Trump’s tariffs hurt, but not that much
Donald Trump did not back down. He carried out his threat to impose another tariff on Brazilian exports.
Citing an investigation into alleged unfair trade practices, the U.S. trade authorities introduced an additional 25% levy on Brazilian goods.
This is the latest chapter in a saga that began during the presidential campaign, when Trump started bullying U.S. trading partners. Then came “Liberation Day” on April 2, 2025, when his administration imposed country-specific tariffs and Brazil was assigned the minimum rate of 10%.
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In June 2025, however, the U.S. president trained his trade weapons on Brazil. Driven by political objectives and the interests of major corporations, he launched the process that has now culminated in the additional 25% tariff.
Export decline
Trade friction and uncertainty inevitably affect commercial flows. Over the past 12 months, the value of Brazilian exports to the United States was 13.1% below the 2024 level.
In other words, since Trump returned to office, Brazil’s annual sales to the U.S. have fallen by $5.3 billion, to $35.1 billion from $40.4 billion.
The tariff offensive is also reverberating through Brazilian politics. Senator Flávio Bolsonaro is trying to distance himself from the “Tariflávio” meme—a play on his name and the Portuguese word for tariff—by blaming the government for the failure of negotiations. President Luiz Inácio Lula da Silva, meanwhile, has sharpened his nationalist rhetoric and promised to invoke Brazil’s Reciprocity Law against U.S. companies.
Aware of the risks of confronting Trump with direct retaliation, the government’s only concrete response so far has been to expand the Sovereign Brazil plan. The program, run by Brazilian development bank BNDES, provides below-market loans to companies affected by higher tariffs.
Uneven losses
The government should be cautious in deploying those resources, however, because the damage has not been felt equally across all industries.
Of the 96 product categories tracked by Brazil’s Foreign Trade Secretariat, known as Secex, 23 have actually increased their sales to the U.S. since Trump took office. The strongest gains came from aircraft, up $704.9 million; electrical machinery and equipment, up $547.9 million; and aluminum products, up $249.3 million.
Those industries therefore have little reason to seek government support on the grounds that they were harmed by the tariffs.
The largest declines were seen in mineral fuels, down $1.8 billion; iron and steel products, down $721.2 million; wood, down $644.5 million; sugar, down $482 million; pulp, down $420.2 million; and coffee, down $398.4 million.
That does not mean, however, that tariffs were solely responsible for the weaker performance in every case.
Other pressures
The fuel industry, for example, was protected from the outset through its inclusion on a lengthy list of exemptions. The decline in U.S. purchases of Brazilian oil primarily reflects state-owned Petrobras’s decision to redirect exports toward China after war broke out in the Persian Gulf.
In the sugar industry, lower shipments to the U.S. have more to do with a combination of poor harvests, falling international prices and the diversion of production toward ethanol than with Trump’s tariffs.
Before distributing subsidized credit to companies, the government should also consider that, of the 73 sectors whose sales to the U.S. declined, 39 offset those losses by exporting more to other markets.
The clearest example is the steel industry. Its sales to the United States fell by $721.2 million, but exports to the rest of the world increased by $1.7 billion.
Rather than corporate whining or populist campaign rhetoric, the debate should focus on what the accompanying chart actually shows.
Despite the much-celebrated strength of Brazilian agriculture, mining and oil, the country has continued to account for little more than 1% of global trade since the end of the commodities boom.
Without a strategy to add value and diversify exports, Brazil will remain stuck while its competitors move ahead.
