Tax Credits, Tariffs, and Fighting Tyrannical Rulers on Twitter: A Brazilian Story

August 18th, 2025
Harry Reitman

After public fear swelled over the economic well-being of Brazilians, Brazilian President Lula Da Silva had to act. Last Wednesday, Center-Left Brazilian President Luiz Inácio Lula da Silva announced that Brazilian companies hurt by American tariffs would have access to a 5.5 billion USD relief fund. For small to mid-size Brazilian companies that may rely on American consumers, Donald Trump’s 50% tariffs on some of Brazil’s largest exports could be bank-breaking; that’s why Lula Da Silva’s plan prioritizes such companies, offering up to $960,000 in tax credits for each company that is impacted. This plan has received mass support from Brazilian politicians, but does it deserve it?

To understand Brazil’s response to American Tariffs, it is important to understand what American Tariffs on Brazil are. On April 2—Trump’s Liberation Day—the Trump Administration planned to impose blanket 10% tariffs on Brazil, yet a dispute over former Brazillian president Jair Bolsonaro forced these tariffs higher. Jair Bolsonaro, currently on trial for plotting an insurrection against Brazil’s government following his loss in the 2022 presidential election, became the center of tariffs after American President Donald Trump posted on Truth Social, writing that the trial “is a Witch Hunt that should end IMMEDIATELY!”, before enlisting 50% tariffs on all Brazilian goods as pressure for the Brazilian Government to end the trial.

However, Brazil’s leadership wasn’t going to bow down; Lula Da Silva tweeted his response, promising to support Brazilian companies hurt by tariffs and also to punish the American economy in response. Brazil’s plan, nicknamed “Sovereign Brazil,” is set to provide a total of 30 billion Reais—$5.5 billion—in funding to companies that rely on American exports, with small to medium-sized companies having access to tax credits of up to $960,000 until 2026. The plan also aims to improve corporate access to insurance for any canceled orders, limiting the negative impact that large, canceled orders will have on Brazilian companies. The plan is set to be passed via multiple bills in Brazil’s Congress, and although none of these bills have been passed yet, they undoubtedly will be approved in Congress, as many Brazilian politicians met at a presidential ceremony on Wednesday, matching Lula’s sentiment.

Lula Da Silva’s Workers Party has been riding the wave of support that fighting American tariffs has brought. Lula Da Silva’s approval rating has risen from 40% in May to 43% currently. Importantly, these tariffs bring an extremely negative American sentiment to Brazil, a sentiment that could lead to Brazilian Politicans moving away from future US involvement. One of this conflict’s largest beneficiaries is China, a nation who already has serious involvement with Brazil—$70.7 Billion in 2024 construction contracts from the Chinese Government and ongoing talks of constructing a railroad that would connect Brazil to a Chinese megaport in Chauncay, Peru. The feud with the United States may open Brazil to increased Chinese Cooperation.

Extemp Analysis by: Harry Reitman

Question: How will Brazil’s Foreign Policy be affected by its Tariff Fallout with the United States?

AGD: Maybe some weird quote about freeing bolsonaro, you could make a joke about how when it comes to insurrectionists authoritarian leaders, game knows game, if you do that commit to it though.

Background: Trump upset about bolsonaro, Define tariff, explain 50% BLANKET tariff, Lula Da Silva response (5.5 Billion Tax, Threaten Suspend Investment in US) - Tank Relations

Answer: Shift away from US Cooperation

Move towards European Military Cooperation (Mostly Germany)
Hastening Energy Production with China (Focus on Solar)
Working with India to develop the Pharmaceuticals (Raw Materials Needed)

Analysis + Concluding Thoughts

The substructure for this would have your A set up what purpose the United States served in a specific field or industry, then your B would focus on why Brazil will now move and what big steps they’ll make with what country because of it. Some general tips would be to really emphasize how this will tank relations between the US and Brazil in the background, and use every on top to explain why Brazil can’t wait for Trump to be out of office and then make deals with the US (basically why they have to move to another country for a specific industry, and can’t wait the three years for trump to be out of office). Also when transitioning from the A to the B don’t have the exact same wording and say something like “But with the US gone, Brazil has to pivot” be more interesting for your internal transitions or at the very least don’t have the same wording.