Trump's 50% Tariff Threat Sparks Global Trade Tensions

US President Donald Trump has announced plans to impose a 50% tariff on Brazilian imports, citing a political 'Witch Hunt' in Brazil. This move, alongside a new copper tariff citing national security, has sent shockwaves through international markets. Brazil retaliates with a promise of economic reciprocity.

US President Donald Trump has announced his intent to impose a steep 50% tariff on Brazilian imports beginning August 1, accusing President Luiz Inacio Lula da Silva of orchestrating a 'Witch Hunt' against former President Jair Bolsonaro. Trump, posting on Truth Social, demanded an immediate conclusion to what he described as a politically motivated trial against Bolsonaro.

In a swift response, President Lula asserted Brazil's sovereignty and warned that any unilateral tariff hikes would be met with reciprocal measures as laid out in Brazil's Law of Economic Reciprocity. While Trump's tariff threat has been extended to over 21 countries, Brazil stands out with a significant $6.8 billion trade surplus with the US this year, marking a potential point of tension.

While Brazil is already under a 10% tariff due to Trump's 'reciprocal' trade policy, the proposed 50% duty signals a heightened escalation. Trump emphasized that the tariffs could be avoided if Brazilian firms chose to relocate manufacturing to the US. This latest tariff news comes amid broader US tariff threats to nations like the Philippines and Libya, focusing on domestic politics rather than trade deficits.

Trump's tariff announcements extend beyond Brazil, also targeting copper imports under the guise of national security. This new import duty has already affected copper prices significantly, causing concerns in both market analysts and affected countries. Ole Hansen of Saxo Bank expressed skepticism over the impact, given the US's reliance on copper imports from South America. China's response emphasized the absence of winners in a trade war, reflecting broader global reservations.

The unfolding tariff drama continues to reverberate through global financial systems and diplomatic arenas, with more tariff-related communications expected from Washington as the August 1 deadline approaches.

(With inputs from agencies.)