Tariff Shock: The Encounter Between the Interregnum and the New Scale of the Age of Turbulence
The global economy is threatened by a new wave of protectionism and instability. Brazil is also affected. The uncertainty caused by the erratic behavior of the U.S. (United States) president is anything but surprising. The trade war initiated by Donald Trump—who once claimed that the most beautiful word in the dictionary is “tariffs”—is more a symptom than a cause of the new global disorder. The likely origin of the belated American reaction lies in its failure to contain China’s rapid industrial advance, especially in disruptive technologies such as AI (Artificial Intelligence) and large-scale vehicle electrification, which are as essential in the present as they are carriers of the future. It is important to contextualize historical phenomena over time to properly understand events of this magnitude.
The most striking example of these new times – though not the only one – is in the AI sector. While exact details are unclear, available information suggests that while Silicon Valley in the U.S. spent USD 100 million to develop ChatGPT, China’s DeepSeek claims to have spent USD 6 million. In parallel, the Trump 2 administration “convinced” Intel (a company that manufactures computer chips and other items) to transfer 10% of its shares to the U.S. government—one of the largest state interventions in a company since the bailout of the automotive industry in 2008. This negotiation was based on the CHIPS and Science Act (U.S. legislation to boost semiconductor production and scientific innovation). In short, the state that once defended free markets beyond its borders has become a direct shareholder in a multinational corporation. This is the backdrop of current developments.
The geopolitical consequences are unpredictable, but the economic effects are already evident. The threat to U.S. hegemony has never been so real since the post–World War II era. The Age of Turbulence was defined by Greenspan (2008) as a period marked by extraordinary growth, unprecedented innovation, and novel risks. This characterization remains relevant, now with unprecedented intensity.
Due to China’s large-scale technological leap, the much-touted liberalism of the Republican Party (one of the two major U.S. political parties)—though not always practiced—was effectively abandoned in Trump 2, replaced by interventionism across various fronts to reindustrialize the U.S. The imposition of import tariffs on multiple countries and products is one of the tools used to bring back industries that had relocated in search of lower costs and higher productivity, especially to China and Mexico. Control over technology and access to strategic inputs such as critical minerals and rare earths has become synonymous with sovereignty; their absence, in turn, represents a risk to national integrity.
Given so much uncertainty, few things can be stated with conviction. However, one assertion can be made: Trump will not succeed in reindustrializing the U.S. within his term, as such a transformation cannot occur in the short term. Economic theory addresses this through the concept of hysteresis (economic term borrowed from physics, referring to the difficulty of returning to a previous state after prolonged external pressure).
The U.S. industrial production structure, having been subjected to various economic forces from global value chains, will require time and abundant resources to regain its former global relevance. It is a long-term process that will span multiple administrations. This applies to the U.S. and equally to Brazil. An industrial policy is a strategic plan of the State (permanent national institution), not of the government (temporary administration). Nevertheless, the economic consequences of the current U.S. administration’s reckless actions are numerous, and Brazil is not immune. It is essential to assess the issue carefully, act by act, even if the outcome remains distant.
The first act of Donald Trump’s theatrical tariff war was paradoxically named “Liberation Day.” The contradiction lies in the fact that it brought no freedom to anyone or anything and instead unleashed global outrage—even among historic U.S. partners such as Canada and Mexico. The pretext was that the U.S. had trade deficits with nearly every country and needed to rebalance them, initially through tariffs. On April 2, 2025, Brazil—which has had trade deficits with “America” for 16 years—was assigned the lowest rate, 10%. This initially brought relief, but it was only the first act.
On July 9, the day São Paulo commemorates the Constitutionalist Revolution of 1932 (military movement that led to Brazil’s 1933 constituent assembly), the world witnessed Trump’s second act. Like Macbeth (Shakespearean character known for ambition and manipulation), Trump revealed himself as a power-obsessed leader willing to break conventions. He announced that Brazilian products would be taxed at 50% starting August 1st. The justification was a mix of attacks on Brazil’s national sovereignty, defense of American big techs (large technology corporations), and statistical falsehoods—all done outside traditional diplomatic channels and with direct support from self-exiled Brazilian congressman Eduardo Bolsonaro.
In Brazil’s case, U.S. interference took on threatening tones, stating that tariffs would only be lifted if the “witch hunt” ceased IMMEDIATELY (in capital letters). The U.S. president referred to the criminal proceedings in Brazil’s STF (Supreme Federal Court – Brazil’s highest judicial authority) against Jair Bolsonaro, father of the congressman, accused of attempting to violently abolish the Democratic Rule of Law (constitutional principle ensuring democratic governance), among other crimes.
In summary, Trump seeks to intervene directly in STF decisions, pressuring its justices through sanctions such as the Magnitsky Act (U.S. law allowing sanctions against foreign officials for human rights violations) and visa suspensions, or indirectly via the Executive Branch, using tariff hikes as leverage. If accepted, this would be a constitutional aberration in Brazil.
Subsequently, the U.S. government, citing Section 301 of the Trade Act of 1974 (U.S. law authorizing investigations into unfair trade practices), announced an investigation into Brazil for “unfair practices,” including the Pix (Brazilian instant payment system), which allegedly undermines the profitability of U.S. credit card networks and payment systems. The coercive effects of Trump’s tariff sanctions—or those resulting from the investigation—will linger in Brazil–U.S. relations for a long time, even after his term ends.
Brazil’s response has been pragmatic, avoiding retaliation, which would escalate tensions and impose additional costs on Brazilian society. Vice President Geraldo Alckmin was appointed by President Luiz Inácio Lula da Silva to lead trade negotiations, underscoring the issue’s importance. Dialogue was attempted, but bridges were never truly built—especially on the U.S. side. A scheduled meeting between Finance Minister Fernando Haddad and U.S. Treasury Secretary Scott Bessent was canceled, reportedly due to lobbying by the self-exiled Brazilian congressman.
In the meantime, seeking legitimacy through multilateralism (cooperation among multiple countries and institutions), Brazil’s decision to bring the issue to the WTO (World Trade Organization – global trade regulation body) was strategically sound, despite low expectations for a swift resolution due to the current fragility of multilateral institutions. On another front, the federal government announced a set of measures across three pillars—strengthening the productive sector, protecting workers, and commercial diplomacy—allocating over BRL 30 billion from the FGE (Export Guarantee Fund – Brazilian credit support mechanism) through the Plano Brasil Soberano (Sovereign Brazil Plan – national industrial support program), offering below-market interest rates to assist companies affected by U.S. tariff hikes.
Ideally, there would be no tariff shock, especially since it is driven by political rather than economic motives. However, given its existence, the Brazilian government must act skillfully to neutralize its effects without direct confrontation. Contrary to President Trump’s claims, it is U.S. consumers who will bear the cost of increased tariffs. As economist Celso Furtado suggested in 1978, a nation without economic autonomy cannot exercise its sovereignty.
Until diplomacy and internal U.S. pressure resolve the impasse—especially given the lack of high-level dialogue—it is up to Brazil’s Executive Branch to mitigate the consequences of U.S. political retaliation using available economic tools.
The turbulence caused by Brazil’s highest-level tariff hike has dominated media coverage. While it negatively affects Brazil’s economic dynamics, it does not amount to a recession—perhaps a slowdown. In other words, it is manageable. The estimated negative impact on Brazil’s GDP ranges from 0.2% to 1.5%, depending on the source and methodology. Although the tariff increase includes nearly 700 exceptions, many products remain heavily taxed. For example, aircraft are exempt due to their strategic importance to the U.S.
Economic analysis must also pay attention to detail. While the overall impact may appear limited from a macroeconomic perspective, in specific segments it is severe from a microeconomic standpoint. Certain Brazilian states, cities, and companies are highly dependent on exports to the U.S. market. Therefore, it is essential to carefully assess these particular aspects.
For example, in 2024, the participation of the U.S. (United States – Brazil’s second-largest trading partner) in exports from Ceará (northeastern Brazilian state) reached 44.9%, and from Espírito Santo (southeastern Brazilian state) another 28.6%. Nearly 50% of the products exported by Brazil to this destination are commodities (raw materials traded globally), mainly petroleum, steel products, and coffee. In truth, the list of affected products is extensive, even in the face of exceptions.
It is worth understanding the broader picture, as Americans often say when assessing complex scenarios. The current global geopolitics is no longer the same as the one that emerged after World War II, nor is it possible to affirm that a new world order has taken shape – only a prolonged interval in which chaos prevails. The various ongoing wars are evidence of this. In truth, the global scenario is closer to what Bauman and Bordoni (2016) called an interregnum (a transitional period in which the old order no longer functions and nothing new has yet taken its place).
In this context, the teachings of Rui Barbosa (Brazilian jurist and diplomat known for defending national sovereignty and international law) regarding the U.S. (United States) remain relevant: we need a pragmatic re-engagement, based on mutual respect and consideration of national interests. There is no room for the whims of fleeting figures; all of this must occur without submission or subordination by Brazil to U.S. hegemonic impulses. Thus, it is the responsibility of the Brazilian government to mitigate, as much as possible, the effects of American sanctions that afflict Brazil—sanctions that are unjustified from an economic standpoint and promoted by those who self-proclaim as patriots but, in reality, act against the Nation for personal gain.
It is important to reflect: this is not about defending multilateralism (cooperation among multiple countries and institutions) without considering Brazil’s long-standing trade relations with the U.S. (United States – Brazil’s second-largest trading partner), nor about recklessly adhering to China’s agenda. Acting in such a way would merely mean exchanging one dependency risk for another. Multilateralism must coexist with Brazil’s own bilateral agendas (country-to-country trade and diplomatic strategies), within the frameworks of the WTO (World Trade Organization – global institution regulating international trade), International Law, and existing treaties—always guided by national interests and responsible pragmatism.
In the current context, it is essential to navigate this turbulent moment until some degree of normality is restored. Until that happens, we must be clear that the true interests to be defended are those of Brazilians—entrepreneurs, workers, and society as a whole. This effort is not the sole responsibility of the Executive, Legislative, and Judiciary Branches, but of all of us. Dignity is indispensable; accepting the role of a bystander in shaping our own destiny is never an option!
Regional Council of Economics – 2nd Region – São Paulo (CORECON-SP)
References
BARBOSA, Rui. Speeches and Conferences. Rio de Janeiro: MEC, 1942.
BAUMAN, Zygmunt; BORDONI, Carlo. State of Crisis. Translated by Carlos Alberto Medeiros. 1st ed. Rio de Janeiro: Zahar, 2016.
FURTADO, Celso. Creativity and Dependence in Industrial Civilization. Rio de Janeiro: Paz e Terra, 1978.
GREENSPAN, Alan. The Age of Turbulence: Adventures in a New World. Rio de Janeiro: Campus, 2008.
SHAKESPEARE, William. Macbeth. Translated by Bárbara Heliodora. 3rd ed. São Paulo: Editora Abril, 2010.
THE ECONOMIST. Donald Trump’s tariffs on Brazil are more bark than bite. Aug 8th 2025. Available online at: https://www.economist.com/the-americas/2025/08/08/donald-trumps-tariffs-on-brazil-are-more-bark-than-bite?utm_campaign=shared_article – Accessed on August 25, 2025.