Brazilian Real, Stocks Plunge Amid Trump 50% Tariff Increase

US President Donald Trump announced a sharp increase in tariffs on Brazilian imports from 10% to 50%, effective August 1, citing retaliation against Brazil's treatment of former President Jair Bolsonaro and alleging attacks on free elections and free speech rights in the US. This political move, rather than economic necessity, caused the Brazilian real to fall to a one-month low near 5.6 per dollar and triggered declines in Brazilian equities, including a nearly 2% drop in the iShares MSCI Brazil ETF. Brazilian President Luiz Inácio Lula da Silva condemned the tariffs, asserting Brazil will retaliate proportionally under new legislation and rejecting US interference in Brazil's judicial matters. Trump linked the tariff hike to Bolsonaro's ongoing trial for an alleged coup attempt after the 2022 election, drawing parallels to the January 6 insurrection in Washington, while Bolsonaro has sought Trump's support amid his legal challenges. The US is Brazil's second-largest trading partner, and the tariff increase threatens key Brazilian sectors such as steel, transportation equipment, and specialized machinery. Market analysts have also noted that Trump's tariffs are political in nature since the US runs a trade surplus with Brazil, and this escalation compounds existing economic pressures from Brazil's falling export prices and weakening industrial production.