Context:

The United States has initiated an investigation into Brazil's trading practices, focusing on digital trade, electronic payment services, tariffs, anti-corruption, intellectual property, ethanol market access, and illegal deforestation. This move escalates tensions between President Donald Trump and Brazil, partly due to the criminal case against former Brazilian President Jair Bolsonaro. The investigation under Section 301 of the Trade Act of 1974 seeks to address practices that may unfairly burden or restrict American commerce. Trump's administration has threatened Brazil with significant tariffs, citing issues such as attacks on free speech and elections, while Brazilian President Luiz Inácio Lula da Silva has vowed to retaliate and possibly involve the World Trade Organization. Despite the US having a trade surplus with Brazil, Trump targets Brazil with potential tariffs similar to those for countries with which the US has a trade deficit, and also considers a 10% levy on imports from the BRICS economic group to protect the US dollar's dominance.

Dive Deeper:

• The US investigation into Brazil's trade practices aims to identify unfair practices related to digital trade, tariffs, and intellectual property that could disadvantage American businesses. This includes concerns over Brazil's treatment of American social media companies and potential retaliation for political reasons.

• Section 301 of the Trade Act of 1974 empowers the US to address foreign practices that harm American commerce, and the current investigation may lead to responsive actions against Brazil. This follows accusations from Trump of Brazil conducting a 'witch hunt' related to charges against Bolsonaro.

• President Trump's administration accuses Brazil of disadvantaging American exports through preferential tariffs for other nations and failing to maintain previous commitments to duty-free ethanol access, thus prompting the investigation.

• Despite the US having a $6.8 billion trade surplus with Brazil, Trump has threatened a 50% tariff on imports from Brazil, citing Brazil's alleged interference with free elections and censorship orders against American companies as justification.

• In response to US threats, President Lula da Silva has promised to retaliate if tariffs are imposed, arguing that Brazil should be the one imposing tariffs due to the trade surplus favoring the US. Lula also plans to engage with the World Trade Organization and the BRICS bloc for support.

• The US's broader trade strategy includes targeting the BRICS economic group, with Trump proposing a 10% levy on imports from these nations to safeguard the US dollar's status, although specific implementation details remain unspecified.

• The investigation and potential tariffs are part of a larger pattern of the Trump administration using trade measures to influence foreign policies, as seen in the distinct approach to Brazil compared to other countries where trade deficits are the primary focus.