Brazil Vows Retaliatory Tariffs If Trump Follows Through on 50 Percent Levy

Brazilian President Luiz Inácio Lula da Silva said Thursday that he will impose retaliatory tariffs on the United States if President Donald Trump follows through on a pledge to boost import taxes by 50% over the South American country's criminal trial against his predecessor, Jair Bolsonaro.

Lula said he will trigger Brazil's reciprocity law approved by Congress earlier this year if negotiations with the U.S. fail.

"If there's no negotiation, the reciprocity law will be put to work. If he charges 50 (% tariffs) from us, we will charge 50 from them," Lula told TV Record in excerpts of an interview that will be fully aired later in the day. "Respect is good. I like to offer mine and I like to receive it."

Lula's comments raise the risk of a tariffs war erupting between the two countries, similar to what has happened between the U.S. and China. Trump has vowed to respond forcefully if countries seek to punish the U.S. by adding tariffs of their own.

The president of Brazil's Senate, Sen. Davi Alcolumbre, and Chamber of Deputies Speaker Hugo Motta, a pair of moderates who have recently been at odds with Lula, agreed that the recipricity law gives Brazil "the means ... to protect our sovereignty."

"We will be ready to act with balance and firmness in defense of our economy, our productive sector, and the protection of Brazilian jobs," they said in a joint statement.

The tariffs letter that Trump sent to Brazil — and posted on social media Wednesday — railing against the "witch hunt" trial against Bolsonaro opened up a new front in his trade wars, with the U.S. leader directly using import taxes to interfere with another nation's domestic politics.

Trump has already tried to use tariffs to ostensibly combat fentanyl trafficking and as a negotiating tool to change how other nations tax digital services and regulate their economies.

In Brazil's case, some critics say, Trump may be trying to influence the outcome of the criminal trial of Bolsonaro, an ally who like Trump has been charged with attempting to overturn a presidential election. Bolsonaro maintains that he is being politically persecuted by Brazil's Supreme Court over his charges on the alleged plot to remain in power after his 2022 election loss to Lula.

"There's nothing Lula or Brazil can do about Bolsonaro's trial," said Carlos Melo, a political science professor at Insper University in Sao Paulo. "Any change in that would be Brazil's capitulation. Bolsonaro's situation here won't change. How do you negotiate over that?"

Lula ordered his diplomats on Thursday to return Trump's letter if it physically arrives at the presidential palace in Brasilia. The document attacks the country's judiciary and mentions recent rulings on social media companies among the reasons why goods from the South American nation will have higher tariffs from Aug. 1.

Trump has initiated his tariffs under the 1977 International Emergency Economic Powers Act, saying in April that the persistent deficit between what the U.S. exports and what it imports is a national crisis.

But the U.S. runs a trade surplus with Brazil, undermining some of the rationale.

A staffer of Brazil's foreign ministry told The Associated Press that trade negotiations that were ongoing since Trump imposed a first set of tariffs in April are now "up in the air."

Some members of the Lula administration say Trump's move is actually aimed at Brazil's connection with other Southern economies, as displayed on Sunday at the summit of BRICS nations hosted in Rio de Janeiro. Brazil's president once again mentioned the hope for an alternative currency to the dollar for transactions, a topic that frequently draws Trump's ire.

"Trump was never worried about democracy anywhere, much less with Bolsonaro's destiny," said Gleisi Hoffmann, Brazil's institutional relations minister.