The scene is worthy of a political thriller, but the threat is real and hangs over the Brazilian economy like a sword of Damocles. In the corridors of the White House and the corridors of power in Washington, a grim scenario is unfolding: US President Donald Trump is threatening a 50% tariff on Brazilian products if former President Jair Bolsonaro is not granted amnesty from the serious charges he faces in Brazil. “Brazil needs to resolve this. There is a man being persecuted for his political beliefs, and this will have consequences,” Trump said in a recent interview with Fox News, leaving no room for interpretation.

The diplomatic blackmail is explicit. Bolsonaro is a central figure in investigations into an attempted coup d’état, the formation and leadership of a criminal organization and the massive dissemination of fake news. He has become the pivot of an unprecedented international crisis that mixes politics, economics and national sovereignty in a way never before seen in more than 200 years of diplomatic relations between the countries. However, behind Trump’s inflammatory statements lies a complex web of economic and geopolitical interests, where tech giants emerge as crucial players, capitalizing on the instability to carve out their own paths.

Eduardo Bolsonaro’s role and the shock of the threat

The news of Donald Trump’s intention to impose a 50% surcharge on Brazil came as a surprise, just as it had with China earlier this year. The difference is that, in the Brazilian case, the justification presented was an arm-wrestling match against the Judiciary, represented by one of its 11 ministers, Alexandre de Moraes. To understand Trump’s real motivations, it is necessary to take a step back in the chronology of the crisis and delve deeper into the murky waters from which the threat emerged.

In March of this year, the third of Jair Bolsonaro’s five children, Eduardo Bolsonaro — who became the most active in the political arena and his father’s defense — emigrated to the US, took a leave of absence from his position as a federal deputy and justified the trip and stay by claiming “political persecution.” In North America, he began lobbying the government to secure amnesty for Jair, who was close to being arrested, for the crimes he was accused of.

However, he — nor the entire right-wing and far-right base that gained strength during Bolsonaro’s term (2019-2022) — did not expect Trump to issue the economic threat letter three months later. Eduardo celebrated as if he had scored a goal in the World Cup final and felt as if he had held a knife to the Brazilian judiciary’s throat, intensifying his threats against Supreme Court ministers and the Federal Police as a whole. The rest of the right-wing political group unanimously condemned Trump’s threat, unwilling to associate themselves with a measure that was clearly detrimental to Brazil. However, the Supreme Court did not give in.

Days later, former President Bolsonaro’s residence was searched and seized, and he was taken to the Federal Police, where he was fitted with an electronic ankle bracelet to monitor his movements and prevent his possible escape. He was ordered not to leave his home between 7:00 PM and 6:00 AM. He was also prohibited from communicating via social media with others under investigation in the operation, as well as with ambassadors and consular officials from other countries.

Pix, Big Tech and the economic motive behind the threat

From the US perspective, behind the superficial political justifications for the threat lies a lobby of major technology firms, especially regarding the Pix system, which has transformed electronic payments in Brazil since 2020 and has become a global success. In just five years, the Central Bank’s system has reached more than 150 million users, surpassing other forms of payment due to its being free for individuals and its instantaneous nature.

This popularity, however, represents an obstacle for large technology companies (Big Techs) such as Google, Apple and Meta. They see Pix as a threat to their business models. Meta, for example, has already tried to launch payment solutions, such as WhatsApp Pay, that have been blocked in Brazil. By offering an efficient and free payment platform, Pix reduces the need for third-party services that monetize transactions and collect data.

Lobbyists for these Big Tech companies have been pressuring the Trump administration, arguing that Pix “limits the development of private solutions” and “prevents the full adoption of global digital wallets.” In fact, the “barrier to innovation” for these companies is the absence of a “toll” that they could charge in a market that Pix has made free and efficient.

“Pix is a disruption that big tech companies did not foresee and are not comfortable with,” commented a financial market analyst, who asked not to be identified. “For them, the widespread adoption of an efficient and free payment system, controlled by the Central Bank, reduces the need for their own solutions and prevents the collection of valuable data for monetization.”

Documents obtained by Brazilian media outlets reveal that lobby groups hired by these companies have been meeting frequently with Trump’s advisers. “They want a bigger slice of the transaction pie. Pix takes that away from them,” explained a source in the payments industry who has been closely following these discussions. 

Epstein scandal as a potential diversion

In addition, there is suspicion that Trump’s statement is an attempt to create a smokescreen, as allegations about his connection to sex offender Jeffrey Epstein, who was arrested and committed suicide in 2019, have reached a peak of controversy and investigation. During his 2024 campaign, Trump promised to reveal all classified documents related to the Epstein case. However, he has been criticized by part of his own base, which accuses him of covering up the case due to alleged involvement. Trump publicly rebukes his supporters for demanding the release of “Epstein files”, which he claims are fabricated by his Democratic opponents.

One of the first women to report Epstein for sexual abuse, Maria Farmer, reported that she alerted the FBI about Donald Trump as early as 1996. She described an episode in 1995 at Epstein’s office where Trump was present and allegedly made a comment about her. 

Lawrence Visoski, Epstein’s longtime pilot, testified in 2021 that Trump flew on Epstein’s private plane several times. Trump denies this. But the relationship between the two is longstanding, dating back to the 1990s, when both were part of elite social circles in New York and Florida. In 2002, Trump was quoted in a magazine describing Epstein as “fantastic” and “a lot of fun.”

The connection between Bolsonaro’s legal situation and Trump’s trade threats is not random, and he may be attempting to strategically remove three (or more) problems with one fell stroke. Sources close to the Trump campaign, who preferred anonymity due to the sensitivity of the issue, revealed that Bolsonaro’s defense has become a point of honor for the former US president. “Trump sees Bolsonaro as an ideological ally and a martyr of the political ‘persecution’ that he himself claims to suffer,” explained a Republican strategist. For Trump, Bolsonaro’s amnesty would not only be a “trophy” for the global right, but a sign of strength and influence in his return to the international stage.

The damage of a “Tariff War”: A crisis scenario for both

The 50% tariffs would be a devastating blow to Brazil’s trade balance, affecting vital sectors such as agribusiness and industry. In 2024, Brazil exported more than $37 billion in goods to the US, becoming one of its main trading partners. The escalation of this rhetoric has already sent shivers through the Ministry of Finance in Brasilia and among exporters. “This is a very serious situation that requires caution and diplomatic firmness. We cannot give in to external pressures that violate our sovereignty and our judicial system,” said a senior official at the Brazilian Ministry of Foreign Affairs.

If Donald Trump’s threats materialize and the 50% tariff is imposed, the scenario for the economies and populations of both countries is one of severe instability and significant losses. A trade war of this magnitude has no winners, creating a wave of shocks that spreads globally.

Negative impacts on Brazil

For Brazil, the effects would be immediate and profound, striking at the heart of its export economy and the daily lives of its population.

Agribusiness in Crisis: The US is one of the largest importers of Brazilian agricultural products, including coffee, meat (beef, pork, and poultry), forest products, orange juice and ethanol. With a 50% tariff, these products would be unviable in the US market, resulting in a decline in exports. We already have concrete examples: meatpacking plants are reporting order cancellations and shipment suspensions, and companies such as BrasPine, in Paraná, have already granted collective vacations to 700 employees due to the downturn.

Manufacturing Industry Impacted: Sectors such as steel (iron and steel), oil and derivatives and aircraft would be hit hard. Furniture companies and the fish sector (which has the US as its main destination, absorbing about 70% of exports) would face downturn and uncertainty.

Mass Unemployment: The drastic drop in exports would result in the closure of industries and farms, leading to large-scale layoffs in various sectors. The National Confederation of Industry (CNI) has already warned that the “tarifaço” would directly compromise job creation.

Devaluation of the Real: Economic uncertainty and the outflow of foreign investment would lead to a sharp devaluation of the Real against the US Dollar.

Increased Import Costs: With a more expensive dollar, the importation of essential goods, industrial inputs and even some foods would become more costly. This increase would be passed on to the end consumer, raising inflation and eroding the purchasing power of families.

A survey by Atlas Intel already indicated that 70% of Brazilians believe that Trump’s tariffs will raise inflation in Brazil, and more than 70% believe that economic growth will slow down. Additionally, XP analysts project that US tariffs could reduce Brazilian GDP growth by 0.30 percentage points in 2025 and up to 0.50 percentage points in 2026, if the measures are implemented. The perception of risk for foreign investors would increase dramatically, leading to capital flight, which would weaken the country’s national financial system and hinder new investments.

Although Brazil may seek other markets, the volume and absorption capacity of a partner like the US are difficult to replace in the short and medium terms. Diversification requires time and adaptation of production.

Negative impacts in the US

Although tariffs are designed to “protect” the US economy, they would also have adverse effects in the United States.

More expensive products: US importers would have to pay 50% more for Brazilian products, and this additional cost would be passed on directly to the end consumer. Items such as coffee, beef, orange juice and other food products, as well as footwear and everyday industrial goods, would become significantly more expensive on US shelves, contributing to domestic inflation and reducing purchasing power. Marcos Matos, director-general of the Brazilian Coffee Exporters Council (Cecafé), has already pointed out that US coffee consumers would be burdened.

Affected Supply Chains: Many American industries depend on inputs and raw materials from Brazil. The increased cost of these products could raise production costs in the US, hurting competitiveness and, in some cases, leading to job cuts.

Retaliation and Market Loss: If Brazil retaliates with tariffs on US products, US exports to Brazil would also be affected, hurting US export sectors and their workers. Although Brazil has had a trade deficit with the US since 2009, the impact would be felt.

The unilateral measure could generate tension in international relations and trigger a series of trade retaliations from other countries. This would, in turn, destabilize global trade and harm American companies that rely on international trade.

Brazil’s dilemma: sovereignty or economy?

Brazil is at a crossroads. Granting amnesty to Bolsonaro, who is involved in grave accusations, would set a dangerous precedent for democracy and the rule of law. On the other hand, Trump’s 50% tariff could plunge the country into an economic crisis, with a direct impact on employment and inflation.

The Brazilian government has so far maintained a firm stance on legal sovereignty. In a statement to the press, President Luiz Inácio Lula da Silva reiterated: “Our institutions work, and justice will take its course, regardless of external pressures. Brazil is a sovereign nation.”

The outcome of this saga is uncertain. Will Brazil maintain its legal integrity, bearing the brunt of possible economic retaliation? Or will Trump’s pressure, orchestrated in part by the tech lobby, be too much to bear, forcing concessions in the name of financial stability? The answer lies in the next moves of a geopolitical chess game where the board is the fate of a nation and the pieces are the sovereignty and prosperity of its people. 

[Kaitlyn Diana edited this piece]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.