Trump’s 50% tariff on Brazil sparks trade tensions; Lula responds strongly

President Donald Trump has unveiled another wave of tariff demand letters, targeting several countries and industries ahead of the August 1 implementation date. The most notable move: a 50% levy on Brazilian imports, one of the steepest yet.

The tariff campaign is part of Trump’s so-called “reciprocal tariff” strategy, which pressures trading partners to match US import duties or face penalties.

Brazil in the crosshairs over Bolsonaro trial

In a letter to Brazilian President Luiz Inácio Lula da Silva, Trump criticised the prosecution of former President Jair Bolsonaro, calling it a “witch hunt” and linking it directly to the trade punishment. Trump also signalled an investigation into Brazil’s trade practices.

Trump cited the treatment of former President Jair Bolsonaro "- a right-wing populist leader "- in his letter to Brazil, calling on authorities to drop charges against him over an alleged coup attempt. "This Trial should not be taking place. It is a Witch Hunt that should end IMMEDIATELY!" Trump wrote in the letter.

Brazil was not on Trump’s original tariff list, making this move a sharp escalation — especially since the US runs a trade surplus with Brazil, unlike most other targeted nations.

Tariff details: Who’s affected?

New tariffs announced this week include:

• Brazil: 50%

• Algeria, Libya, Iraq, Sri Lanka: 30%

• Brunei, Moldova: 25%

• Philippines: 20%

Iraq and Sri Lanka had their rates reduced from earlier proposals, suggesting some flexibility remains in the negotiations.

India, EU also face heat

Trump warned India of a 10% penalty over its BRICS participation, suggesting the bloc threatens the US dollar's dominance. India, set to chair BRICS in 2026, is treading carefully as it seeks a separate trade deal with Washington.

The European Union, meanwhile, has yet to receive a new tariff letter, but Trump has threatened up to 50% tariffs despite ongoing negotiations. The EU remains divided internally on how to respond.

Trump's justification: “common sense” and “deficits”

Asked how rates were determined, Trump cited “common sense, trade deficits, and raw numbers,” calling the measures necessary to restore fairness.

Deputy Treasury Secretary Michael Faulkender later noted that even if tariffs begin on Aug. 1, negotiations could continue. The goal is to have framework agreements in place by the deadline.

So far: Few deals, many threats

• UK and Vietnam are the only countries with partial deals so far.

• Other targeted countries include Japan, South Korea, South Africa, Indonesia, Thailand, and Cambodia.

• Trump paused initial tariffs at 10% for a 90-day window, now extended again.

• The full list of higher tariffs is expected to take effect on August 1, barring last-minute deals.

Legal uncertainty and trade court pushback

Trump’s tariff strategy, largely relying on the 1977 IEEPA law, faces legal challenges. A federal trade court has ruled against broad use of IEEPA for import duties, but enforcement remains pending appeal.

Volatility, pressure, and more to come

With markets on edge, trade partners scrambling, and the White House doubling down on pressure, Trump’s tariff blitz has become a central force in global economic policy. Whether it yields lasting trade deals — or deeper disputes — remains to be seen.

With inputs from AFP, Bloomberg