Brasil
July 11th, 2025
1. Trump imposes a 50% tariff on Brazilian products
Donald Trump has announced an additional 50% tariff on all Brazilian products exported to the United States, set to take effect on August 1. The announcement, made in a letter to President Lula and published on the social media platform Truth Social, shook economic sectors and prompted a response from the Brazilian government, which vowed to retaliate based on the principle of reciprocity.
The measure, which directly impacts the competitiveness of Brazilian products, is the largest among the 22 new tariffs Trump announced this week. The new tariff is separate from existing sectoral tariffs, such as the 50% duties already applied to steel and aluminum. Trump justified the move by claiming the trade relationship between the two countries is unfair and cited alleged US trade deficits.
Folha de S. Paulo: Entenda o tarifaço de Trump sobre Brasil e o que acontece a partir de agora
CNN Brasil: Exportações aos EUA ficam em xeque com tarifa, dizem especialistas
2. Trade balance has worst June in six years amid falling exports
Amid pressure from falling commodity prices and rising imports, Brazil’s trade surplus dropped 6.9% in June, totaling US$ 5.889 billion. This is the worst result for the month since 2019, according to data released this Friday (4th) by the Ministry of Development, Industry, Trade and Services (MDIC).
Year-to-date, the surplus stands at US$ 30.092 billion, a 27.6% decline compared to the same period in 2024. This is the weakest performance since 2020, when the surplus was US$ 22.295 billion. The drop in exports and increased consumption of imported goods explain the decline.
Agência Brasil: Balança comercial tem menor superávit para junho em 6 anos
3. Inflation slows in June but exceeds annual target ceiling
Brazil’s official inflation rose by 0.24% in June, slightly below the 0.26% recorded in May, according to the Brazilian Institute of Geography and Statistics (IBGE). Despite the slowdown, it was the highest June rate since 2022. Over the past 12 months, the IPCA (Extended National Consumer Price Index) reached 5.35%, surpassing the upper limit of the continuous target of 4.5%.
Under the Central Bank’s new inflation target system, inflation is only considered outside the target range if it remains above or below the band for six consecutive months. The current tolerance range is from 1.5% to 4.5%, with a central target of 3%. The Central Bank remains watchful of price trends, which continue to put pressure on monetary policy.
Valor Econômico: IPCA sobe 0,24% em junho e descumpre pela 1ª vez teto da meta de inflação
4. Brazil and China advance transcontinental railway project
Brazil and China have signed an agreement to begin feasibility studies for a major railway project connecting Ilhéus (Bahia) to the port of Chancay in Peru, linking the Atlantic and Pacific Oceans. Spanning approximately 4,500 kilometers, the railway is expected to cross seven Brazilian states, incorporating sections already under construction such as the FIOL and FICO lines. The project aims to reduce transport time for Brazilian commodities heading to Asia by up to 12 days, lessening reliance on the Panama Canal.
The estimated investment exceeds US$ 10 billion, and the technical, environmental, and economic studies are expected to take up to five years. The railway is part of a broader strategy for South American logistical integration and the strengthening of trade relations with China, Brazil’s largest trading partner.
Exame: Da Bahia ao Peru: Brasil e China assinam acordo para projeto de megaferrovia de 4.500 km
5. Chamber of Deputies to vote on income tax exemption for earnings up to R$ 5,000 next week
The Special Committee of the Brazilian Chamber of Deputies is expected to vote on Tuesday (16th) on the report by Congressman Arthur Lira (PP-AL) regarding a bill that would exempt individuals earning up to R$ 5,000 per month from paying income tax. However, a full floor vote is likely to be postponed until August. Lira is set to present his report later today, which also outlines options to offset the resulting loss in tax revenue.
Among the proposals under discussion, the leading option is to retain the minimum tax proposed by the government but apply a reduced rate of up to 8% on monthly incomes above R$ 100,000. The exemption is projected to have a R$ 27 billion impact on public finances. The government initially suggested offsetting this with a 10% tax rate on individuals earning more than R$ 1.2 million per year, but Lira considers that rate too high and is exploring alternatives to lower it.