Bloomberg: Brazil considers response to U.S. sanctions — including curbs on dividends paid to American companies

Bloomberg: Brazil considers response to U.S. sanctions — including curbs on dividends paid to American companies

Title: Brazil Considers Response to U.S. Sanctions, Including Curbing Dividends to American Companies

Brazil's government is intensifying its deliberations on potential responses to further sanctions by the U.S. President Donald Trump, including a limit on dividend payments by U.S. companies with operations in Brazil. According to O Estado de S. Paulo newspaper, the Brazilian government is weighing various measures in response to the U.S. visa revocations for Brazilian Supreme Court justices involved in the trial of former President Jair Bolsonaro [2].

President Luiz Inacio Lula da Silva's administration has been scrutinizing the potential impact of U.S. tariffs and visa restrictions. The U.S. government has announced a 50% tariff on Brazilian goods, effective August 1, which is tied to the charges against Bolsonaro [1]. The Brazilian government is also considering ending the licensing of U.S. drug patents and levying taxes on big tech firms [2].

In response to the visa restrictions, the Brazilian government is studying a tax on digital services offered by big tech companies, with different rates depending on their revenues. This measure is being analyzed by the Finance Ministry [2]. The government intends to continue diplomatic negotiations with the Trump administration, with any retaliatory measures potentially being adopted after August 2 [2].

Brazil's Vice President Geraldo Alckmin has stated that the country will pursue a rapid reversal of the U.S. tariff announcement while remaining open to requesting additional negotiation time. Alckmin noted that Brazil confronts an 'exiguous' deadline since the tariffs are due to take effect on August 1. He emphasized that Brazil will stand united to reverse the decision, given the significant increase in U.S. exports to Brazil [3].

Petrobras, Brazil's state-run oil company, is expected to be minimally impacted by any new tariffs. According to BTG analysts, only 4% of Petrobras' exports were destined for the U.S. in the first quarter of 2025, and the company can redirect this export flow to other countries with ease [3]. The diplomatic crisis between the U.S. and Brazil has intensified, with Brazil's Foreign Ministry stating it 'deplores and rejects' the U.S. administration's 'inappropriate statements' concerning Bolsonaro's trial [3].

The economic analysis from the Getulio Vargas Foundation indicates that the tariffs could curb Brazil's GDP by 0.41%, with agribusiness – representing 30% of exports to the U.S. – facing particular vulnerability [3]. Products such as coffee, sugar, oils, and orange juice would be severely affected. Orange juice futures climbed to four-month peaks in New York following the tariffs announcement amid concerns about reduced Brazilian supply [3].

The Brazilian government's response to U.S. sanctions underscores the ongoing diplomatic tensions between the two countries. As the situation evolves, investors and financial professionals should closely monitor the potential economic and political fallout.

References:
[1] https://www.reuters.com/world/americas/tensions-rise-lula-blasts-us-over-visa-sanctions-tied-bolsonaro-trial-2025-07-19/
[2] https://finance.yahoo.com/news/brazil-weighs-measures-us-dividends-155707837.html
[3] https://www.marketscreener.com/quote/stock/PETROBRAS-6496795/news/Brazil-seeks-to-negotiate-Trump-s-threatened-tariffs-but-oil-exports-could-be-unscathed-say-analyst-50529568/