FX.co ★ Brazilian Real Drops as Trump Imposes 50% Tariff

The Brazilian real has depreciated, approaching 5.6 per dollar, marking its lowest point in a month. This decline follows the announcement by US President Donald Trump of a significant tariff increase on Brazilian imports, raising it to 50% from the previous 10% rate set in April. This tariff hike, set to take effect on August 1, is described by Trump as a response to "unfair trade practices" and appears to be retribution for Brazil's ongoing legal actions against former President Jair Bolsonaro. Brazilian President Luiz Inácio Lula da Silva has promised to respond with retaliatory measures, leveraging recently enacted legislation that permits proportional countermeasures. The situation is compounded by Brazil's declining export prices for crucial commodities such as crude oil and iron ore, which are diminishing the nation's foreign currency income. Furthermore, a surprising increase in the June trade deficit and an unexpected downturn in industrial production have diminished prospects for an imminent economic revival.