Brazil Vows Retaliatory Tariffs on US  07/11 06:15

   Brazilian President Luiz Incio Lula da Silva said Thursday that he will 
impose retaliatory tariffs on the United States if President Donald Trump 
follows through on a pledge to boost import taxes by 50% over the South 
American country's criminal trial against his predecessor, Jair Bolsonaro.

   RIO DE JANEIRO (AP) -- Brazilian President Luiz Incio Lula da Silva said 
Thursday that he will impose retaliatory tariffs on the United States if 
President Donald Trump follows through on a pledge to boost import taxes by 50% 
over the South American country's criminal trial against his predecessor, Jair 
Bolsonaro.

   Lula said he will trigger Brazil's reciprocity law approved by Congress 
earlier this year if negotiations with the U.S. fail.

   "If there's no negotiation, the reciprocity law will be put to work. If he 
charges 50 (% tariffs) from us, we will charge 50 from them," Lula told TV 
Record in excerpts of an interview that will be fully aired later in the day. 
"Respect is good. I like to offer mine and I like to receive it."

   Lula's comments raise the risk of a tariffs war erupting between the two 
countries, similar to what has happened between the U.S. and China. Trump has 
vowed to respond forcefully if countries seek to punish the U.S. by adding 
tariffs of their own.

   The president of Brazil's Senate, Sen. Davi Alcolumbre, and Chamber of 
Deputies Speaker Hugo Motta, a pair of moderates who have recently been at odds 
with Lula, agreed that the recipricity law gives Brazil "the means ... to 
protect our sovereignty."

   "We will be ready to act with balance and firmness in defense of our 
economy, our productive sector, and the protection of Brazilian jobs," they 
said in a joint statement.

   A new front in the trade war

   The tariffs letter that Trump sent to Brazil -- and posted on social media 
Wednesday -- railing against the "witch hunt" trial against Bolsonaro opened up 
a new front in his trade wars, with the U.S. leader directly using import taxes 
to interfere with another nation's domestic politics.

   Trump has already tried to use tariffs to ostensibly combat fentanyl 
trafficking and as a negotiating tool to change how other nations tax digital 
services and regulate their economies.

   In Brazil's case, Trump is trying to dictate the outcome of the criminal 
trial of Bolsonaro, an ally who like Trump has been charged with attempting to 
overturn a presidential election. Bolsonaro maintains that he is being 
politically persecuted by Brazil's Supreme Court over his charges on the 
alleged plot to remain in power after his 2022 election loss to Lula.

   "There's nothing Lula or Brazil can do about Bolsonaro's trial," said Carlos 
Melo, a political science professor at Insper University in Sao Paulo. "Any 
change in that would be Brazil's capitulation. Bolsonaro's situation here won't 
change. How do you negotiate over that?"

   Lula ordered his diplomats on Thursday to return Trump's letter if it 
physically arrives at the presidential palace in Brasilia. The document attacks 
the country's judiciary and mentions recent rulings on social media companies 
among the reasons why goods from the South American nation will have higher 
tariffs from Aug. 1.

   Trade negotiations now 'up in the air'

   Trump has initiated his tariffs under the 1977 International Emergency 
Economic Powers Act, saying in April that the persistent deficit between what 
the U.S. exports and what it imports is a national crisis.

   But the U.S. runs a trade surplus with Brazil, undermining some of the 
rationale.

   A staffer of Brazil's foreign ministry told The Associated Press that trade 
negotiations that were ongoing since Trump imposed a first set of tariffs in 
April are now "up in the air."

   Some members of the Lula administration say Trump's move is actually aimed 
at Brazil's connection with other Southern economies, as displayed on Sunday at 
the summit of BRICS nations hosted in Rio de Janeiro. Brazil's president once 
again mentioned the hope for an alternative currency to the dollar for 
transactions, a topic that frequently draws Trump's ire.

   "Trump was never worried about democracy anywhere, much less with 
Bolsonaro's destiny," said Gleisi Hoffmann, Brazil's institutional relations 
minister.

   Brazil's new unity

   Trump's interference in Brazilian affairs has brought a sense of unity that 
was largely absent in the politically divided nation. Some of Bolsonaro's 
allies claimed Lula had drawn the U.S. president's anger with other decisions, 
including criticism of Israel's war in Gaza. But other supporters of the former 
president chose to ask for prudence in negotiations.

   Daily O Estado de S. Paulo, a frequent critic of Lula and his 
administration, said in an editorial on Thursday that Trump's move against the 
Brazilian government is "a mafia thing." It also said Lula's reaction was 
correct, a rare feature for the newspaper.

   Analysts also see Trump's attempt to interfere in the country's domestic 
affairs as a potential backfire for Bolsonaro during his trial and a push for 
Lula, whose reelection bid was facing unpopularity headwinds this year.

   Canadians recently elected Mark Carney as prime minister, with his Liberal 
Party reenergized by Trump's tariffs and threats to make Canada the 51st U.S. 
state.

   "The reaction of a lot of people is that this is a political gift to Lula," 
said Andre Pagliarini, a professor of history and international studies at 
Louisiana State University who is also affiliated with the Quincy Institute for 
Responsible Statecraft.

   Thomas Traumann, an independent political consultant and former Brazilian 
minister, called Trump's move "a game changer" for next year's election.

   "Trump put Lula back in the game," Traumann said. "This gives Lula a 
narrative, puts Bolsonaro as the guilty part for any economic problems."

   Exceeding the authority

   The U.S. Court of International Trade ruled in May that Trump had exceeded 
his authority by declaring an emergency to impose tariffs without congressional 
approval. The Trump administration is appealing that decision, but opponents 
plan to use his Brazil letter to bolster their case.

   "This is a brazenly illegal effort by Donald Trump to sacrifice the economy 
to settle his own personal scores, and it is far outside his legal authority," 
said Democratic Oregon Sen. Ron Wyden.

   The Republican administration has argued that their tariffs are now 
relatively harmless for the U.S. economy, since inflation has trended down in 
recent months. But many companies stockpiled imports to get ahead of the import 
taxes, and it's unclear what happens when their inventories dwindle and 
consumers consider the risk of higher prices. Most outside economic analyses 
expect growth to decline.

   In Brazil, Trump's interest in Bolsonaro's trial is expected to weigh over 
the trial. Media outlets have reported that lawmakers and judges are worried 
the former president will try to leave Brazil for the U.S. if he is convicted.

   Lawmaker Eduardo Bolsonaro, a son of the former president, moved to the U.S. 
in March. On Wednesday night, he asked his supporters on X to post "their thank 
you to President Donald Trump."

   In Thursday's interview, Lula said the elder Bolsonaro "should take the 
responsibility for agreeing with Trump's taxation to Brazil."

   "His son went there to make up Trump's mind, then he (Trump) writes a letter 
to speak about a case that is in the hands of the Supreme Court. A case that is 
not a political trial. What is under investigation is the evidence of the 
case," Lula said.