"Brazil's President Threatens Equivalent Retaliation to Trump's Tariff Plan, Vows 'We'll Impose a 50% Charge'"

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Brazil’s President Luiz Inacio Lula da Silva expressed his desire for a diplomatic solution to the United States President Donald Trump’s proposed 50 percent tariffs on Brazilian goods. However, he promised reciprocal measures if these tariffs are enforced on August 1st.

“Our first step will be to negotiate, but if that fails, we will enact the law of reciprocity,” Lula mentioned in an interview with Record TV. This reference was to a law recently approved by Brazil’s Congress that grants the president authority to respond to trade restrictions.

“If they impose a 50 percent tariff on us, we will do the same to them.”

A Brazilian diplomat, who preferred to remain anonymous to discuss internal discussions, indicated that Lula would likely hold off on any retaliatory actions until the tariffs are officially in place.

“We have until August 1,” the source noted.

In a letter to Lula published on Thursday AEST, Trump linked the tariffs to Brazil’s judiciary launching legal proceedings against former president Jair Bolsonaro, who is on trial on charges of plotting a coup to stop Lula from taking office in 2023 after hundreds of pro-Bolsonaro supporters stormed Congress.

Trump said Bolsonaro was the victim of a “witch hunt”.

Lula criticised Bolsonaro for perpetuating claims of legal persecution, stressing the former president’s son, Eduardo Bolsonaro, took leave from his role in Congress at least in part to head a campaign in his father’s favour in the US.

“The previous president of the Republic must be accountable because he endorses Trump’s tariffs on Brazil. In fact, it was his son who actively sought to influence Trump’s views,” Lula criticized.

A man waves a Brazilian flag at a protest.

People protest against Donald Trump’s US tariffs, at the central bus station in the Brazilian capital Brasilia. Source: AAP / Andre Borges/EPA

In a social media post, Bolsonaro said Trump’s letter announcing tariffs was received with “a sense of responsibility,” adding he respects and admires the US government.

Bolsonaro argued the US measure was a reaction to Brazil’s distancing from freedom. “This would never have happened under my government,” he wrote.

Lula said the government will set up a committee with Brazilian business leaders to “rethink” the country’s commercial policy with the US.

He mentioned Brazil’s new reciprocity law, passed just after Trump made his first tariff announcements in April, that allows the government to respond with reciprocal measures in case other countries impose unilateral barriers to Brazilian products.

In addition to imposing similar tariffs, the legislation would empower Lula to restrict American imports and investments and to suspend intellectual property rights of U.S. companies, among other actions.

How would the tariffs work?

The US is Brazil’s second-largest trading partner after China and has a rare trade surplus with Latin America’s largest economy.

Some market sectors, including aviation and banking, felt immediate pressure.

But the tariffs could inflict pain in the US too, disrupting food prices, given Brazil’s role as a major agricultural exporter of coffee, orange juice, sugar, beef, and ethanol.

The proposed 50 per cent tariff would effectively halt the flow of Brazilian coffee to the US, its largest buyer, four trade sources told Reuters on Friday AEST.

Brazilian industry lobby groups representing sectors such as coffee and oil issued statements on Friday AEST, urging a diplomatic solution.

“We hope that diplomacy and balanced negotiations will prevail, despite ideologies and personal preferences, and that common sense will once again guide the relationship between these two great sovereign nations,” Josue Gomes da Silva, the president of Sao Paulo industry group Fiesp, said in a statement.