Brazil threatens reciprocal tariffs as US imposes 25% levy on most imports, Rubio accuses Lula of bad faith

The tariff announcement

On July 15, the US Trade Representative announced a 25% tariff on most Brazilian imports, effective July 22. The order exempts coffee, beef, oranges, orange juice and aircraft components, goods not produced in the US or where duties would disrupt supply chains. USTR Jamieson Greer cited unfair trade practices, including limited US access to Brazil's ethanol market. The move is the first action under the Trump administration's new tariff strategy, which could eventually affect dozens of countries.

Brazil's response and threat of retaliation

The Brazilian government immediately rejected the justification. A statement from President Lula's office noted that 76% of US imports entered Brazil duty-free in 2025, with an average effective tariff of just 3.1%. Brazil said it would invoke its reciprocity law and pursue the matter through the WTO dispute settlement mechanism. Finance Minister Dario Durigan called the tariffs an attempt at US interference, vowing the government would not "lower its head" or act with subservience.

Diplomatic spat escalates

US Secretary of State Marco Rubio blamed Lula personally, writing on X that Lula "did not negotiate in good faith" and "prioritized his own ego over an agreement for the benefit of the Brazilian people."

President Lula and his government have not negotiated with the US in good faith. His economic policies are bad for Americans and bad for Brazilians. Over the past year, Lula prioritized his own ego over an agreement for the well-being of the Brazilian people, and these tariffs are the price to pay for that.

Brazilian Foreign Minister Mauro Vieira fired back, calling Rubio's remarks "rude and arrogant" and "unacceptable and offensive to the Brazilian people." Vieira said the US had tried to pressure Brazil into granting exclusive access to American companies in some sectors, and that the tariff justifications, including claims about Brazil's Pix payment system and deforestation, had "no basis in reality." A Brazilian diplomat told BBC News Brasil that Rubio's tone broke an implicit diplomatic rule that ministers should not criticise heads of state.

Political fallout ahead of October election

The tariffs have become a flashpoint in Brazil's presidential race. Senator Flavio Bolsonaro, son of former president Jair Bolsonaro and Lula's main rival, blamed Lula for the tariff hike. Lula accused the Bolsonaro family of collaborating with Washington, calling them "false patriots" who orchestrated actions against the country for electoral gain. A Quaest poll published July 16 showed 42% of respondents believed the levies would benefit Lula politically. Trump had previously imposed a 50% tariff on Brazil in July 2025, explicitly linking it to the "witch hunt" against Jair Bolsonaro, who was later convicted of attempting a coup. Some of those tariffs were later rescinded.

The tariff outcome is part of the plot built with the active collaboration of the Bolsonaro family. They are false patriots who orchestrated and publicly defended actions against our country, driven by electoral objectives.

Impact on key sectors

Brazil's sugar and ethanol industries voiced dismay. UNICA said the US was the second-largest foreign market for Brazilian ethanol in 2025, importing 253 million litres worth $163 million. Sugar exports to the US fell to 420,000 metric tons in 2025 from 1.12 million tons in 2024. UNICA argued the tariffs disregard trade asymmetries, as Brazilian sugar faces US restrictions while Brazil maintains non-discriminatory ethanol policies.

The decision disregards significant asymmetries in the trade relationship between the two countries. Brazilian sugar exports remain subject to tariffs and market access restrictions imposed by the United States, whereas Brazil maintains a non-discriminatory policy regarding ethanol.

NovaBio's Renato Cunha said the US wants better ethanol access without offering sugar concessions. Meanwhile, instant coffee was exempted, protecting an estimated $2 billion to $2.5 billion in annual exports, according to Cecafe. The exemption followed a 30% drop in Brazilian instant coffee exports to the US in 2025 under previous tariffs. Cecafe's director general Marcos Matos credited efforts by his group and the US National Coffee Association.

Broader trade context

The US ran a trade surplus of nearly $42 billion with Brazil in 2025, one of its largest globally, behind only the Netherlands and the United Kingdom. Brazil's National Confederation of Industry warned the new tariffs increase insecurity for companies in both countries. The Brazilian corn ethanol association UNEM said the country's ethanol tariff complies with WTO rules and that no bilateral agreement was being violated, attributing the decline in US ethanol imports to the expansion of domestic corn ethanol production.