Trump Hits Brazil With 50% Tariffs, Excludes Aircraft, OJ, Energy

Economic

Political

Summary:

U.S. President Donald Trump on Wednesday slapped a 50% tariff on most Brazilian goods to fight what he has called a "witch hunt" against former President Jair Bolsonaro, but softened the blow by excluding sectors such as aircraft, energy and orange juice.

That came as a relief for many in Brasilia, who since Trump announced the tariff had been urging protections for major exporters caught in the crossfire. Shares of planemaker Embraer and pulpmaker Suzano rose.

"We're not facing the worst-case scenario," Brazilian Treasury Secretary Rogerio Ceron told reporters. "It's a more benign outcome than it could have been."

In a factsheet about Trump's executive order on Wednesday, the White House tied the tariffs to Brazil's prosecution of Bolsonaro, who is standing trial on charges of plotting a coup to overturn his 2022 electoral loss.

The executive order came as the U.S. also announced sanctions on a Brazilian Supreme Court justice overseeing Bolsonaro's trial, accusing the judge of authorizing arbitrary pre-trial detentions and suppressing freedom of expression.

Still, Trump's executive order formalizing a 50% tariff excluded dozens of key Brazilian exports to the United States, including civil aircraft, pig iron, precious metals, wood pulp, energy and fertilizers.

Among the top concerns in the government of President Luiz Inacio Lula da Silva were aircraft produced by Embraer (EMBR3.SA), which exports 45% of its commercial aircraft and 70% of its executive jets to the United States.

Analysts had also warned of a serious potential impact on Suzano (SUZB3.SA), one the world's largest wood pulp producers.

Embraer shares rose 11% in Sao Paulo and Suzano gained over 1% in afternoon trading.

Former Brazilian trade secretary Welber Barral warned it was too soon to celebrate, however. He estimated that the list of Brazilian products exported to the U.S. comprises approximately 3,000 items, and only a fraction of these received exclusions.

"There will be an impact," he said of the tariffs.

Wednesday's executive order did not include exemptions for beef or coffee, two key exports to the United States, he noted.

Brazilian meatpacking lobby Abiec, which represents beef producers including JBS and Marfrig (MRFG3.SA), did not immediately comment on Wednesday's executive order.

On Tuesday, the group said the new tariffs would make sales to the U.S. "inviable."

Despite language exempting "energy and energy products" from the tariffs, energy companies operating in Brazil suspended oil shipments to the United States, citing uncertainty, industry group IBP told Reuters.

Source: Reuters

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Manuel

China–U.S. Trade War

Economic

President Trump on Wednesday announced a trade deal with South Korea. The agreement includes a 15% tariff rate on imports from the country, while the US will not be charged a tariff, according to Trump's post on Truth Social.

"South Korea will be completely OPEN TO TRADE with the United States," the president wrote, adding "they will accept American product including Cars and Trucks, Agriculture, etc."

Trump said that the deal also features a $350 billion investment from South Korea in the US as well as purchases of liquified natural gas and other energy products.

Earlier Wednesday, the president made other moves on tariffs, including threatening a 25% tariff on goods from India and slapping massive 50% tariffs on goods from Brazil.

Trump also suggested that beginning Aug. 1, India could pay an additional penalty because of its ties with Russia.

“India has been a good friend, but India has charged basically more tariffs than almost any other country," Trump said.

Trump signed several orders Wednesday too:

One order imposes 50% tariffs on copper imports. Following a Section 232 investigation, the Trump administration is imposing a 50% tariff on semi-finished copper products and copper-intensive derivative products on Aug. 1, but has excluded copper scrap and copper input materials.

Another order ends the so-called de minimis exemption, thereby applying tariffs to low-value imports that have evaded duties. That measure takes effect Aug. 29 and applies to goods that are valued at or under $800 that had qualified for that tax-free treatment, according to a White House fact sheet.

The final order imposes the 50% tariffs on imports from Brazil, which Trump had threatened earlier this month. The order says former President Jair Bolsonaro, currently standing trial for his alleged participation in a coup attempt, has been a victim of "political persecution." The order appears to include exemptions for key US imports, including orange juice and aircraft parts.

Trump reiterated he would not extend Friday's deadline for new tariff levels to kick in. The president confirmed this week that 15% represents the new tariff "floor" for countries, whose rates he has been dictating to leaders in letters in the absence of trade deals. Trump Announces Trade Deal With South Korea Featuring 15% Tariff Rate_1

Trump Announces Trade Deal With South Korea Featuring 15% Tariff Rate_1

Meanwhile, the US and China concluded their latest round of tariff and trade talks in Sweden on Tuesday, with both sides touting progress but without an immediate announcement of a further tariff delay. Treasury Secretary Scott Bessent said President Trump would make the final call on extending the trade truce between the world's two largest economies before an Aug. 12 deadline.

Also, the US and EU are racing to lock in the final details of their major new trade deal before Friday.

Top EU critics say it's a rushed fix. German Chancellor Friedrich Merz called the outcome unsatisfying, and France’s Bayrou dubbed the EU’s "submission" a "dark day."

Source: Yahoo Finance

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Manuel

Central Bank

Bond

U.S. Federal Reserve Chair Jerome Powell on Wednesday said there is no place for the central bank to consider government financing needs when setting interest rate policy.

“We have a mandate” from Congress, and that is to keep inflation in check and the job market as strong as it can be, Powell said in a press conference following the latest Federal Open Market Committee meeting.

Given that legal charge, “we don't consider the fiscal needs of the federal government. No advanced economy central bank does that, and it wouldn't be good” for the Fed to do so as it would compromise its credibility.

Most economists agree that a central bank that sets interest rates to keep government borrowing costs low is a central bank that will likely lose control of inflation and will be unable to act with the independence needed to keep price pressures in check.

Powell spoke to reporters after a Fed policy meeting that saw officials maintain their overnight interest rate target range steady at 4.25% to 4.5%. Officials are continuing to weigh data to see how big changes in government import taxes are affecting the economy, as financial markets continue to eye a possible September easing in short-term borrowing costs.

The Fed has faced steady and often aggressive pressure from President Donald Trump to cut rates. The president has said a large move down in rates is justified by a number of factors, but part of his critique centers on the elevated interest costs now faced by the government as it sells bonds to cover oceans of red ink.

Fed rates, even after cuts last year, still remain relatively high relative to where they've been in recent years. At $1.1 trillion in interest rate payments last year, the cost of managing government debt has more than doubled since before the COVID-19 pandemic, and that’s in large part driven by the high rates the Fed has in place to cool inflation levels.

But if the Fed were to cut rates to 1% now, a level Trump has argued for, it would run the risk that inflation pressures, already likely to go up due to trade tariffs, would rise even more given newly stimulative policy. That could in turn backfire on government borrowing as it would likely send bond yields up, meaning the government would have to pay higher rates to secure investors.

In years past, the Fed has also faced some heat from critics who believed it was keeping rates low to make government deficit spending easier, a notion regularly rejected by central bankers.

The issue of interest rate costs could continue to nip at the central bank as a recent Republican taxation and spending bill is expected to increase government borrowing, which could further increase how much the government has to pay to get the public to buy those bonds.

Source: Reuters

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Manuel

Cryptocurrency

Political

Dragonfly managing partner Haseeb Qureshi revealed that the U.S. Department of Justice (DOJ) will not bring criminal charges against the crypto venture firm, as Tornado Cash co‑founder Roman Storm’s federal trial in Manhattan neared its conclusion.

Qureshi, whose investment firm backed several blockchain startups, wrote on social media that federal prosecutor Nathan Rehn told the court July 28 that neither Dragonfly nor its principals were targets of the department’s investigation.

He called the public clarification “unprecedented” and “a clear violation of DOJ policy,” citing the Justice Department’s usual practice of keeping target information confidential. The development comes days after Qureshi publicly denounced the DOJ over targeting the firm for backing Tornado Cash in 2020 as part of Storm’s trial.

Storm, who co‑founded Tornado Cash in 2019 as an open‑source protocol to anonymize cryptocurrency transactions, is charged with laundering more than $1 billion and violating U.S. sanctions against North Korea’s Lazarus Group.

The trial, which began July 14 in U.S. District Court in Manhattan, has heard testimony from blockchain tracing experts and former Tornado Cash users. Closing arguments are expected later this week.

Tornado Cash was added to the U.S. Treasury Department’s sanctions list in August 2022, marking the first time a software protocol faced such action. Prosecutors allege Storm personally approved transactions for illicit actors, while defense attorneys argue that the protocol’s code, not its creator, should be judged.

Dragonfly invested in Tornado Cash in 2020 after obtaining an outside legal opinion that the mixer complied with U.S. anti‑money‑laundering guidance issued by the Financial Crimes Enforcement Network (FinCEN).

The outcome of Storm’s case could reshape how open‑source developers are held accountable for user activity. If convicted, Storm faces up to 45 years in prison, a sentence that critics warn could chill innovation in privacy‑enhancing tools.

Qureshi wrote: “With that behind us, the focus should remain on Roman Storm’s trial, which is now nearing closing arguments as soon as this week. Its outcome will have massive implications for open-source software and privacy rights in America.”

Source: Cryptoslate

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Manuel

Economic

Energy companies operating in Brazil are expected to resume oil shipments to the United States after several oil products were exempted from U.S. tariffs, the head of Brazilian oil lobby group IBP told Reuters on Wednesday.

Oil is Brazil's top export to the U.S. and was exempt from the 10% April tariff imposed on Brazilian exports, but uncertainty over whether the commodity would be exempt under new tariffs announced on July 9 led to a halt in shipments for most of the month.

However, while President Donald Trump's decree on Wednesday hiked tariffs against Brazil to 50%, it excluded several major Brazilian exports from the measures, which included orange juice, some aircraft, pulp and energy products.

"We are out of the tariff," said Roberto Ardenghy, president of IBP.

IBP represents oil companies operating in Brazil including Petrobras, Shell, TotalEnergies, ExxonMobil and Equinor.

Due to earlier uncertainty over the tariffs, instead of shipping their product to the United States, companies were storing oil on floating production vessels or on cargo ships, Ardenghy said.

Because it takes around 21 days for a shipment to reach the U.S. from Brazil, oil shipments were stopped once it became impossible to reach their destination before August 1, he said.

In 2024, Brazil exported a total of 1.78 million barrels per day, of which 243,000 bpd went to the U.S., according to government data compiled by consultancy group StoneX.

If no exemption for oil had been forthcoming, Brazil would have redirected shipments to Europe and India, Ardenghy said.

Magda Chambriard, CEO of Petrobras, Brazil's state-run oil firm, had also said the company would not be majorly affected and could redirect flows to other regions.

"Placing tariffs on our products is a lose-lose game," said Ardenghy.

Source: Reuters

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Central Bank

Economic

The Federal Reserve held interest rates steady on Wednesday in a split decision that gave little indication of when borrowing costs might be lowered and drew dissents from two of the U.S. central bank's governors, both appointees of President Donald Trump who agree with him that monetary policy is too tight.

"The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated," the central bank said in a policy statement after the Federal Open Market Committee voted 9-2 to keep its benchmark overnight interest rate steady in the 4.25%-4.50% range for the fifth consecutive meeting.

The statement noted that economic growth "moderated in the first half of the year," possibly bolstering the case to lower rates at a future meeting should that trend continue. But it also said "uncertainty about the economic outlook remains elevated," with risks to both the Fed's inflation and employment goals, language that has anchored its reluctance to cut rates until the path of inflation and jobs becomes clearer.

Fed Chair Jerome Powell was careful to keep his options open on monetary policy. "We have made no decisions about September" and have time to take in a wide range of data before the central bank next meets in mid-September, he said in a press conference after the end of the two-day policy meeting. Powell noted current monetary policy is appropriately set at "modestly restrictive" levels, as some risks to the outlook have risen.

This week's meeting marks the first time in more than 30 years that two members of the Fed's seven-person Washington-based Board of Governors voted against a rate decision at the consensus-driven central bank, and it will likely stoke debate about how Trump's public pressure to cut rates is playing out at an institution designed to set monetary policy independent of demands from elected officials.

Both Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller, who has been mentioned as a possible nominee to replace Fed Chair Jerome Powell when his term expires next May, were appointed to the board by Trump and "preferred to lower the target range for the federal funds rate by one quarter of a percentage point at this meeting," the Fed's policy statement said.

Powell, a bipartisan figure who was appointed to the Fed's board by former President Barack Obama and later promoted to the top job by Trump, voted to hold rates steady, as did three other governors and the five Fed regional bank presidents who currently hold a vote on the rate-setting FOMC. The Fed's regional bank presidents are hired by local boards of directors who oversee the Fed's 12 regional institutions.

Governor Adriana Kugler was absent and did not vote.

Dissenting members of the FOMC often release statements explaining their vote on the Friday following Fed meetings.

'WAIT-AND-SEE' APPROACH

Treasury yields were up in late-afternoon trading after the Fed's policy decision while stocks were on track to close the session down. Futures markets lowered the odds of a rate cut at the central bank's September 16-17 policy meeting.

The data since the Fed's June 17-18 meeting has given policymakers little reason to shift from the "wait-and-see" approach they have taken on interest rates since Trump's January 20 inauguration raised the possibility that new import tariffs and other policy shifts could put upward pressure on prices. The unemployment rate is still low at 4.1%, and recent inflation data showed faster increases for some heavily imported goods - a development policymakers will watch in the coming weeks.

The Commerce Department earlier on Wednesday reported that U.S. growth rebounded more than expected in the second quarter, but declining imports accounted for the bulk of the improvement and domestic demand rose at its slowest pace in 2-1/2 years.

Trump has berated Powell in particular for not cutting rates to try to lower the government's borrowing costs, a concern outside the Fed's congressionally-mandated goals of maintaining stable inflation and maximum employment.

Source: Reuters

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Adam

Forex

The markets are no longer on the verge – they’re making the key step as I’m writing this.

USD Index Breaks New Ground

The US Dollar Index didn’t just move to a new July high – it also moved above its June high. Congratulations to everyone who didn’t fall for the bear trap in the previous weeks – this rally is just getting started and profits resulting from it could be enormous before the move is over.

US Dollar Breaks Out—Is This 2008 All Over Again for Precious Metals?_1

This is exactly what the USD Index is supposed to be doing, given the Peak Chaos theory that I’ve been writing about for some time now.

At first, the USD Index was rallying slowly, but surely, and now it’s accelerating – this is exactly how the HUGE rally started back in 2008 – it was small and slow at first.

Zooming in allows us to see that the recent price action created an inverse head-and-shoulders pattern that the USD Index recently completed and then verified.

US Dollar Breaks Out—Is This 2008 All Over Again for Precious Metals?_2

The minimum (!) upside target based on this formation is about 101.45, which is close to the May high. That’s where the USD Index might pause or correct, but – by no means – do I expect this to be the end of the rally.

And since precious metals are vulnerable to USD Index’s rallies, the above is likely to trigger declines across the board – also in commodities like copper.

US Dollar Breaks Out—Is This 2008 All Over Again for Precious Metals?_3

Indeed, silver not only moved below its most recent lows; it also moved below its rising support line. This is important as it suggests that the white metal has much further to decline.

Given USD’s momentum, it seems quite likely that silver invalidates its move above its June high, and this is when the bigger declines will start. Simply because it will be then that it will become clear that – despite multiple reasons for silver to move higher in the long run – THIS IS NOT IT with regard to its main breakout. And by “main breakout” I mean the one that will take it to $50 and then beyond.

US Dollar Breaks Out—Is This 2008 All Over Again for Precious Metals?_4

Platinum: Final Push Before Slide?

Finally, platinum just failed to rally back above its June high, and it moved back below it. This pause likely means that platinum is getting ready to slide, but it’s waiting for the final push.

There are two events that could trigger further moves (up in the USD Index, and down in most other markets, including precious metals, commodities, and miners):

Today’s interest-rate decision from the Fed (almost everyone – including myself – is expecting Powell to keep the rates unchanged, but the key thing is what they will say during the press conference)

The August 1 tariff deadline / implementation. Even if key things are known upfront, this date could still trigger significant “but the rumor, sell the fact” price moves.

US Dollar Breaks Out—Is This 2008 All Over Again for Precious Metals?_5

The technical signs are clear – USD Index is already rallying, and this move is likely to continue for weeks or months (there will be pauses and corrections along the way, but I mean in general), and the precious metals sector as well as commodities are likely to see big corrections / declines – especially if the general stock market also (finally) slides. Of course, there are ways to profit from all of it.