Portugal Colonial - US tariffs on Brazil take effect as Trump readies fresh flurry

The 25-percent Brazil tariff followed a year-long US investigation, with Washington accusing the Latin American giant of unfair trade practices.

This has drawn sharp pushback, although Brazil's Vice President Geraldo Alckmin told a press conference Tuesday that Brazil will seek to resolve the issue through negotiations instead of retaliating.

Various products like beef, coffee and aircraft parts will be exempted from the levy, and roughly half of Brazil's exports to the United States would remain excluded from the duty, estimates Valentina Sader of the Atlantic Council think tank.

Nonetheless, the move comes as Trump makes a renewed push to use tariffs as leverage, sparking fears of retaliation and heightened tensions.

Officials could be "using Brazil as an example to send a broader message about its priorities and negotiating approach," Sader told AFP.

While the US Supreme Court struck down many of Trump's tariffs in February, dealing a blow to his ability to impose new duties at will, Washington has moved to rebuild his trade agenda using other powers.

The United States saying the Brazil tariffs were imposed as President Luiz Inacio Lula da Silva failed to negotiate in good faith also "reinforces the perception that the action is directed not only at Brazil's trade practices, but also politically at Lula himself," Sader said.

The duty is becoming a major campaign flashpoint ahead of Brazil's October presidential elections.

The American Chamber of Commerce for Brazil recently warned that Washington's measure affects more than $11 billion in exports.

Trump on Tuesday also announced a 100-percent tariff on generic drugs from August 2028, a day after ordering a 50-percent duty on many Canadian goods to take effect in 30 days.

A broader sweep is yet to come, with officials in June proposing tariffs of between 10 percent and 12.5 percent targeting 60 trading partners over alleged failures to act against forced labor.

Analysts widely expect the duties over forced labor to replace the temporary 10-percent global tariff -- expiring Friday -- that Trump imposed after his Supreme Court setback.

"We expect to see some action soon," US Trade Representative Jamieson Greer told CNBC.

- Forced labor concerns -

Greer added Tuesday that new action over labor concerns will cover a majority of US trade, though it could reignite trade tensions.

The lower 10-percent tariff rate would hit US imports from partners including Canada, the European Union, Mexico, Taiwan and the United Kingdom. They were found to have taken some steps against forced labor.

Goods from over 40 other economies like China, India and Japan face a 12.5 percent levy.

The EU has said that it considers tariffs imposed on these grounds "unjustified."

A separate tranche of US investigations targeting 16 economies over excess industrial capacity is ongoing, and could lead to further duties.

- Canada pressure -

Washington's planned 50-percent tariff on Canadian goods comes amid ongoing talks over a North American free trade pact.

Washington recently declined to extend the accord as-is, and Greer is set to travel to Mexico from Wednesday to Friday for discussions linked to a joint review of the US-Mexico-Canada Agreement (USMCA).

US negotiations with Canada have proceeded more slowly.

Some lawyers see Trump's use of an untested legal provision -- Section 338 of the Tariff Act of 1930 -- as a means to gain leverage over Canada in USMCA negotiations.

Canadian Prime Minister Mark Carney said Tuesday that he was looking at "all options," adding that he and Trump had agreed to "intensify discussions" in upcoming weeks.

Trade lawyer Dave Townsend of Dorsey & Whitney said higher tariffs could be "aimed at encouraging an agreement between Canada and the United States, or in retaliation for the failure to reach such agreement, or both."

The question, he added, is whether both sides will start a "cycle of escalation and retaliation."

M.Carneiro--PC