump’s tariff policy on Brazil, calling it a “new job-killing tariff”

Some contend that the 50% tariff on Brazilian imports wouldn’t directly affect the ongoing lawsuit for Trump. Still, others caution that his hostile trade maneuvers could hurt the administration’s credibility.

Tim Kaine, a junior United States senator from Virginia, commented on the situation. Kaine stated that Trump’s letter about the tariff on Brazil is an abuse of power on a whole new level.

He then promised to use every option available to stop these new job-killing tariffs.

Ron Wyden, a senior United States senator from Oregon, also criticized Trump’s action. Wyden accused Trump of trying to harm the economy to settle his personal grudges, which, according to him, go beyond his legal power. 

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