In a Splendid Cradle

Brazil's government has made a conceptual error in its response to U.S. tariffs imposed by President Trump. By meeting only with directly affected economic sectors, the government wrongly defined the nation as a "condominium of sectors." In reality, punitive tariffs impact the entire economy, affecting everyone's income and jobs.

Furthermore, offering subsidized credit and tax relief as compensation reinforces Brazil's historical protectionism. This approach makes Brazilians pay for the inefficiency of most heavily tariffed sectors. The article argues that globalization has not ended but is merely being shifted away from the U.S. by Trump's actions.

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The globalization has not ended: Trump displaces it away from the USA.

The author advocates for structural responses, including reducing interest rates through genuine fiscal balance and opening trade by lowering import tariffs. These measures would stimulate competitiveness, diversify external trade, and increase trade agreements. However, the immediate horizon demands a different approach. The negotiation phase is over, and reopening it requires a national reaction that can inflict pain on the U.S.

This reaction should not be symmetrical reciprocity, such as tariffs on U.S. imports. Such a move would harm Brazil's industrial modernization by taxing essential capital goods, while causing only negligible damage to the U.S. Instead, the article proposes asymmetric retaliation, mirroring strategies suggested by experts Monica de Bolle and Philip Yang. This calibrated retaliation would involve a combination of taxes and export controls targeting strategic items on the U.S. original exemption list.

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It is not symmetric reciprocity (tariffs on goods imported from the USA), which would hit capital goods essential to Brazilian industrial modernization, causing insignificant damage to the superpower.

Examples include taxing exports of coffee, meat, and orange juice, which are difficult for the U.S. to replace in the short term, potentially causing inflation before U.S. congressional elections. Controls on exports of niobium, critical for U.S. defense and aerospace industries, and regional aircraft, in coordination with Canada, are also suggested. The article draws a parallel with China's successful use of rare earth export controls against Trump, noting that Brazil's niobium and Embraer aircraft are as essential to the U.S. economy as China's critical minerals.

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It is mirrored asymmetric retaliation, along the lines suggested by Monica de Bolle and Philip Yang.

The "inaction lobby," a coalition of inefficient, tariffed sectors seeking subsidies and efficient sectors desiring normalcy, promotes a passive stance. This "protectionism of ideas" involves short-term losses, but the article contends these would be less severe than imagined. China is already seeking trade opportunities ceded by the U.S., and Asia and Canada are engaging. Brazil's domestic market would also play a role, potentially leading to cheaper meat due to increased supply.

The author believes Trump retreats when faced with pain, and exceptional retaliatory measures are a way to escalate negotiations. Canada's approach, despite greater dependence on the U.S., has yielded popularity for its government. The "false prudence lobby" seeks to maintain a comfortable status quo, shifting the costs of American unilateral action onto the Brazilian public. The article concludes that Brazil should not be held hostage by the immediate interests of specific economic sectors, emphasizing that Brazil is a nation, not merely a collection of companies.

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Brazil is not China.