Why Brazil Has Escaped Trump’s Tariff Targeting (So Far)

“The question isn’t whether Brazil will face tariffs—it’s when”

That’s the assessment of experts consulted by BBC News Brasil regarding the future of Donald Trump’s tariff policies.

“It’s highly likely that Brazil will eventually become a target of U.S. tariffs,” says economist Otaviano Canuto, a former vice president at the World Bank and researcher at the Policy Center for the New South.

“Not next week, when Europe will probably be in the crosshairs, but later on, very likely.”

Over the weekend, Trump followed through on one of his campaign promises by announcing new tariffs against Canada, Mexico, and China.

A 10% tariff on Chinese goods took effect on Tuesday (Feb. 4). Meanwhile, a 25% tariff on Mexican and Canadian products was suspended for a month following negotiations between the governments.

When announcing the measures, Trump pointed to what he called the “great threat” of illegal immigrants and illicit drugs entering the U.S. via Mexico and Canada or being imported from China.

The Mexican and Canadian governments denied the allegations but later committed to stepping up efforts to curb illegal drug trafficking into the U.S.

China, on the other hand, responded to the new tariffs by imposing duties of up to 15% on certain U.S. goods, such as coal and liquefied petroleum gas, and 10% on oil, agricultural machinery, pickup trucks, and some SUVs.

Global analysts believe Trump won’t stop there. The former president has long promised to slap tariffs on the European Union (EU) and reiterated on Sunday (Feb. 2) that his plans remain unchanged.

And while Washington has yet to announce any concrete measures against Brazil, Trump has repeatedly called out the country in his speeches, labeling it a “major taxer.”

At the end of January, the Republican included Brazil among nations that “wish harm” on the U.S.

“Put tariffs on countries and foreign people who truly mean us harm,” Trump said. “China is a huge tariff imposer. India, Brazil, so many, many countries. We’re not going to let that happen anymore because we will always put America first,” he declared at a rally in Florida.

That’s why, according to Vinícius Vieira, professor of Economics and International Relations at Fundação Armando Álvares Penteado (FAAP), “The question isn’t whether Brazil will face tariffs, but when.”

Not a Priority—For Now

So why has Brazil been spared so far?

Experts believe the country is simply not high on Washington’s list of priorities.

Brazil has no free trade agreement with the U.S. and runs a trade deficit with the country—meaning it buys more American goods than it sells.

These were the most exported products from Brazil to the US in containers throughout 2024. The data comes from DataLiner.

Most Exported Products to the United States | 2024 | TEUs

Source: DataLiner (click here to request a demo)

Trump has repeatedly framed protectionism as a tool to correct what he sees as an unfair global trade system, associating the U.S. trade deficit—estimated at $1 trillion—with countries taking advantage of American markets.

While he justified his initial tariff package by citing border security concerns with Mexico and Canada, Trump has often expressed frustration that the U.S. imports more from these nations than it exports.

Indeed, the American trade deficit with Canada and Mexico has grown in recent years, reaching $76 billion with Canada and $156 billion with Mexico in 2023.

Meanwhile, China posted a record trade surplus of nearly $1 trillion in 2024—meaning it exported significantly more than it imported. The U.S. accounted for about $270 billion of that surplus, according to U.S. Census data.

“In Trump’s view, and that of his inner circle, these trade surpluses are essentially gifts from America,” says Otaviano Canuto.

But that logic doesn’t apply to Brazil. In 2024, the U.S. actually recorded a $253 million trade surplus with Brazil.

Brazil exported $40.33 billion to the U.S. and imported $40.58 billion, making the U.S. Brazil’s second-largest trading partner, its second-largest export destination, and its third-largest import source.

“Brazil’s trade deficit with the U.S. has narrowed significantly in recent years, as the country reduced oil imports and increased exports,” Canuto explains. “But in terms of reducing the U.S. trade deficit, Brazil isn’t as high a priority as Canada, Mexico, and China.”

That assessment is echoed by Tatiana Prazeres, Brazil’s Secretary of Foreign Trade at the Ministry of Development, Industry, Trade, and Services (MDIC).

“In the U.S. government’s own trade balance calculations, combining goods and services, Brazil accounts for the sixth-largest U.S. trade surplus,” she told Agência Brasil. “Given the focus of the next U.S. administration on trade deficits, the fact that the U.S. runs a surplus with Brazil should be taken into account.”

Vinícius Vieira of FAAP agrees that Brazil simply isn’t a top concern for Washington.

“Brazil doesn’t stir up Trump’s base the way China or Mexico do,” he says. “In fact, with few exceptions, Brazil has never been a priority for any U.S. administration, even within Latin America.”

But that doesn’t mean Brazil won’t be next.

Tariffs as a Bargaining Chip

While Brazil may not be a priority for economic reasons, its membership in the BRICS bloc could put it in Trump’s crosshairs. The Republican has already threatened BRICS nations with 100% tariffs if they support efforts to use alternative currencies instead of the U.S. dollar.

“There’s no chance that BRICS will replace the U.S. dollar in global trade—or anywhere else—and any country that tries will face tariffs and say goodbye to America,” Trump declared in late January.

Though BRICS has explored mechanisms for settling trade in Chinese yuan and issuing loans in non-dollar currencies, there’s no imminent plan for a unified BRICS currency.

That’s why Daiane Santos, an economics professor at the State University of Rio de Janeiro (UERJ), believes Brazil won’t be targeted immediately. “A BRICS common currency has been discussed for a long time, but I find it unlikely in the short term,” she says.

However, Livio Ribeiro, associate researcher at the Brazilian Institute of Economics (Ibre-FGV) and partner at BRCG Consultoria, warns that Trump has shown he’s willing to use tariffs as a geopolitical weapon—not just an economic tool.

Because Brazil carries less economic weight, he speculates, it could be targeted as an “example” to pressure more significant trade partners.

Since winning the U.S. presidential election in November 2024, Donald Trump and his advisers have alternated between two tariff strategies.

The first is a pragmatic approach aimed at addressing the trade deficit and reducing the U.S. national debt, which currently stands at $36 trillion.

The second strategy treats tariffs as a bargaining tool to advance key government priorities.

“In other words, imposing tariffs to pressure the other side into making concessions,” explains economist Otaviano Canuto. He points to the recent one-month suspension of tariffs on Mexico and Canada in exchange for stronger border security commitments as an example of this tactic.

A similar pattern emerged in the case of Colombia and the deportation of undocumented immigrants using U.S. military aircraft.

Trump imposed sanctions on Colombia after its president, Gustavo Petro, criticized Washington’s new immigration policies and refused to allow two deportation flights carrying Colombian nationals to land.

In response, Trump announced an immediate 25% tariff on all Colombian imports, threatening to raise it to 50% within a week. Washington also warned of potential banking and financial sanctions, travel bans, and visa revocations for Colombian government officials.

However, within hours of the dispute escalating, the U.S. and Colombia reached a deal: Bogotá agreed to accept all deportation flights, and Washington dropped the sanctions.

What About Brazil? If the U.S. were to impose strategic tariffs on Brazil, what would Washington demand in return?

“I don’t see an obvious agenda that Trump could push for in exchange for tariffs, except perhaps discouraging Brazil’s shift toward alternative currencies,” says Canuto, a former executive director at the International Monetary Fund (IMF).

However, he considers this unlikely: “Pressuring Brazil to abandon its currency-swap agreements with China in favor of the U.S. dollar isn’t a feasible demand.”

President Luiz Inácio Lula da Silva has already stated that Brazil would retaliate if Trump imposed tariffs on Brazilian exports.

“It’s very simple: if he taxes Brazilian products, Brazil will reciprocate by taxing U.S. exports,” Lula said.

Steel and Aluminum in the Crosshairs

Economists interviewed by BBC Brasil warn that a new wave of U.S. tariffs could target Brazil in response to its own import duties.

“Brazil could be hit by a broad package of tariffs aimed at emerging economies or specific industries—especially steel and aluminum,” says Vinícius Vieira, a professor at FAAP.

He recalls Trump’s first term, when Washington imposed additional tariffs of 25% on steel and 10% on aluminum imports in 2018. While the U.S. initially exempted certain countries, it later negotiated a quota system for Brazilian exports of these products.

Trump also accused Brazil and Argentina of “massively devaluing” their currencies, threatening to reinstate tariffs on their steel and aluminum exports—only to back down within 20 days.

The U.S. steel industry is concentrated in the Rust Belt, a key Trump stronghold. Additionally, Vice President J.D. Vance has deep political ties to the Appalachian region, which overlaps with parts of the Rust Belt.

Given these factors, Brazilian steel and aluminum appear to be prime targets for potential tariffs, experts say.

“The protectionist lobby against Brazilian steel remains strong in Washington, even under Biden,” notes Canuto, who now works at the Policy Center for the New South.

Iron and steel semi-finished products are Brazil’s second-largest export to the U.S., trailing only crude oil. These goods accounted for 14% of Brazilian exports to the U.S. in 2024.

Brazil is also a major supplier of iron and steel to the U.S., alongside Canada, Mexico, South Korea, and other nations.

Another critical Brazilian export is aircraft, representing 6.7% of total shipments to the U.S. in 2024, with Embraer playing a significant role.

According to Canuto, broad tariffs on Brazilian imports would particularly impact the U.S. aviation sector, given the importance of these aircraft.

“There are no obvious domestic or international alternatives to Brazil’s medium-sized regional jets,” he explains. “That’s why, if tariffs are imposed, this sector is likely to be exempt or subjected to milder measures.”

Reporting by Camilla Veras Mota, BBC News Brasil, São Paulo

Source: Época Negócios

 

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