CNN
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The United States has launched an investigation into “unfair” trading practices by Brazil, escalating President Donald Trump’s spat with the world’s 10th-largest economy over issues including the criminal case against its former President Jair Bolsonaro.
The investigation will focus on digital trade and electronic payment services, preferential tariffs, and anti-corruption interference, as well as intellectual property protection, to determine whether there are “unreasonable or discriminatory and burden or restrict” American commerce, according to a statement by the United States Trade Representative (USTR).
It will also look into ethanol market access and illegal deforestation.
“At President Trump’s direction, I am launching a Section 301 investigation into Brazil’s attacks on American social media companies as well as other unfair trading practices that harm American companies, workers, farmers, and technology innovators,” Trade Ambassador Jamieson Greer said.
“I have determined that Brazil’s tariff and non-tariff barriers merit a thorough investigation, and potentially, responsive action.”
Section 301 of the Trade Act of 1974 is designed to address unfair foreign practices affecting US commerce, and could be used to respond to unreasonable, or discriminatory foreign government practices, according to the USTR statement.
This comes after Trump sent Brazilian President Luiz Inácio Lula da Silva a tariff letter last week, accusing him of undertaking a “witch hunt” over charges against Bolsonaro.
The right-wing former president, who has boasted of his close ties with Trump, is currently on trial for allegedly attempting a coup to overturn Lula’s 2022 election victory.
In its investigation announcement, the USTR expressed concerns that Brazilian authorities could undermine the competitiveness of American digital companies by retaliating against them for failing to censor political speech or restricting their ability to operate in the country.
It also accused Brazil of disadvantaging American exports by offering lower tariffs to “certain globally competitive trade partners,” failing to protect American intellectual property rights, and backtracking from its earlier willingness to grant virtually duty-free access for US ethanol and imposing instead a “substantially higher tariff.”
Most countries targeted by Trump’s tariffs are those with which the US runs a trade deficit – meaning the US imports more goods from the nation than it exports to it.
But the US ran a $6.8 billion trade surplus with Brazil last year, and it has not had a trade deficit with the country for 18 years.
On top of country-specific tariffs, Brazil has also been targeted by Trump’s threat of a 10% levy on imports from the BRICS economic group of 10 emerging-market nations, of which Brazil is a founding member along with Russia, India and China.
The US president said last week that he plans to impose the tariff to protect the US dollar from potential threats to its dominance, without providing more details on when he would do so.
Trump’s letter to Brazil last week – threatening a crippling 50% tariff – stood out for the use of the trade levy to influence the country’s domestic policies, unlike the letters to 21 other countries issued last week based on US trade deficits.
He justified the tariff by citing Brazil’s “attacks on free elections” and Americans’ free speech, accusing Brazilian courts of issuing “unlawful” censorship orders to American social media companies and threatening them with hefty fines.
Immediately after Trump issued the letter last week, Lula vowed to reciprocate should Trump follow through on the threat to impose the staggering tariff.
On Friday, Lula said Brazil ought to be the side imposing tariffs, given the US trade surplus.
“The United States does not have a trade deficit with Brazil. It’s Brazil that has a deficit with the US,” he told a crowd of supporters. “I should be one taxing them.”
The Brazilian president said he plans to “fight” US tariffs in any way he can, including by filing a complaint with the World Trade Organization, and discussing them with other members of the BRICS bloc, of which Brazil is currently chair.
