Trump imposes 25% tariffs on Brazilian goods

The Trump administration said Wednesday it will impose an additional 25% tariff on many Brazilian goods, escalating a trade fight it says is rooted in Brazil's treatment of U.S. companies.

Why it matters: The new policy includes exemptions for key consumer staples like coffee and beef, suggesting the White House is trying to minimize the inflationary impact on American shoppers even as it steps up pressure on Brazil over disputes involving U.S. tech firms, ethanol and more.

The big picture: A senior administration official says the tariffs are in response to Brazil's unfair barriers against U.S. technology and payment companies.

• The administration also accuses Brazil of restricting market access for American ethanol, inadequately protecting intellectual property and granting preferential tariff treatment to other countries.
• Meanwhile, Brazil isn't effectively enforcing laws against illegal deforestation, giving Brazilian producers an unfair cost advantage over U.S. firms, according to the official.

Zoom out: The tariff decision stems from a year-long investigation by Trump's top trade official Jamieson Greer under Section 301 of the Trade Act of 1974, which authorizes the U.S. to impose trade measures — including tariffs — in response to foreign practices it deems unfair.

• The senior administration official said the exemptions cover products that the U.S. doesn't produce domestically, or that would disrupt U.S. supply chains or the broader economy if subjected to additional tariffs.
• The U.S. runs a trade surplus with Brazil, but the official said that the investigation concerns specific trade barriers rather than the overall balance between the two countries.
• The tariffs take effect on July 22.

The intrigue: The administration says the action is based solely on its trade investigation. But it comes against the backdrop of a broader political feud between Trump and Brazilian leader Luiz Inácio Lula da Silva.

• Trump previously imposed separate tariffs on Brazil while explicitly criticizing the nation's treatment of former President Jair Bolsonaro, a political ally.

What to watch: The official said Brazilian officials have been more constructive over the past six weeks, though the two sides remain too far apart to avoid the tariffs.

• Negotiations between the two nations are expected to continue.