Trump Delays 50% Brazil Levy, Excludes Orange Juice, Embraer
[Stay on top of transportation news: .]
President Donald Trump delayed the implementation of 50% tariffs on Brazilian exports by seven days while exempting many products from the punishing levy, causing the country’s currency and shares in some major exporters to rally.
The executive order signed July 30 said that the tariffs are a response to policies and actions implemented by the Brazilian government and that constitute a threat to U.S. national security. It says former President Jair Bolsonaro, who’s standing trial for his alleged participation in a coup attempt against President Luiz Inacio Lula da Silva, has been victim of “politically motivated persecution.”
Trump’s decision came with a long list of exceptions, including orange juice and civil aircraft and parts that benefit Embraer SA. The Brazilian plane maker has been working to explain the impact tariffs would have in its U.S. operations, where it has more than 2,000 employees.
The Brazilian real erased losses of almost 1% to rise as much as 0.6% against the dollar, outperforming most emerging peers after the exemptions were outlined.
Brazil President Luiz Inacio Lula da Silva byBruna Prado/Associated Press, File
Shares of Brazilian exporters rose as the market evaluated the tariff exemptions. Embraer, seen as the most affected by Trump’s decision, rose as much as 11.5% in Sao Paulo, while Weg SA and Suzano SA, which had fallen on the earlier news, rose more than 1.7% each.
“The market was already discounting the 50% tariff, so the exemptions are a surprise, which actually dilutes the impact of the tariffs,” said Marco Oviedo, a senior strategist at XP Investimentos. “Going forward, it will depend on the Brazilian government response.”
The list of exemptions, however, did not stretch to other major Brazilian goods, pointing to ongoing risks for the agricultural giant. “Food remains a serious problem, as coffee, meat, mangoes and all fruits will have tariffs,” said Welber Barral, a former secretary of foreign trade for Brazil.
Some of Brazil’s top export products exempted:
- Orange juice
- Iron ore
- Pig iron
- Wood pulp
- Coal, lignite
- Oil products
- Natural gas
- Fertilizers
- Airplanes, aircraft parts
- Helicopters
- Machinery
- Air conditioning machines
Trump had initially threatened to implement 50% tariffs on all Brazilian goods on Aug. 1 if its Supreme Court did not immediately drop its trial against Bolsonaro, which he had described as a “witch hunt.”
հܳ
Shortly before issuing the updated executive order July 30, the U.S. sanctioned Supreme Court Justice Alexandre de Moraes, who is overseeing Bolsonaro’s legal cases, under its Global Magnitsky Designation. It had previously revoked his visa earlier this month.
Despite the mounting pressure from the U.S., Brazil’s Supreme Court has refused to back down. Two weeks ago, Moraes ordered Bolsonaro to wear an ankle monitor and placed additional restrictions on his use of social media, citing obstruction of justice and a flight risk as his motivation.
Lula too has seized on the fight with Trump, casting the U.S. president as a threat to Brazilian sovereignty. The leftist leader maintained that he was open to negotiations but would not accept incursions into his nation’s affairs.
Want more news? Listen to today's daily briefing above or go here for more info
After hearing about Trump’s new order, Lula called Vice President Geraldo Alckmin, who has spearheaded efforts to broker a deal with the U.S., and other officials for emergency meetings, according to two people familiar with the situation.
RELATED: Brazil Vows Retaliatory Tariffs If US Sets 50% Rate
Since last week, Lula’s government has been working on a contingency plan to mitigate the potential impact of the tariffs. With Embraer and orange juice excluded, it sees the situation as less threatening because fewer key sectors will require support, according to a third official, who like the others requested anonymity to discuss internal matters.
But the government remains wary, seeing the combination of the tariff order and sanctions against Moraes as part of a broader pressure campaign that could still ramp up as Bolsonaro’s trial moves forward, one of the people said.
Simone Iglesias, Rachel Gamarski and Giovanna Bellotti Azevedo contributed to this report
