Brazil has started to retaliate against the United States — rolling out $5.5 billion to address the tariffs imposed by the U.S. This situation indicates that the trade tensions between these two economic powerhouses are escalating.

What’s going on? The U.S. has imposed high tariffs on many products from Brazil, affecting major exports like coffee, beef, and some industrial goods.

In response, Brazilian President Lula has introduced a rescue plan called “Sovereign Brazil,” which provides exporters with loan quotas, tax reductions, and insurance support. It also encourages domestic purchases to protect local industries. So far, Brazil hasn't directly raised tariffs in retaliation, but it has lodged complaints with the World Trade Organization and is beginning to trade more with Asia and the European Union.

This issue is not just a matter between the U.S. and Brazil; it will ripple through global trade:

- Global supply chains may change, and buyers will have to seek other markets.

- Prices for items like coffee and agricultural products may rise.

- Brazil might be more inclined to collaborate with BRICS countries and the Southern Common Market, making geopolitical blocs more pronounced.

When it comes to specific industries:

- Coffee exports have decreased by 28% compared to last year, and if this continues, prices may rise further.

- In agriculture and meat, if the U.S. buys less, Brazil may struggle to sell domestically.

- Industrial products may not sell well in the U.S. market, but could become more popular in Asia.

Lula's approach is to minimize losses, avoiding escalating tensions while using domestic policies to cushion the impact and keeping room for negotiation. If this dispute drags on, Brazil's export pathways may change, and U.S. influence in Latin America could also be challenged.$WCT @WalletConnect #WalletConnect