Trump Tariffs Goods from Brazil at 50%, Citing ‘Witch Hunt’ Trial Against Country’s Former President

Economic

China–U.S. Trade War

Summary:

Trump imposed 50% tariffs on Brazil over Bolsonaro’s trial, sparking backlash and promises of retaliation from Brazil.

President Donald Trump singled out Brazil for import taxes of 50% on Wednesday for its treatment of its former president, Jair Bolsonaro, showing that personal grudges rather than simple economics are a driving force in the U.S. leader’s use of tariffs.

Trump avoided his standard form letter with Brazil, specifically tying his tariffs to the trial of Bolsonaro, who is charged with trying to overturn his 2022 election loss. Trump has described Bolsonaro as a friend and hosted the former Brazilian president at his Mar-a-Lago resort when both were in power in 2020.

“This Trial should not be taking place,” Trump wrote in the letter posted on Truth Social. “It is a Witch Hunt that should end IMMEDIATELY!”

There is a sense of kinship as Trump was indicted in 2023 for his efforts to overturn the results of the 2020 U.S. presidential election. The U.S. president addressed his tariff letter to Brazilian President Luiz Inacio Lula da Silva, who bested Bolsonaro in 2022.

Lula responded in a forceful statement that said Trump’s tariffs would trigger the country’s economic reciprocity law, which allows trade, investment and intellectual property agreements to be suspended against countries that harm Brazil’s competitiveness.

He noted that the U.S. has had a trade surplus of more than $410 billion with Brazil over the past 15 years.

“Brazil is a sovereign country with independent institutions that will not accept being taken for granted by anyone,” Lula said.

Bolsonaro testified before the country’s Supreme Court in June over the alleged plot to remain in power after his 2022 election loss. Judges will hear from 26 other defendants in the coming months, and legal analysts say a decision could come as early as September. The country’s electoral authorities have already barred Bolsonaro from running for office until 2030.

The former president did not comment about Trump’s tariff decision on his social media channels, but wrote that he is being politically persecuted.

In his statement, Lula defended the country’s legal system, saying the “proceedings against those who planned the coup d’etat is a competence of the Brazilian judiciary and is not subject to interference or threats that harm the independence of national institutions.”

For Trump, the tariffs are personal

Trump also objected to Brazil’s Supreme Court fining of social media companies, saying the temporary blocking last year amounted to “SECRET and UNLAWFUL Censorship Orders.” Trump said he is launching an investigation as a result under Section 301 of the Trade Act of 1974, which applies to countries with trade practices that are deemed unfair to U.S. companies.

Among the companies the Supreme Court fined was X, which was not mentioned specifically in Trump’s letter. X is owned by Elon Musk, Trump’s multibillionaire backer in the 2024 election whose time leading Trump’s Department of Government Efficiency recently ended and led to a public feud over the U.S. president’s deficit-increasing budget plan. Trump also owns a social media company, Truth Social.

“In Brazil, freedom of speech is not mistaken by aggression or violent behavior,” Lula said in his statement. “To operate in our country, every company, local or foreign, must be subjected to Brazilian legislation.”

Brazilian lawmakers allied with Lula blamed Bolsonaro and two of his sons, congressman Eduardo Bolsonaro and Sen. Flávio Bolsonaro, for Trump’s tariff action. Sen. Lindbergh Farias, the whip of Lula’s Workers’ Party in the Senate, said on social media that the Bolsonaros “must be very happy to harm Brazil, our economy and our jobs.”

The Brazil letter was a reminder that politics and personal relations with Trump matter just as much as any economic fundamentals. And while Trump has said the high tariff rates he’s setting are based on trade imbalances, it was unclear by his Wednesday actions how the countries being targeted would help to reindustrialize America.

The tariffs starting Aug. 1 would be a dramatic increase from the 10% rate that Trump levied on Brazil as part of his April 2 “Liberation Day” announcement. In addition to oil, Brazil sells orange juice, coffee, iron and steel to the U.S., among other products. The U.S. ran a $6.8 billion trade surplus with Brazil last year, according to the Census Bureau.

Trump initially announced his broad tariffs by declaring an economic emergency, arguing under a 1977 law that the U.S. was at risk because of persistent trade imbalances. But that rationale becomes problematic in this particular case, as Trump is linking his tariffs to the Bolsonaro trial and the U.S. exports more to Brazil than it imports.

Trump also targeted smaller trade partners

Trump also sent letters Wednesday to the leaders of seven other nations. None of them — the Philippines, Brunei, Moldova, Algeria, Libya, Iraq and Sri Lanka — is a major industrial rival to the United States.

Most economic analyses say the tariffs will worsen inflationary pressures and subtract from economic growth, but Trump has used the taxes as a way to assert the diplomatic and financial power of the U.S. on both rivals and allies. His administration is promising that the taxes on imports will lower trade imbalances, offset some of the cost of the tax cuts he signed into law on Friday and cause factory jobs to return to the United States.

Trump, during a White House meeting with African leaders, talked up trade as a diplomatic tool. Trade, he said, “seems to be a foundation” for him to settle disputes between India and Pakistan, as well as Kosovo and Serbia.

“You guys are going to fight, we’re not going to trade,” Trump said. “And we seem to be quite successful in doing that.”

Trump said the tariff rates in his letters were based on “common sense” and trade imbalances, even though the Brazil letter indicated otherwise. Trump suggested he had not thought of penalizing the countries whose leaders were meeting with him in the Oval Office — Liberia, Senegal, Gabon, Mauritania and Guinea-Bissau — as “these are friends of mine now.”

Countries are not complaining about the rates outlined in his letters, he said, even though those tariffs have been generally close to the ones announced April 2 that rattled financial markets. The S&P 500 stock index rose Wednesday.

“We really haven’t had too many complaints because I’m keeping them at a very low number, very conservative as you would say,” Trump said.

Tariff uncertainty returns with Trump’s letters

Officials for the European Union, a major trade partner and source of Trump’s ire on trade, said Tuesday that they are not expecting to receive a letter from Trump listing tariff rates. The Republican president started the process of announcing tariff rates on Monday by hitting two major U.S. trading partners, Japan and South Korea, with import taxes of 25%.

According to Trump’s Wednesday letters, imports from Libya, Iraq, Algeria and Sri Lanka would be taxed at 30%, those from Moldova and Brunei at 25% and those from the Philippines at 20%. The tariffs would start Aug. 1.

The Philippine government’s reaction has been relatively tame. Its ambassador in Washington, Jose Manuel Romualdez, said the country will seek new negotiations with the U.S. to lower the 20% tariff.

The Census Bureau reported that last year the U.S. ran a trade imbalance on goods of $1.4 billion with Algeria, $5.9 billion with Iraq, $900 million with Libya, $4.9 billion with the Philippines, $2.6 billion with Sri Lanka, $111 million with Brunei and $85 million with Moldova. The imbalance represents the difference between what the U.S. exported to those countries and what it imported.

Taken together, the trade imbalances with those seven countries are essentially a rounding error in a U.S. economy with a gross domestic product of $30 trillion.

The letters were posted on Truth Social after the expiration of a 90-day negotiating period with a baseline levy of 10%. Trump is giving countries more time to negotiate with his Aug. 1 deadline, but he has insisted there will be no extensions for the countries that receive letters.

The president threatened additional tariffs on any country that attempts to retaliate.

Savarese reported from Rio de Janeiro. Associated Press writers Jim Gomez in Manila, David McHugh in Frankfurt, Germany, and Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.

Source: AP

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Michelle

Economic

Forex

The number of Americans filing new applications for jobless benefits unexpectedly fell last week, suggesting employers may be holding on to workers despite other indications of a cooling labor market.

Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 227,000 for the week ended July 4, the Labor Department said on Thursday. Economists polled by Reuters had forecast 235,000 claims for the latest week. The data included last week's July Fourth holiday and claims tend to be volatile around public holidays.

Economists and U.S. central bankers have generally viewed the labor market as solid, if weakening somewhat. This is a view reinforced by last week's monthly jobs report that showed the unemployment rate ticking down to 4.1%, though largely because the workforce shrank, and a bigger-than-expected gain of 147,000 jobs, though highly concentrated in just a few sectors.

Fed Chair Jerome Powell has noted that in the current low-hiring and low-firing environment, any increase in layoffs could rapidly push up the unemployment rate.

So far that has not happened, though nearly 100 U.S. companies have announced layoffs this month, including Microsoft and Intel. Economists say President DonaldTrump'sstill unsettled tariff policy is making it difficult for businesses to plan ahead.

Hiring has been lackluster, making it harder for people out of work to find jobs. Last month's jobs report showed the median duration of unemployment rose in June to 10.1 weeks from 9.5 weeks in May.

The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 10,000 to a seasonally adjusted 1.965 million during the week ending June 28, Thursday's claims report showed.

The so-called continuing claims are at their highest level since November 2021, suggesting those who lose a job are taking longer to find a new position.

The Federal Reserve last week left its policy rate in the 4.25%-4.50% range where it has been since December as central bankers wait to see if tariffs push up inflation before moving to lower rates.

Source: TradingView

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Adam

Commodity

Oil prices edged lower on Thursday as investors weighed the potential impact of U.S. President Donald Trump's tariffs on global economic growth.

Brent crude futures were down 53 cents, or 0.8%, at $69.66 a barrel by 1210 GMT. U.S. West Texas Intermediate crude fell 62 cents, or 0.9%, to $67.76 a barrel.

On Wednesday, Trump threatened Brazil, Latin America's largest economy, with a punitive 50% tariff on exports to the U.S., after a public dispute with his Brazilian counterpart Luiz Inacio Lula da Silva.

He has also announced plans for tariffs on copper, semiconductors and pharmaceuticals and his administration sent tariff letters to the Philippines, Iraq and others, adding to over a dozen letters issued earlier in the week including for powerhouse U.S. suppliers South Korea and Japan.

Trump's history of back-pedalling on tariffs has caused the market to become less reactive to such announcements, said Harry Tchilinguirian, group head of research at Onyx Capital Group.

"People are largely in wait and see mode, given the erratic nature of policymaking and the flexibility the administration is showing around tariffs," Tchilinguirian said.

Policymakers remain worried about the inflationary pressures from Trump's tariffs, with only "a couple" of officials at the Federal Reserve's June 17-18 meeting saying they felt interest rates could be reduced as soon as this month, minutes of the meeting released on Wednesday showed.

Higher interest rates make borrowing more expensive and reduce demand for oil.

Supporting oil prices however was a weaker U.S. dollar in Thursday's Asia trading session, said OANDA senior analyst Kelvin Wong. A weaker dollar lifts oil prices by making it cheaper for holders of other currencies.

U.S. crude stocks rose while gasoline and distillate inventories fell last week, the Energy Information Administration said on Wednesday. Gasoline demand rose 6% to 9.2 million barrels per day last week, the EIA said.

Global daily flights were averaging 107,600 in the first eight days of July, an all-time high, with flights in China reaching a five-month peak and port and freight activities indicating "sustained expansion" in trade activities from last year, JP Morgan said in a client note.

"Year to date, global oil demand growth is averaging 0.97 million barrels per day, in line with our forecast of 1 million barrels per day," the note said.

Additionally, there is doubt the recent increase in production quotas announced by OPEC+ will result in an actual increase in production, as some members are already exceeding their quotas, said Tony Sycamore, an analyst at IG.

"And others, like Russia, are unable to meet their targets due to damaged oil infrastructure," he said.

OPEC+ oil producers are set to approve another big output boost for September, as they complete both the unwinding of voluntary production cuts by eight members and the United Arab Emirates' move to a larger quota.

Source: Reuters

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Warren Takunda

Economic

London stocks had extended gains by midday on Thursday, with the top-flight index hitting an all-time high as investors shrugged off Trump’s trade war rhetoric.

The FTSE 100 was up 1.1% at 8,960.27, having hit a fresh intraday high of 8,973.

Dan Coatsworth, investment analyst at AJ Bell, said: "European markets in general continue to shrug off Donald Trump’s daily tariff updates, perhaps seeing them as noise and not facts. Trump is throwing out numbers left, right and centre, and investors have begun to dismiss anything that isn’t set in stone.

"So many of Trump’s decisions have either been rolled back, forgotten about, or kicked down the road. For investors, that means a shift in focus back to economic data and corporate news flow as key drivers for markets."

In equity markets, heavily-weighted miners were the best performers on the FTSE 100 following losses the previous day, with Anglo American, Rio Tinto, Glencore and Antofagasta all up.

Advertising agency WPP gained as it appointed Microsoft executive Cindy Rose as chief executive to succeed Mark Read who will step down on 1 September. The shares fell sharply on Wednesday after WPP slashed annual profit forecasts.

Jupiter Fund Management surged as it agreed to buy CCLA - the UK's largest asset manager focused on serving non-profit organisations - for £100m.

Iconic bootmaker Dr Martens advanced as it held annual guidance and said it continued to see positive trading in its Americas direct to consumer operations, driven by full price sales, although its UK business continued to experience a challenging trading backdrop.

Rank Group rallied as it said annual profits would come in ahead of expectations despite a backdrop of higher costs and regulatory uncertainty.

Recruiter Pagegroup rose despite reporting a steeper rate of profit decline in the second quarter, with particular weakness in the EMEA and UK divisions. For the full year, the board said it still expects to hit market forecasts for operating profit, though subdued levels of client and candidate confidence are continuing to impact decision making.

On the downside, water and sewage firm Severn Trent edged lower even as it reiterated its full-year outlook, underpinned by ongoing work to find and fix leaks.

Building materials distributor Grafton slumped as it said first-half trading was in line with its expectations but that many of its markets remain challenging and it is not expecting a significant increase in volumes this year.

British Land and Land Securities were both knocked lower by downgrades to ‘underperform’ at Jefferies.

Vistry reversed earlier gains as the housebuilder said it remains on track to deliver a year-on-year increase in profits in FY25, supported by a forward order book of £4.3bn and a "strong” pipeline of development opportunities.

Source: Sharecast

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Glendon

Commodity

OPEC+ is discussing a pause in further production increases after its next monthly hike, according to delegates familiar with the matter.

Saudi Arabia and its partners already have a tentative plan to complete the revival of a 2.2 million-barrel supply revival in September, with another monthly tranche of 550,000 barrels.

The group will likely wait for some time before moving onto reversing another layer of halted production, amounting to roughly 1.66 million barrels per day, said the delegates. They asked not to be identified as the talks are private.

Source: Bloomberg Europe

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Michelle

Economic

Forex

The US dollar has experienced the worst start to a year since 1973, but analysis from Bank of America suggests the currency may see more limited downside in the second half of 2025.

According to BofA’s time zone framework analysis, while overall USD price action no longer correlates with Federal Reserve rate cut pricing, cumulative USD return during US trading hours still maintains a +71% correlation with Fed rates pricing in 2025.

The bank notes that unchanged Fed rates for the remainder of the year should moderately support the USD during US trading hours.

Asia-based investors have been the biggest USD sellers so far in 2025. However, a longer-term analysis reveals that USD price actions in Asian trading hours have flattened after cumulative long returns from the past two years unwound to neutral levels. BofA suggests these investors may wait for new bearish USD catalysts to form in other time zones before pushing the currency lower.

The dollar still has significant room to depreciate during European trading hours, but this would likely require global equity markets to outperform US equity for the rest of the year. Foreign investors now have less incentive to increase their FX hedge ratio on US-based assets following the year-to-date USD movement.

While global equities outperformed US markets in Q1 2025, the US regained leadership in Q2. BofA indicates that relative equity performance should be the focal point for global FX investors in the second half of 2025.

Source: Investing

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Gerik

Economic

German Exporters Prioritize Equity Over Expediency in US Negotiations

As trade tensions between the European Union and the United States escalate, Germany’s leading export lobby has cautioned against rushing into a trade agreement that overlooks European interests. Dirk Jandura, President of the Federation of German Wholesale, Foreign Trade and Services (BGA), stated firmly in Berlin that any forthcoming deal with Washington must be balanced and fair not merely an exercise in damage control to avert tariffs.

The urgency arises from President Donald Trump’s August 1 deadline, which threatens sweeping tariff hikes on European goods if a framework agreement is not reached. In response, the European Commission is working to broker a deal in the coming days. However, German exporters are warning that concessionary diplomacy could sacrifice long-term strategic interests for short-term relief.

Causal Link Between Tariff Threats and Trade Decline

Recent trade data underscores the deteriorating situation. German exports to the United States its largest trading partner in 2024, with bilateral goods trade reaching €253 billion fell by 7.7% in May, following a 10.5% drop in April. These back-to-back contractions mark a clear downward trajectory, closely aligned with the rise in protectionist US policies.

The causal relationship between Trump’s tariff stance and Germany’s export downturn is becoming increasingly apparent. Tariff threats have already destabilized cross-border supply chains and investment planning, eroding the predictability exporters rely on. As Jandura put it, “The situation in foreign trade is dramatic and threatens to get worse,” highlighting the immediate economic costs and future risk if tensions escalate unchecked.

Strategic Recalibration: Strengthening the EU’s Negotiating Leverage

In calling for a stronger European single market, Jandura emphasizes the need for internal cohesion within the EU to counterbalance external pressures. A more integrated market, he argues, would increase Europe’s bargaining power and reduce dependency on any one trade partner, particularly the United States.

Moreover, the BGA is advocating for the expansion or renegotiation of trade agreements beyond the transatlantic axis. This includes diversifying export destinations to reduce vulnerability to policy shifts in Washington. The proposal reflects a shift from reactive to proactive trade policy, aiming to insulate European exporters from the volatility of global trade politics.

Germany’s exporters are drawing a line: economic pragmatism must not be mistaken for submission. While the EU scrambles to finalize a trade framework before Trump's tariff deadline, Berlin is warning against hasty decisions that may sacrifice broader European interests. The recent export declines provide empirical weight to the argument that a weak deal could do more harm than good. Ultimately, the call is for a durable, rules-based trading relationship one that upholds fairness, maintains economic stability, and reinforces Europe’s sovereignty in global trade negotiations.