US asked Brazil to eliminate tariffs on industrial, chemical and aerospace goods

According to two authorities familiar with the discussions, the American government requested the exemption from charges for these items, in addition to the opening of some commercial sectors in Brazil, as mentioned by Minister Márcio Elias Rosa (Industry and Commerce) on Thursday (16).

The assessment of members of President Lula's (PT) team is that the proposal, in the terms in which it was presented, was non-negotiable.

"They intended nothing more, nothing less than the opening of the entire chemical sector market, the reduction to zero of tariffs on industrial goods. Access to the North American automotive sector market, and among other sectors", said Márcio Elias in his speech about the tariff, alongside other ministers involved in the discussion.

On Thursday, the economic team reported that the new tariff affects 18% of Brazilian exports to the USA, or around US$7.4 billion (R$38 billion), considering data from 2024. For more immediate relief from the impacts, the management announced a reinforcement of the Brasil Soberano program, which offers credit lines to businesspeople affected by the American tariff.

As already announced by Lula's administration, the Brazilian government will make use of the Reciprocity Law to react to this new wave of tariffs.

Authorities familiar with the issue state that, if the US introduces new sanctions and retaliations, the use of reciprocal applications will be calibrated so as not to be used against sectors more expensive to the Brazilian economy. As a form of future reactions, management is already considering sensitive points for the Americans, such as the patent and audiovisual sector.

In the ministers' speech about the new application, vice-president Geraldo Alckmin stated that the government would know how to implement the legislation at the appropriate time. As Folha de S. Paulo reported, the government was already considering applying the measures provided for by law on the eve of the American announcement.

The new 25% tariff on Brazilian products was announced on Wednesday night (15) and should be implemented on July 22nd. The surcharge will be applied based on Section 301, a trade law that authorizes the United States to retaliate against countries whose policies or practices are considered unfair.

The investigation began in July last year, as one of the measures announced by the republican in reaction to what he classified as a "witch hunt" against former president Jair Bolsonaro (PL).

As Folha de S. Paulo showed, Brazilian authorities already took the implementation of the tariffs for granted even before the official announcement. There were a series of conversations with the Trump administration, but no agreement went ahead. Brazilian authorities stated that issues such as Pix and ethanol - central points of the American investigation - would be non-negotiable, which made it difficult to reach an agreement.

In a statement in the early hours of Thursday (16), after confirmation of the tariff, the Brazilian government stated that it will activate the Reciprocity Law and will return to the issue in the dispute settlement mechanism of the WTO (World Trade Organization).

The federal government can respond in this way thanks to a law approved by the National Congress in 2025, when the US president started the cycle of new tariffs. According to legislation, the application of equivalent retaliation is permitted in situations like this, in the economic sphere.

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