Brazil hit by US tariffs

**Gideon Long** (0:01)
Brazil feels the heat from US tariffs. It's World Business Express from the BBC World Service. I'm Gideon Long. Plus, we're in Malaysia, which is fashioning itself as a data center hub. And talking of fashion, how do you feel about men wearing shorts in the office?
A new 25% US tariff comes into force on Brazil today. It'll affect around 3,000 products, everything from Brazilian sugar to ethanol to footwear. Leticia Sperb-Maselli works at Abical Sados, an association representing the Brazilian footwear industry.

**Leticia Sperb-Maselli** (0:42)
For American consumers, the measure may lead to higher costs, upward pressure on prices, and a reduced variety of products available. This is because the United States imports nearly all the footwear it consumes. The impact is not limited to Brazilian factories. It also affects suppliers, importers, brands, and retailers in the United States.

**Gideon Long** (1:07)
Well, I spoke to Monica de Ball, a Brazilian economist at the Peterson Institute in Washington, DC. I asked her if President Trump was using Brazil as something of a guinea pig.

**Monica de Bol** (1:16)
I think he is. Brazil was hit by a 50% tariff, and what's going on now is that the US administration is looking to rebuild those tariffs. And why not start with Brazil?

**Gideon Long** (1:27)
And a lot of Brazilian products are being targeted, but a lot aren't. So how big a deal is this? How much of Brazil's exports will be hit?

**Monica de Bol** (1:36)
Only about a third of Brazil's exports are going to be hit by the tariffs. But what is interesting about the exemptions list, so the two thirds of Brazilian exports that are excluded from the tariffs happen to be products that the US cannot do without, and for which Brazil is the largest supplier to the US market. So take coffee, for example, which was exempted. Coffee represents a third of the US market, Brazilian coffee, that is. So of course they're going to exclude that, because if they did include it in the tariff, that would ultimately hit the American consumer.
The same is true for orange juice, the same is true for meat, the same is true for pig iron, and the list goes on and on and on. So really, I think the way to look at these exemption lists is that yes, they're an exemptions list, but at the same time, they're a list of US vulnerabilities.

**Gideon Long** (2:32)
So what's the response been in Brazil to these tariffs coming in?

**Monica de Bol** (2:36)
So the Brazilian government has decided to take a cautious approach at first to see what else is coming down the pipeline. There are things that the Brazilian government could do if it wanted to reciprocate or retaliate, but the Brazilian government at this juncture is in a kind of a vulnerable situation itself because there are elections this year, presidential elections and congressional elections happening in October.
And there's a lot of caution in not rocking the boat, so to speak. So trying to keep things as stable as possible and therefore not ignite a proper trade war with the United States. Well, personally, I do think that Brazil is going to have to react because the tariffs that are coming into force today is not the end of this whole tariff process.

**Gideon Long** (3:22)
Monica de Bol. Well, Brazil is the first country to be targeted under Trump's new tariff strategy. In a bit of recent history here, you'll remember that Trump hit loads of countries with tariffs on what he called Liberation Day last year. The Supreme Court then struck them down and so the White House reverted to a 10% duty on all countries. But that was always intended as a stopgap measure and it expires this Friday. So the government's now rolling out its new strategy based on trade legislation from 1974
So are we likely to see more of these announcements in the coming days and weeks? I'm joined by Russ Mould, investment director at AJ Bell. What do you reckon, Russ, are we going to see more, and if so, on which countries and which products?

**Russ Mould** (4:01)
Well, with an unpredictable president, Gideon, anything is possible. But the president, Trump, still wants to generate tax revenues from tariffs.
He still wants to drive jobs and manufacturing back to America and onshore it. And he may still want to use tariffs as a negotiating tool as he prepares to come up with an alternative to the US-Mexico-Canada agreement that he organised back in 2020 So the president may well continue to use tariffs as an economic tool or a negotiating tool or both.

**Gideon Long** (4:26)
And Russ, I have to ask you about oil prices yet again. Brent crude creeping back up to around $95 a barrel today. So to sum up for us, how is this on again, off again conflict impacting fuel prices?