The 50 per cent tariffs President Donald Trump imposed on Brazil last week are among the highest he has applied on any country thus far in his trade wars.
The reason had nothing to do with Brazil’s trade policies. In fact the US runs a surplus with Brazil. Instead, Trump is using trade policy to make political demands. He wants Brazilian authorities to drop charges against former president Jair Bolsonaro, who is accused of plotting a coup after losing the 2022 election.
Yet despite the escalating tension — with Brazil’s current president Luiz Inácio Lula da Silva accusing Trump of infringing on the country’s sovereignty — Brazilian assets are barely flinching. The real is still up nearly 13 per cent against the greenback this year. The country’s benchmark Ibovespa stock index, home to oil major Petrobras and mining company Vale, is hanging on to an 11 per cent gain.