Brazil’s government convened top ministers yesterday to prepare retaliatory measures against the US’s latest tariffs, with options including curbs on US audio visual companies and suspension of pharmaceutical and agricultural patents, three sources have said.
The measures under consideration are in line with Brazil’s reciprocity law, which President Luiz Inácio Lula da Silva pledged his government would invoke after the Trump administration announced a 25% tariff on many Brazilian products on Wednesday in response to what it said were unfair trade practices by Brazil.
The planned response, targeting US intellectual property rights and audio visual sector interests rather than imports, would represent a new approach to trade retaliation designed to pressure Washington while shielding Brazilian consumers from higher prices.
“How we proceed from here will depend on the instructions the president gives us, but it is highly unlikely there won’t be a tough response,” one source said.
According to another source, Brazil is expected to revisit countermeasures studied last year under the reciprocity law, including curbs on dividend and royalty remittances by US audio visual companies.
The government is also considering suspending patent protections for pharmaceutical products and agricultural seeds.
National interest
Speaking at a press conference yesterday, Vice President Geraldo Alckmin said Mr Lula would decide at the appropriate time how to invoke Brazil’s reciprocity law, without providing details on possible measures.
“The law is not retaliatory. There is no retaliation,” Mr Alckmin said, describing it as a legitimate legal instrument created to defend “the national interest, the interests of Brazilians and the Brazilian economy”.
Speaking alongside Mr Alckmin, Finance Minister Dario Durigan said the government separately plans to roll out credit lines and other support measures for affected sectors by early August, reviving a programme launched last year after the initial round of tariffs imposed by US President Donald Trump.
Mr Durigan said the government would likely commit fewer public resources this time and would remain committed to its fiscal targets.
“We will not bow our heads or bend to foreign interests,” he said.
“That does not mean we will not be open to negotiations. We will remain open to diplomacy and negotiations, whether with the United States or with any other country that treats us with due respect,” he added.
Rationale behind strategy
Officials in Brasília view options to respond under the reciprocity law as preferable to tariffs on imports from the US because they would be less likely to disrupt Brazilian supply chains or fuel domestic inflation.
US officials have warned that Washington would “review its actions” if Brazil retaliates, a prospect that has fuelled concerns among Brazilian exporters and pushed some to diversify away from the US market.
Shipments to the United States fell 13% in the first half of the year, even as the country’s overall exports rose 5.1% over the same period.
On a separate track, Brazil will also revive the World Trade Organization dispute it launched last year over customs duties for electronic transmissions, another source familiar with the matter said, allowing it to move more quickly to establish a dispute settlement panel.
A ruling in Brazil’s favour would strengthen its legal basis for retaliatory measures under international trade rules.
