Trump Slams Brazil With Harsh New Tariffs; EWZ Yawns
- Trump accused the country of "insidious attacks on free elections and the fundamental speech rights of Americans."
- EWZ was down less than 2% on Thursday.
The iShares MSCI Brazil ETF (EWZ) fell 1.9% on Thursday after President Donald Trump announced a new set of tariffs targeting Brazil, this time for political rather than economic reasons.
In a sharply worded letter addressed to Brazilian President Luiz Inácio Lula da Silva, Trump accused the country of "insidious attacks on free elections and the fundamental speech rights of Americans."
The letter appeared to reference the legal troubles of former Brazilian president Jair Bolsonaro, who is currently on trial for allegedly attempting to overturn the 2022 election and stage a coup.
The move marks a departure from Trump's recent tariff announcements, which were largely framed around economic grievances, such as trade deficits or unfair trade policies. In Brazil’s case, the U.S. actually runs a trade surplus, making the rationale for punitive tariffs more political than economic.
Brazil’s government responded swiftly, saying it would impose countermeasures on the U.S.
“The judicial proceedings against those responsible for planning the coup d'état fall exclusively under the jurisdiction of Brazil´s Judicial Branch and, as such, are not subject to any interference or threats that could compromise the independence of national institutions.”
“Therefore, any unilateral tariff increases will be addressed in accordance with Brazil's Economic Reciprocity Law,” Brazil’s president wrote on X.
EWZ Still Outperforming
Despite Thursday’s pullback, markets have largely taken the tariff news in stride. Brazil’s economy is heavily export-driven, but with commodities like oil and agricultural goods making up a large portion of shipments, analysts believe the country may be able to redirect much of its trade to other partners, including China.
According to the World Bank, exports account for about 20% of Brazil’s GDP, and the U.S. is its second-largest trading partner after China.
Despite Thursday’s drop, EWZ remains one of the top-performing country ETFs in 2025, up 25% year to date. Investors appear confident that the impact of the tariffs will be limited and that Brazil’s commodity-heavy economy can weather the storm.
