Brazil Support to Counter U.S. Tariffs on Exports

To protect its exporters against the new U.S. tariffs, Brazil launched a plan of support that amounted to dollars 5.5 billion with the launch of President Luiz Inacio Lula da Silva

ContentsGovernment Announces Major Relief MeasuresLula Criticizes U.S. Measures and Defends JudiciaryTensions Rise as U.S. Expands SanctionsThis is in response to former U.S. President Donald Trump’s issuance of a 50 percent import duty on many Brazilian products, which intensified trade tensions between the two nations.

The new measures include the introduction of the new program “Sovereign Brazil,” which includes giving credit, tax relief, and better insurance coverage to cushion the blow on the companies affected. There is also an intended assistance to small and medium-sized exporters who are directly affected by the tariff, out of pocket.

Government Announces Major Relief Measures

The government of Brazil will give out 30 billion reais in credit to affected exporters under the new policy. Another $5 billion in tax credits will go to small and mid-sized businesses until 2026. It also alleviates when the payment of taxes by companies that have experienced a loss of revenue under the U.S tariffs is deferred.

Public agencies are prioritizing the buying of goods that cannot be exported to the U.S anymore. The move is meant to shift local production to national consumers and stabilize supply chains.

The government is equally extending the benefit period of tax under the drawback program by one year. In this scheme, companies are relieved of taxation upon importation of materials but only in the event that such materials are used in the production of export goods.

Lula Criticizes U.S. Measures and Defends Judiciary

President Lula described the U.S. decision as rather unpleasant and criticized the validity of the sanctions applied. He said Brazil would not be a victim of fear and pressure and affirmed that the country would explore other markets.

Lula ruled out accusations that the tariffs are meant to support a legal battle against former President Jair Bolsonaro. He said Brazil’s judiciary system was independent, and due process was given to all the accused. Bolsonaro is on trial and residing at home on house arrest, but he will face trial in October.

Justice Alexandre de Moraes presided over the Bolsonaro case. He was recently sanctioned under the U.S. Magnitsky Act. His refutation of the charges and devotion to justice were not surprising.

Tensions Rise as U.S. Expands Sanctions

U.S. Secretary of State Marco Rubio subsequently declared new limits on Brazilian government officials. The action is focused on the Brazilian program known as the “Mais Medicos,” which has placed thousands of doctors abroad, many of them Cubans.

Dubbing the program exploitative, Rubio disagreed with a statement that claimed Brazil was justified in benefiting underserved communities. Lula has said Brazil was not going to react with a swift tariff hike even as tensions rise, opting instead to talk rather than take revenge.