Brazil threatens to hit back as Trump escalates trade war

Brazil is threatening to hit back after Donald Trump’s campaign said he would slap a 50 percent tariff on imports from the country if he returns to the White House.

In an interview with Bloomberg, Brazil’s foreign trade secretary Tatiana Prazeres said the country’s government is preparing to challenge the policy at the World Trade Organization and is “evaluating all the possibilities,” including retaliatory tariffs. “If the measure is applied, we will have to react,” Prazeres said.

The warning is the strongest response yet from a foreign government after Trump’s campaign last week released a video pledging to slap a “universal baseline tariff” of 10 percent on all imports and a 60 percent tariff on imports from China.

The campaign later told the Financial Times that the plan also included a 50 percent tariff on imports from Brazil, the biggest economy in Latin America.

Brazil exports about $40 billion a year to the US, its second-largest trading partner, with a heavy emphasis on iron and steel.

Prazeres said Brazil would consider various legal avenues, including an appeal to the WTO’s dispute settlement body and actions under Mercosur and other trade agreements.

“We want to believe this is just campaign rhetoric,” she said. “But if it becomes real, we will act.”

Carlos Honorato, an economist and professor at Brazil’s FIA Business School, told MLex that Brazil would be unwise to escalate the conflict too soon.

“I think it would be a risk to escalate things prematurely. When we talk about breaking patents, as has happened with medications, it interferes with international processes and, more importantly, creates legal uncertainty. Any bold move could cause more problems, and we have to consider that there might be retaliation to the retaliation,” he said.

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