U.S. Prepares Sanctions on Brazil, Brazil Plans Retaliation

The United States government is reportedly preparing to implement new measures against Brazil. These measures are expected to target Brazilian banks and the import of diesel from Russia. The actions are anticipated to be part of a broader strategy in response to the ongoing legal proceedings against former Brazilian President Jair Bolsonaro, which are set to commence on September 2.

According to sources in Washington, the U.S. government is considering sanctions against Brazilian banks as the most immediate step. Additionally, trade measures against Brazil's import of diesel from Russia are also being contemplated and are expected to be enforced within a week or two.

In response to these developments, Brazil has initiated a process to evaluate retaliatory measures against U.S. tariffs. The Brazilian government, under the leadership of President Luiz Inácio Lula da Silva, has authorized the use of the "Economic Reciprocity Law" to assess and respond to the U.S. tariffs. This law allows Brazil to impose retaliatory measures on U.S. goods and services in response to unfair trade practices.

The Brazilian government has formed a working group to determine which sectors or products will be targeted for retaliation. This group will make its recommendations once the Foreign Trade Chamber (Camex) approves the evaluation process. The U.S. is expected to receive notification of Brazil's actions by August 29, marking a significant escalation in the trade dispute between the two nations.

President Lula has indicated that Brazil is not in a rush to implement retaliatory measures and prefers to engage in negotiations with the U.S. He emphasized that Brazil is open to dialogue and hopes to resolve the issue through diplomatic means. This stance contrasts with the more aggressive approach taken by the U.S., which has imposed tariffs on Brazilian goods without congressional approval, citing the International Emergency Economic Powers Act.

The U.S. tariffs, which were implemented earlier this year, have been deemed illegal by the U.S. Court of International Trade. The Trump administration's decision to bypass Congress and impose these tariffs unilaterally has been a point of contention, with Brazilian officials stressing the importance of judicial independence and fair trade practices.

The potential for new measures from both sides highlights the growing tensions in U.S.-Brazil trade relations. The U.S. has been accused of interfering in Brazil's internal affairs, with former Trump advisor suggesting that the U.S. could lift tariffs if Brazil drops legal proceedings against Jair Bolsonaro. However, Brazilian officials have rejected this proposal, asserting that the country's judicial system operates independently and will not be influenced by external pressures.

The situation remains fluid, with both countries weighing their options and considering the potential impact of further escalation. The coming weeks will be crucial as Brazil finalizes its retaliatory measures and the U.S. responds to the notification of Brazil's actions. The outcome of this trade dispute will have significant implications for both economies and could set a precedent for future trade relations between the two nations.