The Brazilian government, led by President Luiz Inácio Lula da Silva, announced on August 11, 2025, the development of a contingency plan to respond to the 50% tariffs imposed by the United States on Brazilian products, effective since August 6. The strategy involves applying the Economic Reciprocity Law, regulated in July, which allows Brazil to adopt countermeasures against unilateral trade barriers. The decision follows intensified protectionist policies by US President Donald Trump, impacting sectors like agribusiness, steel, and oil. The plan, set to be detailed by August 12, aims to protect the national economy without jeopardizing diplomatic negotiations. Entrepreneurs fear rising prices for US imports and impacts on production chains.
The response will be coordinated by an interministerial committee, led by the Ministry of Development, Industry, Trade, and Services (MDIC), with participation from the Ministries of Finance, Foreign Affairs, and the Chief of Staff’s Office. The goal is to implement targeted measures, avoiding broad actions that could harm bilateral trade.
- Sectors under review: Oil and gas, pharmaceuticals, and agribusiness are key priorities.
- Possible actions: Restrictions on US imports and review of bilateral agreements.
- Timeline: The economic plan will be announced on August 12, with reciprocity discussions to follow.
Business sector reactions
The prospect of applying the Reciprocity Law raises concerns among Brazilian entrepreneurs, who warn of rising costs for US imports, such as industrial inputs and consumer goods. The National Confederation of Industry (CNI) estimates that US tariffs affect 36% of Brazil’s exports to the US, equivalent to 4% of Brazil’s total exports. However, around 700 products were exempted, mitigating immediate impacts.
The private sector advocates a cautious approach, with prior dialogue to avoid further retaliation. The CNI highlights that reciprocity measures could increase costs for companies reliant on US imports, such as machinery and electronic components. Conversely, some sectors, like agribusiness, see the law as an opportunity to protect the competitiveness of products like coffee, meat, and sugar facing US market barriers.
- Products affected by US tariffs: Coffee, meat, fruits, organic sugar, and chocolate.
- Estimated impact: Losses up to R$ 52 billion, per CNI, risking 110,000 jobs.
- Strategic sectors: Steel, aluminum, and oil are most affected by 25% and 50% tariffs.
Mechanisms of the Reciprocity Law
The Economic Reciprocity Law, enacted in April 2025, allows Brazil to adopt countermeasures against countries imposing unilateral trade barriers. Regulated in July, the law establishes the Interministerial Committee for Negotiation and Economic and Commercial Countermeasures, chaired by the MDIC under Geraldo Alckmin. The committee evaluates and proposes actions, which may be provisional for swift application or ordinary, following public consultations.
Among the measures considered are the suspension of trade concessions, import restrictions, and, in extreme cases, the review of intellectual property rights. The latter, which includes breaking patents for medicines and agricultural chemicals, was ruled out by the Ministry of Health at a recent Febraban event, signaling caution in sensitive sectors.
The law also allows Brazil to temporarily suspend the World Trade Organization’s (WTO) “most favored nation” principle, applying selective tariffs against the US without affecting other trade partners.
Ongoing diplomatic strategy
The Brazilian government prioritizes dialogue to avoid escalating trade tensions. On August 6, Brazil filed a consultation request with the WTO, seeking support from other affected countries, such as China and India, to challenge US tariffs. Brazilian diplomacy bets on multilateralism but keeps the Reciprocity Law as a pressure tool.
Lula directed that countermeasures be targeted, focusing on strategic US sectors like agribusiness, which exports products like wheat and soybeans to Brazil. The strategy balances firmness and caution, preserving trade relations with the country’s second-largest partner.
- Diplomatic actions: WTO consultation request and coordination with BRICS countries.
- Targeted US sectors: Agribusiness, technology, and industrial goods may face tariffs.
- Main objective: Protect exports without breaking bilateral negotiations.
Economic impacts and alternatives
The US tariffs, ranging from 10% to 50%, with surcharges of 25% on steel and aluminum, directly affect the competitiveness of Brazilian products. Brazil, the third-largest exporter of metals to the US, faces billion-dollar losses, particularly in industry and agribusiness. However, the government estimates that up to half of the affected exports can be redirected to other markets, such as Asia and Europe.
Companies like Embraer, exempted from tariffs, show resilience, but sectors like oil and beef face significant challenges. Rising prices of US imports could boost domestic production but also increase costs for consumers and industries reliant on American inputs.
The financial market remains cautiously optimistic. The Ibovespa rose 1.04% on August 6, reaching 134,537.62 points, reflecting strong corporate results and the perception that tariffs were already priced in. The dollar, at R$ 5.46, also indicates short-term stability.
Global scenario and next steps
The US tariff offensive reflects a strategy to protect the dollar’s hegemony amid the diversification of currencies in global trade, especially by BRICS countries. Alongside Brazil, China (34%), the European Union (20%), and Vietnam (46%) face high tariffs, potentially leading to global countermeasures.
The Brazilian government plans to announce by late August a list of US products subject to retaliatory tariffs. The interministerial committee, led by Alckmin, is working to calibrate measures to impact the US without harming local production chains. The expectation is that negotiations will progress before a trade escalation, but the Reciprocity Law gives Brazil a robust tool to defend its interests.
