Trump Renews Trade War Drums with Tariffs on Brazil, Canada, and Others

A 25 percent tariff has been imposed on Brazil after Washington accused Latin America’s largest country of unfair trade practices. The decision followed a year-long investigation by the US government. The policy has sparked strong opposition. However, Brazilian Vice President Geraldo Alckmin said in a press conference on Tuesday (21/07) that Brazil would seek to resolve the issue through negotiations, not retaliatory measures. Products such as beef, coffee, and aircraft parts are exempt from the tariff. According to estimates by Valentina Sader of the Atlantic Council think tank, around half of Brazil’s exports to the United States also remain free from the levy. Nevertheless, the move comes as US President Donald Trump once again pushes the use of tariffs as a bargaining tool, fuelling concerns of retaliation and rising trade tensions. According to Sader, US officials are likely using Brazil as an example to send a broader message about their priorities and negotiating approach. Although the US Supreme Court struck down many of Trump’s tariffs in February, dealing a blow to his ability to impose new ones unilaterally, Washington is now seeking to rebuild its trade agenda using other legal authorities. The US statement that the tariff was imposed because President Luiz Inácio Lula da Silva failed to negotiate in good faith also reinforces the perception that the action is not only aimed at Brazil’s trade practices but is also politically motivated against Lula himself, Sader said. The tariff has now become a major issue in the campaign ahead of Brazil’s presidential election in October. The American Chamber of Commerce in Brazil recently warned that Washington’s policy affects exports worth more than 11 billion US dollars. On Tuesday, Trump also announced a 100 percent tariff on generic drugs starting in August 2028, a day after ordering a 50 percent tariff on many Canadian products to take effect in 30 days. A broader wave of tariffs is still to come. In June, the US government proposed tariffs of 10 to 12.5 percent on 60 trading partners for their alleged failure to take action against forced labour practices. Analysts expect these labour-related tariffs will replace the temporary global 10 percent tariff, which expires on Friday, that Trump imposed after his Supreme Court defeat. US Trade Representative Jamieson Greer told CNBC that further steps are expected soon. Greer indicated that the new forced labour measures would cover the majority of US trade with foreign countries. The US has laws to prohibit trade in goods made with forced labour. Most other countries do not have such laws, and those that do do not really enforce them, Greer said in explaining the rationale for the stricter trade rules. He added on Tuesday that the new labour policy would cover most of US trade, although it could reignite trade tensions. A lower tariff of 10 percent will be imposed on imports from trading partners such as Canada, the European Union, Mexico, Taiwan, and the United Kingdom, which are deemed to have taken some steps to address forced labour. Meanwhile, goods from more than 40 other countries, including China, India, and Japan, will face a 12.5 percent tariff. The European Union said it considers the tariffs imposed on these grounds to be unjustified. Separately, the US is also conducting investigations into 16 countries over industrial overcapacity, which could lead to additional tariffs. The plan to impose a 50 percent tariff on Canadian goods comes amid ongoing talks on the North American free trade agreement. The US government recently refused to extend the agreement in its current form. US Trade Representative Jamieson Greer is scheduled to visit Mexico from Wednesday to Friday for discussions on the joint review of the USMCA. Meanwhile, negotiations with Canada are progressing more slowly. Some legal experts view Trump’s use of a previously untested provision, Section 338 of the Tariff Act of 1930, as a way to increase US leverage in USMCA negotiations with Canada. Canadian Prime Minister Mark Carney said his government is considering all options, adding that he and Trump have agreed to intensify discussions in the coming weeks.