Brazil faces potential losses of up to BRL175bn ($31.7bn) over the next decade if the US follows through on plans to impose 50% import tariffs on Brazilian goods.

The tariff threat has already triggered a Supreme Court investigation into suspected insider trading in foreign exchange markets, while Brazilian miners warn of $1bn in additional annual costs if the government retaliates with countermeasures.

The Federation of Industries of the State of Minas Gerais (Fiemg) estimates the tariffs could eliminate 1.3mn jobs and deliver a negative 1.49% impact on GDP in the long term. Should Brazil respond with reciprocal 50% tariffs, the economic damage would deepen significantly, with GDP contracting by BRL259bn (-2.21%) and 1.9mn jobs affected within 10 years.

The meat industry faces immediate consequences. The Brazilian Meat Packers Association (Abrafrigo) reports potential losses of nearly $1.3bn for beef exporters due to US order cancellations. Brazil exported $1.29bn worth of beef and by-products to the US during the first half of 2025, making America the second-largest destination for these products after achieving $7.45bn in total revenue.

Insider trading probe

On July 21, Supreme Court Justice Alexandre de Moraes authorised an investigation into alleged privileged information use in foreign exchange transactions before Donald Trump's July 9 tariff announcement. The probe follows reports of significant Brazilian real sales in anticipation of the announcement, potentially indicating insider trading.

The investigation stems from an analysis by Spencer Hakimian, founder of New York-based hedge fund Tolou Capital Management, who identified suspicious real movement patterns on July 9. "I am very happy to see Brazil looking into something suspicious. I wish the US would be responsible enough to do the same," Hakimian said.

Diplomatic response

Finance Minister Fernando Haddad acknowledged this week that a trade deal may fail to materialise by the August 1 tariff deadline, but emphasised Brazil's commitment to negotiations. Brazil awaits Washington's response to trade proposals initially submitted in May, with contingency plans including potential activation of the Reciprocity Law and redirecting over half of current US exports to alternative markets.

However, Haddad cautioned such redirection "would take time.”

Rui Costa, chief of staff of the Brazilian presidency, advocated for diplomatic solutions while noting Brazil is not alone in facing Trump's trade actions. "This is the president of a great power who has decided to fight against the entire world: the EU, Canada, and Mexico. Brazil must act and continue to act with great serenity," Costa said.

Meanwhile, Brazil is pursuing trade diversification by further strengthening relations with China and eyeing prospective Mercosur partnerships. Canada and Mexico, who have also fallen in Washington's crosshairs, have expressed interest in reducing their own US dependence through similar arrangements. "We hope to sign the free trade agreement between the EU and Mercosur by December. This will open new markets for Brazilian industries and agriculture," Costa added.

Mining sector concerns

Brazil's mining industry has cautioned against retaliatory tariffs, despite the US accounting for only 3.5% of Brazilian mineral exports. Raul Jungmann, head of the Ibram mining lobby representing 85% of Brazil's mineral production companies, warned the sector would face severe consequences from reciprocal action.

"This would represent additional costs of around $1bn per year" for Brazilian miners, Jungmann told journalists earlier this week, Bloomberg reported. "Retaliation and reciprocity worry us much more."

Brazilian miners depend heavily on US manufacturers for essential heavy equipment including excavators and massive dump trucks capable of hauling 100-ton loads, creating vulnerability to retaliatory measures. Mining executives are considering direct engagement with US companies to encourage the Trump administration toward negotiations rather than tariff implementation.

Jorge Viana, president of the Brazilian Export and Investment Promotion Agency (Apex), rejected characterising the tariffs as a trade dispute, instead blaming political groups linked to Bolsonaro. Speaking on July 22 during the signing of an export agreement with farming cooperatives, Viana said the tariffs represent "no trade problem—it's a perverse move by a family, by extremist groups that want to harm the country, harm workers, and harm the sovereignty of our country."

"In my attempt to take some kind of action, I cannot find the problem we have with the US, because what we're about to face is no trade problem," he declared, calling for national unity in response.

Stakes and context

The US represents Brazil's second-largest export destination after China, purchasing $40.4bn worth of products in 2024, or 12% of Brazil's total exports. Major exports include fuels, minerals, iron, steel, machinery, aircraft and coffee.

Fiemg warned the crisis "represents a serious risk to economic stability and industrial development," advocating diplomatic resolution over retaliation. "Responding in kind could lead to inflationary effects in Brazil. Therefore, the smartest path is diplomacy," declared organisation president Flávio Roscoe, O Globo reported.

The tariff threat relates to Trump's opposition to former far-right president Jair Bolsonaro's trial for allegedly plotting a coup after losing the 2022 presidential election. Diplomatic tensions intensified following recent Supreme Court measures against Bolsonaro, including home searches, movement restrictions, and orders preventing him from contacting foreign officials over suspected attempts to secure Trump's intervention in his legal proceedings.

Justice Alexandre de Moraes justified the restrictions by pointing to flight risks and what the court termed “hostile acts” by Bolsonaro, a close ideological ally of the US president, and his son towards Brazilian institutions.

The US retaliated by restricting travel visas for Moraes and several other justices. Secretary of State Marco Rubio characterised the court's actions as “a political witch hunt”, leading to the visa sanctions against court officials and their families.

The insider trading investigation forms part of broader inquiries into using international tariffs to coerce Brazil's court system regarding Bolsonaro's case, with authorities examining allegations that his son Eduardo, currently based in Washington, actively lobbied for Trump's interference.