Trump's Trade War with Brazil: A Vindictive and Unlawful Act

Strategic Insights -

Brazil has been subject to 50% effective tariffs on its exports to the United States since 1 August, a move widely seen as a vindictive act by President Trump in response to the sentencing of his ally, former Brazilian President Jair Bolsonaro. The motive behind the tariffs appears to be mainly political, rather than a legitimate trade concern. Despite Brazil's economic surplus with the US, the tariffs have been imposed with little regard for WTO rules or the global trading system.

Key Takeaways:

  • The 50% effective tariffs on Brazilian exports to the US are widely seen as a vindictive act by President Trump in response to the sentencing of former Brazilian President Jair Bolsonaro.
  • The tariffs have been imposed despite Brazil's economic surplus with the US, and are seen as a clear departure from the global practice of keeping non-trade concerns out of trade relations.
  • The US has alleged unfair trade practices by Brazil, but the tariffs seem to have little to do with trade and more to do with Trump's personal grievances.
  • Nearly half of Brazil's products are exempt from the tariffs, but many other key products, such as coffee and beef, are not excluded and will likely inflict significant pain on both countries.
  • The Brazilians have taken legal action in the WTO, arguing that the US has violated WTO obligations not to engage in trade discrimination, not to exceed bound tariff rates, and not to retaliate against perceived unfair trade practices without first seeking authorisation in WTO dispute settlement.
  • The US defence of the tariffs as necessary for US national security is legally laughable, and other trading partners burdened by the highest US tariffs since the Great Depression have not yet joined the Brazilian case in the WTO.

Statistics:

  • 30% surge in global coffee prices since Trump's Brazilian action (Washington Post)
  • 192 countries in the WTO have largely bent the knee to Trump's trade bullying (Cato Institute)
  • 165 WTO countries have largely acquiesced to the authoritarian "might makes right" of economic coercion (Washington Post)
  • $billions of dollars in bilateral trade at risk due to the tariffs (Cato Institute)

Sources:

  • Cato Institute
  • Washington Post