Brazilian Real Slides as Trump Punishes Brazil with 50% Tariffs

July 10, 2025 - Written by James Fuller

STORY LINK Brazilian Real Slides as Trump Punishes Brazil with 50% Tariffs

The Brazilian Real posted heavy losses on Wednesday after President Trump announced a 50% tariff on Brazilian exports to the US.

The Dollar to Real (USD/BRL) exchange rate jumped to 5-week highs around 5.60 from 5.44 ahead of the announcement.

At this stage, global ramifications have been limited, but there will be further announcements over the next few days with markets wary over an escalation in trade wars.

President Trump stated; "Brazil, as an example, has not been good to us, not good at all."

The US Administration also linked the announcement to political factors and former President Bolsonaro.

According to the US embassy in Brazil; "The political persecution of Jair Bolsonaro, his family and his supporters is shameful and disrespectful of Brazil's democratic traditions,"

Bolsonaro who supported Trump, is on trial on charges of plotting a coup to stop current President Luiz Inacio Lula da Silva from taking office in January 2023.


Taylor Nugent, senior markets economist at National Australia Bank commented; "It is a reminder of Trump's penchant for tariffs as a tool against a wide range of grievances, trade fairness or otherwise."

Brazil has threatened to respond and the President’s office stated; "Any measure to unilaterally raise tariffs will be responded to in accordance with Brazil's Economic Reciprocity Law."

According to ING; “The focus is now on whether any trade negotiations will include demands by the US related to Bolsonaro, which could prove a significant political hurdle and cause additional pressure on the BRL.”

MUFG commented; “Without a clear path yet to de-escalation, the real is likely to continue to trade on a softer footing in the near-term.”

The bank added; “The risk is that carry trades continue to be unwound on the back of heightened trade risks and higher financial market volatility triggering a further reversal of real gains. However, there are question marks over whether President Trump has the power to justify imposing tariffs for political reasons.”

There have been some concerns that there will be wider implications for currency markets and the dollar if there is a wider link between tariffs and political regimes.

Commerzbank FX analyst Michael Pfister noted; "the reasons are clearly politically motivated. Brazil is actually one of the very few countries with a trade deficit with the U.S."


He added; "It's worrying not only for the Brazilian real but also for the U.S. dollar, you can't be sure which country might be next."

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