USA vs Brazil: Trade War Sets Back Democracy & Civilization
HAVANA TIMES – “If one declines, two don’t fight,” is a popular saying that’s been lost from the current world scene. It’s one that Brazilian President Luiz Inacio Lula da Siva recalled, to emphasize that his country wouldn’t be retaliating against the Donald Trump’s imposed 50%, super-tariff, which went into effect on August 7.
The US president unilaterally initiated the battle, and everything indicates it will tend to worsen for a Brazil dragged down not only by a trade war but also by its struggle for democracy, self-determination and the civilizing advances made in the wake of two world wars.
“No one is standing up to Trump like the President of Brazil,” highlighted the New York Times on July 30, in conjunction with a long interview with Lula they published.
Current circumstances have thrust Brazil into the center of disperse, yet isolated and uncoordinated, reactions to what Donald Trump and his government represent for the world as a crushing extreme rightist force, to the detriment of democracy, the fight against climate change and the threat of pandemics.
Lula refrained from retaliations he promised after the July 9 announcement of the extraordinary 50% tariff, locally known as the arecelazo. His government is trying to mitigate the damages to the nation’s export industries not included among the 694 exceptions conceded by Trump when the super-tariff was formalized on July 30.
Exporting despite losses
“Some fruit growers are sending their mangoes and splitting the additional costs with the importer in the US, absorbing 25% each,” stated Jailson Lira, president of the Rural Producers’ Union of Petrolina, a municipality in in northeast Brazil’s Sao Francisco river valley, where a large part of Brazil’s mango and grape production is concentrated
“There’s a lack of mangoes in the US, a fact that favored a price increase and allows us to continue exporting without large losses,” from the super-tariff, Lira told IPS, speaking by telephone from Petrolina.
There are signed export contracts, and commitments that can’t be left unfulfilled, even when they involve losses. Further, redirecting the current harvest to the internal market would represent “throwing it in the garbage,” because the resulting glut in the market would cause prices to drop too far, Lira added.
For now, “people will have to deal with it,” noted Jailson Lira, including the fact that the harvest began at the end of July with low yields, and the problem is expected to worsen in September when the mango picking intensifies and the grape harvest begins, He is demanding urgent negotiations with the US government.
Coffee producers are facing a graver situation, since they export much more to the United States market – nearly 2 billion dollars a year – while mangoes accounted for only US $45.8 million in 2024.
Coffee growers too are enduring a series of negative factors in the Cerrado region of Brazil’s Minas Gerais, a savannah area where 4,500 growers, most of them small farmers, who produce arabica coffee, recognized for its high quality. The region represents 12% of the national production, which reached 54 million 60-kilo (132.3 lb.) sacks in 2024.
This year’s coffee harvest in the Cerrado region appears to have lower yields, due to droughts mixed with rains outside the normal periods. Coffee farmers are on track to harvest only 20 sacks per hectare, less than half of the normal yield.
Bitter coffee
Given the expected coffee scarcity, prices were high – rising to some US $520 dollars a sack in April. However, following the announcement of Trump’s tariff, the price fell to less than half, creating a worst-case scenario that combines low production with falling prices, according to a local farmer who preferred to remain anonymous.
To Brazilian consumers, it comes as a relief to see prices falling after two years of elevation due to a world coffee shortage. That fact had fed hopes of a repeal of the additional tariffs in the US, where nearly 30% of the coffee consumed comes from Brazil.
Beef, furniture, wood and shoes are other products that face special difficulties with Trump’s arencelazo. The beef sector also had hopes of seeing a reduction of the US tariffs, because their product is mostly destined to make up the hamburgers that are so widely consumed in the US.
The United States is the second market for the greater Latin American economy; in 2024, Latin America’s exports to the US reached 40.33 billion dollars, 12% of the total, while imports added up to 40.58 billion.
The bilateral trade balance gives the United States a slight surplus, but if services are added in, that surplus has accounted for $410 billion since 2009, according to US data. This makes clear the political punishment behind the tariff hike.
Brazilian media and business owners now fear new tariff measures from Trump. Tension has heightened since August 4, when Alexandre de Moraes, a magistrate in Brazil’s Supreme Court, the Supremo Tribunal Federal, ordered house arrest for Jair Bolsonaro. Bolsonaro is Brazil’s former right-wing president, currently facing criminal charges in that high court.
The house arrest declaration came after Bolsonaro made use of social media to manifest his support for the protests promoted by his followers in a number of the Brazilian state capitals on Sunday, August 3. The demonstrators demanded amnesty for all those charged with trying to foment a coup between the end of 2022 and January 2023, to prevent Lula’s assuming the presidency. The former president is accused of being the leader of this movement.
His posts on social media violated the measures imposed by Moraes on July 18. At that time, the judge ordered the former ruler to wear an electronic ankle monitor, due to indications that Bolsonaro was planning to flee the country to avoid a probably guilty verdict and sentence in the trial being conducted in the high court.
It’s expected that his house arrest may generate new US government sanctions for Brazil and for Judge Moraes, given that Trump justified his super-tariff on Brazilian products as a sanction for the supposed political persecution of Trump’s ally Bolsonaro.
Trump has already sanctioned Judge Moraes under the US Treasury’s Magnitsky Law, for wanting to impose “a judicial dictatorship” in Brazil. This law imposes exterior sanctions on those deemed responsible for violating human rights, free expression, or who are involved in corruption. Legal scholars are clear that the norms of the Magnitsky Law don’t apply to the Brazilian judge.
Meanwhile, Washington’s fight with the Brazilian government and with Moraes is also playing out internally between Bolsonaro’s sympathizers and the Brazilian institutions, especially the Supreme Court.
In early August, Bolsonaro supporters in the Senate and Chamber of Deputies occupied the presiding officers’ tables to prevent legislative work from proceeding until an amnesty for the coup leaders headed by Bolsonaro was voted on. The presidents of the two legislative chambers only managed to quell the two-day mutiny on the night of Wednesday, August 6.
Attacks from the outside and inside
The combination of punitive measures from the US government and agitation from the right within Brazil are trying to put an end to the trial currently taking place in Brazil’s Supreme Court. Bolsonaro and 30 other defendants are charged with five crimes, including attempting to stage a Coup d’etat, abolishing democracy and criminal conspiracy.
The trade attack also seeks to impede any Brazilian regulation of the social networks, the majority of which belong to US companies, accusing the Brazilian government and justice system of threatening free expression.
Another pretext is Brazil’s participation and leadership in BRICS, an acronym for the five-country group that includes Brazil, Russia, India, China, and South Africa plus another six new members, all seeking to promote economic cooperation and a multi-polar world order.
Trump has accused them of being an anti-Western bloc that seeks to replace the dollar in international transactions with other currencies. He has threatened trade retaliations against its members and on any country that follows its policies.
The additional tariffs imposed by President Donald Trump as a political arm will continue, as evidenced by his announcement of an additional 25% tariff on products from India beginning on August 7, supposedly punishment for importing oil from Russia.
Since Indian exports already had 25% tariffs leveled on them, the end result of the additional tariff puts them on a par with the Brazilians, who up until then had been facing the highest tariffs, at 50%, of all those unilaterally imposed by the US President.
However, Brazil fears additional sanctions, since they import from Russia more than half the diesel fuel they buy from outside to cover approximately 18% of their consumption.
In addition, Brazil imports nearly 85% of the 41 billon tons of fertilizer they use annually, and nearly a third of this quantity comes from Russia according to the State-run Brazilian Agricultural Investigation Company. This fertilizer is essential for the agricultural powerhouse that produces more soy, coffee, sugar, and orange juice than any other country in the world.
The certainty of new sanctions also stems from the investigation launched by the Office of the US Trade Representative into possible Brazilian actions harmful to US interests.
But at present the motivation for the punitive tariffs leveled on Brazil is purely political. This was made clear from the time of the July 9 announcement that an additional 40% tariff would be added to the 10% previously announced for most of the Latin American countries, as part of the offensive that went into effect on August 7.
With this measure, Trump wants to free Bolsonaro from being tried for an attempted coup, just as Trump himself managed to put off his own trial indefinitely for having tried to overturn the electoral victory of his rival Joe Biden in 2020. At that time, January 6, 2020, a Trump-inspired crowd of radical followers invaded the US Capitol, the seat of the U.S. Congress. Similar attacks were repeated in Brazil, two years later.
First published in Spanish by IPS and translated and posted in English by Havana Times.