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Brazil vows to match US tariffs after Trump threatens 50% levy

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Brazilian President Luiz Inácio Lula da Silva has said he is ready to match any tariffs imposed on Brazil by the United States.

Lula was responding to Wednesday’s threat by his US counterpart, Donald Trump, to impose a 50% import tax on Brazilian goods from 1 August.

In a letter, Trump cited Brazil’s treatment of former President Jair Bolsonaro as a trigger for tariff-hike.

Bolsonaro is currently on trial for allegedly attempting to stage a coup against Lula after being defeated by him in the 2022 election.

Trump referred to Bolsonaro as “a highly respected leader throughout the world”. “This Trial should not be taking place,” he wrote, calling on Brazil to immediately end the “witch hunt” against the former president.

Trump’s support for Bolsonaro does not come as a surprise as the two men have long been considered allies.

The US president had already slammed Brazil for its treatment of Bolsonaro on Monday, comparing it to the legal cases he himself had faced in US courts.

The 50% tariff threat was met with a robust and lengthy response by President Lula.

In a post on X, he stressed that Brazil was “a sovereign country with independent institutions and will not accept any tutelage”.

The Brazilian leader also announced that “any unilateral tariff increases” would be met with reciprocal tariffs imposed on US goods.

The US is Brazil’s second-largest trade partner after China, so the hike from a tariff rate of 10% to an eye-watering 50% – if it comes into force – would hit the South American nation hard.

But Lula also made a point of challenging Trump’s assertion that the US had a trade deficit with Brazil, calling it “inaccurate”.

Lula’s rebuttal is backed up by US government data, which suggests the US had a goods trade surplus with Brazil of $7.4bn (£5.4bn) in 2024.

Brazil is the US’s 15th largest trading partner and among its main imports from the US are mineral fuels, aircraft and machinery.

For its part, the US imports gas and petroleum, iron, and coffee from Brazil.

Brazil was not the only country Trump threatened with higher tariffs on Wednesday.

Japan, South Korea and Sri Lanka were among 22 nations which received letters warning of higher levies.

But the letter Trump sent to his Brazilian counterpart was the only one focussing matters beyond alleged trade deficits.

As well as denouncing the treatment of ex-President Bolsonaro, Trump slammed what he said were “secret and unlawful censorship orders to US social media platforms” which he said Brazil had imposed.

Trump Media, which operates the US president’s Truth Social platform and is majority-owned by him, is among the US tech companies fighting Brazilian court rulings over orders suspending social media accounts.

Lula fought back on that front too, justifying the rulings by arguing that “Brazilian society rejects hateful content, racism, child pornography, scams, fraud, and speeches against human rights and democratic freedom”.

Rafael Cortez, a political scientist with Brazilian consulting firm Tendências Consultoria, told BBC News Brasil that rather than hurt him, the overly political tone of Trump’s letter could end up benefitting Lula.

“Those confronting Trump win at home when Trump and other conservative leaders speak out on issues pertaining to their countries. That happened, to a certain degree, in Mexico, and the elections in Canada and Australia,” Mr Cortez says of other leaders who have challenged Trump and reaped the rewards in the form of rising popularity levels.

Creomar de Souza of the political risk consultancy Dharma Politics told BBC News Mundo’s Mariana Schreiber that it would depend on the Lula government coming up with organised and united response if it is to “score a goal” against Trump.



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No imminent change to tax-free allowance

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There will be no immediate changes to cash Individual Savings Accounts (Isas), the BBC understands.

Chancellor Rachel Reeves was widely expected to announce plans to reduce the £20,000 tax-free allowance.

The move was aimed at encouraging more investment in stocks and shares, which the goverment says it will still focus on.

“Our ambition is to ensure people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy,” a Treasury spokesperson said.

The Treasury is expected to continue to talk to banks, building societies and investment firms about options for reform.

An Isa is a savings or investment product that is treated differently for tax purposes.

Any returns you make from an Isa are tax-free, but there is a limit to how much money you can put in each year.

The current £20,000 annual allowance can be used in one account or spread across multiple Isa products as you wish.



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UK economy shrank unexpectedly in May

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The economy shrank by 0.1%, the second month in a row it has contracted.



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Trump threatens 35% tariffs on Canadian goods

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US President Donald Trump has said he will slap a 35% tariff on Canadian goods starting 1 August, even as the two countries are days away from a self-imposed deadline to reach a new deal on trade.

The missive came as Trump also threatened blanket tariffs of 15% or 20% on most trade partners, and said he would soon notify the European Union of a new tariff rate on its goods.

Trump announced the latest levies on Canada on Thursday in a letter posted to social media and addressed to Prime Minister Mark Carney.

The US has already imposed a blanket 25% tariff on some Canadian goods, and the country is feeling the pain of the Trump administration’s global steel, aluminium and auto tariffs.

The letter is among more than 20 that Trump had posted this week to US trade partners, including Japan, South Korea and Sri Lanka.

Like Canada’s letter, Trump has vowed to implement those tariffs on trade partners by 1 August.

The US has imposed a 25% tariff on all Canadian imports, though there is a current exemption in place for goods that comply with a North American free trade agreement.

It is unclear if the latest tariffs threat would apply to goods covered by the Canada-United States-Mexico Agreement (CUSMA).

Trump has also imposed a global 50% tariff on aluminium and steel imports, and a 25% tariff on all cars and trucks not build in the US.

He also recently announced a 50% tariff on copper imports, scheduled to take effect next month.

Canada sells about three-quarters of its goods to the US, and is an auto manufacturing hub and a major supplier of metals, making the US tariffs especially damaging to those sectors.

Trump’s letter said the 35% tariffs are separate to those sector-specific levies.

“As you are aware, there will be no tariff if Canada, or companies within your country, decide to build or manufacture products within the United States,” Trump stated.

He also tied the tariffs to what he called “Canada’s failure” to stop the flow of fentanyl into the US, as well as Canada’s existing levies on US dairy farmers and the trade deficit between the two countries.

“If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter. These Tariffs may be modified, upward or downward, depending on our relationship with Your Country,” Trump said.

President Trump has accused Canada – alongside Mexico – of allowing “vast numbers of people to come in and fentanyl to come in” to the US.

According to data from the US Customs and Border Patrol, only about 0.2% of all seizures of fentanyl entering the US are made at the Canadian border, almost all the rest is confiscated at the US border with Mexico.

In response to Trump’s complaints, Canada announced more funding towards border security and had appointed a fentanyl czar earlier this year.

Canada has been engaged in intense talk with the US in recent months to reach a new trade and security deal.

At the G7 Summit in June, Prime Minister Carney and Trump said they were committed to reaching a new deal on within 30 days, setting a deadline of 21 July.

Trump threatened in the letter to increase levies on Canada if it retaliated. Canada has already imposed counter-tariffs on the US, and has vowed more if they failed to reach a deal by the deadline.

In late June, Carney removed a tax on big US technology firms after Trump labelled it a “blatant attack” and threatened to call off trade talks.

Carney said the tax was dropped as “part of a bigger negotiation” on trade between the two countries.

The Prime Minister’s office told the BBC they did not have immediate comment on Trump’s letter.



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