America has a trade surplus with Brazil — it buys more of our products than we buy of its products — yet President Trump announced yesterday that he will impose a 50% tariff on Brazil’s exports to the United States. Trump’s action is creating a backlash in Brazil that is boosting support for Brazil’s left-wing President Lula da Silva, who barely unseated the more conservative president Jair Bolsonaro in the 2022 election. Trump’s tariffs will lead to Brazil imposing tariffs on our products, wiping out American manufacturing jobs that rely on selling goods to Brazil. Indeed, “Brazil’s president promised to reciprocate against Trump’s tariffs,” reports the New York Times. So some jobs at Boeing, which exports airplanes and airplane parts to Brazil, will likely be lost.
Trump’s letter announcing the 50% tariff complains about Brazil’s prosecution of its ex-president Jair Bolsonaro for alleging plotting a coup attempt. But as economist Patrick Chovanec observes, “There is absolutely no law that allows the President of the United States to unilaterally impose a tariff to interfere with a criminal case in another country.” Moreover, Brazil’s left-leaning independent judiciary isn’t going to let Bolsonaro off the hook to make Trump happy. A Brazilian Supreme Court justice is spearheading the prosecution of Bolsonaro.
Trump imposed massive “Liberation Day” tariffs on most of the countries of the world, claiming America’s trade deficit is an “emergency” that justifies tariffs on other countries, most of which America runs a trade deficit with. (The Court of International Trade found those tariffs were unlawful, but its ruling against the tariffs was temporarily stayed by the Federal Circuit Court of Appeals, which will rule on the legality of many of Trump’s tariffs this summer).
But that “trade deficit” excuse (for tariffs) doesn’t work with Brazil, which buys $7 billion more in goods per year from America than we buy from it.
Trump’s tariffs on Brazil will lead to higher prices. Brazil sells a lot of coffee to the U.S., so if we impose a 50% tariff on Brazilian products, the cost of the coffee you buy will go up.
Brazil exported $6 billion worth of steel to the United States in 2024, which was used by our auto industry and other manufacturing industries. Tariffs on that steel could harm some U.S. manufacturers. Trump’s 50% tariff on Brazil is on top of his earlier 50% tariff on foreign steel. Tariffs on steel wipe out more jobs than they save, because “steel is produced by a tiny sliver of the economy, but used as an input by a much broader swathe of manufacturers,” notes Justin Wolfers, an economist at the University of Michigan. Earlier steel and aluminum tariffs Trump imposed back in 2018 shrank employment by 74,000 jobs, wiping out 75 times more manufacturing jobs than they saved.
Frankly, our trade deficit isn’t an “emergency” either, as legal experts on presidential emergency powers have explained. Our trade deficit is a longstanding, manageable issue that poses no major threat to our country. Many countries with growing economies have trade deficits, while some countries with lousy economies have trade surpluses with the rest of the world. A trade deficit just means other countries send us more goods than we send to them, and this doesn’t mean we run out of money — a trade deficit can be financed by other countries investing in our economy some of the money they get from selling us goods (such foreign investment does not have big negative side effects for a country with a growing economy like ours, which reinvests most profits and retains domestic ownership of most of our economy. The trade deficit isn’t a huge problem like the U.S. government’s skyrocketing national debt, which results in America paying more and more in interest to foreign bondholders). While the U.S. runs a trade deficit in goods, it runs a trade surplus in services.
President Trump said that he planned to impose a 50 percent tariff on all Brazilian imports, partly in retaliation for what he sees as a “witch hunt” against his political ally, former President Jair Bolsonaro, who is facing trial for attempting a coup.
In a letter to President Luiz Inácio Lula da Silva of Brazil, Mr. Trump wrote that the new tariffs would take effect on Aug. 1. “The way that Brazil has treated former President Bolsonaro, a Highly Respected Leader throughout the World during his Term, including by the United States, is an international disgrace.”
A few hours later, Mr. Lula said that Brazil would reciprocate against the tariffs. “Brazil is a sovereign country with independent institutions that will not accept being abused by anyone,” he said in a statement. He added that the case against Mr. Bolsonaro “is the sole responsibility of the Brazilian Judiciary.”… The United States is Brazil’s second largest trading partner after China, and Mr. Trump appears to be demanding an end to Mr. Bolsonaro’s prosecution to lift the steep tariffs.
Mr. Trump’s effort to use tariffs to intervene in a criminal trial in a foreign nation is an extraordinary example of how he wields levies as a one-size-fits-all cudgel — and how they can yield economic destruction as a result.
Mr. Trump said the 50 percent tariff was needed to “have the Level Playing Field we must have with your Country” and “to rectify the grave injustices of the current regime.”
Mr. Trump also incorrectly said the United States had a trade deficit with Brazil. For years, the United States has generally maintained a trade surplus with Brazil. The two countries had about $92 billion in trade together last year, with the United States enjoying a $7.4 billion surplus in the relationship. The top products traded are aircraft, oil, machinery and iron.
Mr. Trump wrote that the tariffs were also in response to “SECRET and UNLAWFUL Censorship Orders to U.S. Social Media platforms”… Justice Alexandre de Moraes, the Brazilian Supreme Court justice who is overseeing the case against Mr. Bolsonaro, has ordered tech companies to take down hundreds of accounts.
Prosperity doesn’t require tariffs. Australia and the United Kingdom are prosperous, and have low average tariffs of around 1%.
The most backward nations on Earth often have tariffs of over 10%, such as the following African countries, which are all much poorer than the average country, and are not making much economic progress:
- Cameroon: Has a weighted mean applied tariff of 15.5%.
- Sierra Leone: Has a weighted mean applied tariff of 14.1%.
- Nigeria: Has a weighted mean applied tariff of 12.4%.
- Guinea: Has a weighted mean applied tariff of 12.2%.
- Guinea-Bissau: Has a weighted mean applied tariff of 11.7%.
- Republic of Congo: Has a weighted mean applied tariff of 11.6%.
- Burundi: Has a weighted mean applied tariff of 11.3%.
- Togo: Has a weighted mean applied tariff of 11%.
