Dollar soars to R$6.07 with 104% US tariff and China retaliating in trade war

Global financial markets plunged into turmoil this Wednesday, April 9, as the U.S. dollar soared to R$ 6.077 against the Brazilian real, its highest level since January this year. The catalyst for the spike was a dramatic escalation in the trade war between the United States and China, fueled by a fresh round of punishing tariffs. On Tuesday night, the U.S. rolled out a staggering 104% tariff on Chinese goods, effective from 1 a.m. Brasília time. Within hours, China fired back with an 84% tariff on American imports, set to take effect Thursday, April 10, at 1:01 a.m. Brasília time. The tit-for-tat measures sent shockwaves through global exchanges, with Brazil’s Ibovespa dropping 1.32% to 123,931 points and futures yields climbing amid widespread uncertainty.

The U.S. tariff hike followed a Monday ultimatum from Donald Trump, who gave China until April 8 to roll back its existing 34% retaliatory duties. With no concessions from Beijing, Washington tacked on an additional 50%, bringing the total to 104%. China’s swift response—raising its tariffs from 34% to 84%—underscored the deepening rift between the world’s two economic powerhouses. The fallout hammered stock markets worldwide, drove down commodity prices, and stoked fears of a sharper global economic slowdown.

In Brazil, the dollar kicked off the day on a steep climb, peaking at R$ 6.096 by 10:08 a.m., according to market data. The currency has gained roughly R$ 0.40 in just four trading sessions, mirroring a global flight to safety. This latest flare-up in the trade war, simmering since early this year, has hit Brazil hard, already grappling with a 10% U.S. tariff on its exports imposed last Saturday.

Early tremors of the tariff storm

The roots of this latest clash stretch back to last week when Trump unveiled his “Liberation Day” plan, slapping tariffs on 117 countries. China initially faced a 34% rate, but its refusal to bow to U.S. demands triggered the current standoff. By Tuesday, markets were already jittery, with the dollar jumping 1.43% and the Ibovespa shedding 1.31%. The confirmation of the 104% tariff overnight Wednesday amplified the sell-off, as investors dumped risk assets and piled into U.S. Treasuries and the dollar.

Even before China’s counterpunch, Asian markets closed lower, bracing for worse to come. Europe followed suit Wednesday morning, with major indices tumbling. In the U.S., Wall Street’s early gains evaporated, and the S&P 500 ended in the red as the trade war’s toll became clear.

• U.S. tariff on China: 104%, effective April 9.
• China’s retaliation on U.S.: 84%, starting April 10.
• Dollar in Brazil: R$ 6.077 at 10:08 a.m. on April 9.

China’s retaliation ramps up global stakes

China wasted no time hitting back. Less than 12 hours after the U.S. tariff took effect, its Commerce Ministry unveiled the 84% rate on U.S. goods, citing Washington’s “misguided policies” as justification. The hike, grounded in Chinese trade laws, targets a broad swath of American imports and kicks in Thursday, marking a bold escalation in a conflict that’s dragged on for years.

Analysts warn that China’s move will inject even more volatility into markets. The tariff war comes at a fragile moment for the global economy, with projections suggesting trade disputes could shave up to 0.5% off world growth over the next two years. As the planet’s top exporter of metals and manufactured goods, China saw its mining stocks slump as much as 4.3% in Asia, while oil prices hit a four-year low.

In Brazil, China’s response deepened market losses. The real, already battered by the dollar’s strength, lagged behind other emerging currencies, and the Ibovespa saw export-heavy firms like Vale slide nearly 5% on Tuesday—a trend likely to worsen with the latest tariffs.

Brazil feels the heat

Brazil bore the brunt of the trade war’s fallout directly. With the dollar hitting R$ 6.077 by 10:08 a.m. Wednesday, it echoed levels last seen on January 21 at R$ 6.03. The 1.32% daily surge reflects both the dollar’s global rally and Brazil’s reliance on commodity exports, which took a hit as prices tanked amid trade uncertainty.

Commodity-linked companies, particularly in iron ore and oil, led the Ibovespa’s decline. Vale shed significant value over recent days, while Petrobras tracked the drop in global oil prices. Futures yields spiked, aligning with U.S. Treasuries, where 30-year rates touched 5% overnight.

Brazil also faces its own 10% U.S. tariff, the lightest among the 117 nations targeted by Trump’s “tariff blitz.” Despite Vice President Geraldo Alckmin’s call for dialogue, Congress passed a law greenlighting retaliatory measures, hinting at readiness to push back if needed.

Commodities and inflation under pressure

The U.S.-China trade war is hammering commodities, a lifeline for Brazil’s economy. As China—Brazil’s top buyer of iron ore, soybeans, and meat—faces higher tariffs, demand risks shrinking. Oil prices fell over 3% Tuesday, and iron ore weakened in Asian trading, squeezing export revenues.

Experts caution that the escalation could reignite global inflation. In the U.S., the 104% tariff will likely jack up prices for Chinese goods like electronics and apparel, hiking living costs. In Brazil, the dollar’s climb threatens to lift prices for imported goods like fuel and wheat, potentially nudging the IPCA higher in the coming months.

Falling commodity prices also jeopardize Brazil’s trade surplus. In 2024, exports to China topped $100 billion, but the tariff uncertainty could erode that edge, pushing the government to scout new markets or tweak economic policy.

Global reactions to the tariff blitz

Nations worldwide are scrambling to respond to Trump’s tariffs. India is negotiating a bilateral deal, hinting at concessions on U.S. imports. Germany, speaking for the EU’s 450 million-strong market, aims to leverage its clout for a resolution. Brazil, armed with legal tools for retaliation, still favors talks—for now.

Latin American leaders from Brazil, Colombia, and Mexico plan a summit next week in Honduras to weigh the trade war’s fallout. The move underscores regional anxiety over ripple effects, especially for export-dependent economies.

China insists it’s open to talks, but only on equal terms. A Foreign Ministry spokesperson vowed to fight “to the end” against U.S. measures, while stressing that trade wars benefit no one.

Timeline of the tariff escalation

Key moments in the recent flare-up:

Leia Tambem

Crise na indústria solar chinesa agrava-se apesar da liderança global em painéis

Guangzhou obriga restaurantes a informar se dim sum é feito à mão ou à máquina

China intensifica repressão contra corretoras estrangeiras que atraem investidores do país

• April 4: China slaps 34% tariffs on U.S. goods in response to Trump’s initial rates.
• April 5: U.S. 10% tariff on Brazil and others takes effect.
• April 8: Trump issues ultimatum, threatening China with 104%.
• April 9: U.S. 104% tariff begins; China announces 84% retaliation.

How it hits Brazilian wallets

The dollar’s rise is already rattling Brazilian consumers. Imported goods like electronics and medicine face imminent price hikes. An iPhone 16 Pro, priced at $999 in the U.S., could near R$ 8,000 in Brazil with the current exchange rate and local taxes.

Fuel prices are another worry. Despite falling oil prices, the strong dollar could push pump prices up, depending on Petrobras’ adjustments. Staples like bread and pasta, reliant on imported wheat, may also climb, squeezing household budgets.

Investors are on edge. Demand for safe-haven assets like gold and dollars is up, while export stocks face heavy selling. The trade war’s uncertain duration keeps markets on tenterhooks.

Trump’s role in the protectionist surge

Donald Trump has driven this trade war wave. Since taking office, he’s vowed to slash the U.S. trade deficit, which hit $800 billion with China in 2024. The 104% tariff—unprecedented in scale—aims to force talks, though it doubles as a provocation.

On Monday, Trump took to social media, pressing Beijing for a call to hash out the tariffs. China stood firm, hiking its rates instead. Trump’s also wooing Japan and the UK with lighter tariffs, seeking bilateral wins.

Critics slam his approach. In the U.S., higher costs for clothes and gadgets loom, while firms like Delta Airlines cut 2025 profit forecasts, citing rising expenses.

Markets in free fall

Markets reacted swiftly. Japan’s Nikkei dropped 2.5% Tuesday, and Hong Kong’s Hang Seng fell 3.1%. In Europe, Germany’s DAX shed 2.8% Wednesday morning, with London and Paris close behind. The U.S. Dow Jones, up 1% early, closed down 0.9% after China’s move.

Treasury sales surged as investors sought cash amid the panic. Yield spreads tightened, signaling a flight to safety. In Brazil, the Ibovespa hit lows near 123,000, with the dollar testing R$ 6.10 resistance.

China’s yuan shed 1.5% against the dollar Tuesday, dragging emerging currencies like the real down. Volatility is expected to persist until U.S.-China talks emerge.

Global economic outlook

The trade war hits as the global economy teeters. Last year’s 3.1% growth could dip below 2.8% in 2025 if tariffs linger. Emerging markets like Brazil, tied to exports and vulnerable to a strong dollar, face heightened risks.

China’s economy, already strained by a slowing property sector, may buckle further under retaliation. In the U.S., the tariff blitz could fuel inflation, nudging the Federal Reserve—currently at 4.5% rates—to rethink its stance.

Brazil’s mix of a high dollar and slumping commodities demands action. The Central Bank, hosting its LIFT Day later this month, may step into the forex market, while the government eyes industry safeguards.

Trade war trivia

Notable facts about the conflict:

• The 104% U.S. tariff is the steepest on China in decades.
• Brazil sent $100.3 billion in exports to China in 2024, 30% of its total.
• The U.S. hit 117 countries with tariffs, from 10% (Brazil) to 104% (China).
• China is the top trade partner for 120 nations, including Brazil.

The future of global trade

The tariff war reignites protectionism debates. Trump touts it as an economic booster, but detractors warn of higher costs and supply chain chaos. China bets on resilience, though its trade partners feel the squeeze.

In Brazil, the dollar’s climb could aid exporters, but inflation and commodity woes complicate the picture. India and Germany push for deals, while Latin America seeks a unified stance.

Next week’s Honduras summit may signal regional coordination, with U.S.-China talks the market’s big hope. For now, uncertainty rules, and the R$ 6 dollar is just the start of a brewing economic storm.