Trump Tariffs: US President Donald Trump has announced to impose a 50% tariff on all exports from Brazil, move which is being seen as clear warning to BRICS countries, especially India and China, not to challenge American economic and strategic interests, amid rumblings of de-dollarization within the regional grouping.
Why Trump imposed heavy tariffs on Brazil?
Trump’s decision to impose heavy tariffs on Brazil came following a heated exchange with Brazilian President Luiz Inacio Lula da Silva, who called the US President an “unwanted emperor”. In response, Trump alleged that Brazil was attacking freedom of speech in the United States, and influencing free and fair elections.
Experts view Trump’s imposition of heavy tariffs on Brazil as a multi-dimensional move, loaded with business, geopolitical and even personal political motives, including weakening the BRICS grouping. The tariff are also meant to serve as a strong message to countries like India and China that they will suffer economic consequences if they make any moves against American interests.
How Trump tariffs will impact Brazil?
Donald Trump’s 50% tariffs on Brazil is expected to deal blow to the country’s economy, by severely impacting Brazilian exporters, especially who import key agricultural products like coffee, orange juice, sugar, beef and ethanol, to the US. The impact of Trump tariffs is already being witnessed as Brazilian Real fell after the announcement, while the shares of major firms such as aircraft manufacturer Embraer, oil giant Petrobras, dipped significantly.
However, American consumers are also expected to bear the brunt of US’ tariffs on Brazil as the prices of goods imported from the South American country are likely to rise. Brazil is the world’s largest coffee producer, and around one-third of the coffee consumed in the US comes from Brazil.
What’s the ‘message’ for India and China?
Trump’s tariffs on Brazil are being seen by many as a direct “message” to India and China, warning them not to threaten US interests. China, the largest economic power in the BRICS, is already embroiled in a trade war with the US, while India, a key member of the regional grouping, has strong strategic ties with US’ rival Russia.
Notably, India also has important trade relations with the US, which put New Delhi in a complex position, where it must figure out how to balance ties with BRICS countries while maintaining a health partnership with America. Trump has talked about imposing more tariffs on Indian imports, including 10% tariffs on the pharmaceutical sector, indicating that New Delhi may have to face economic consequences if it opposes any US policies.