MercoPress. South Atlantic News Agency

Lula enacts Reciprocity Law in reaction to Trump's tariffs

With the new law, Brazil's Camex will have the power to apply proportionate retaliatory measures

Brazilian President Luiz Inácio Lula da Silva enacted the so-called Reciprocity Law on Friday, whereby the federal government can react whenever countries or economic blocs create measures restricting Brazilian exports, be it in the form of surcharges or objections to the origin of the product. The measure is to be published in Monday's issue of the Diário Oficial da União (Federal Official Gazette).

The bill, approved by Congress earlier this month, gained momentum amid the trade war promoted by US President Donald Trump. So far, however, the Palácio do Planalto has not announced any kind of retaliation to Trump's tariffs.

The law sanctioned by Lula stipulates that the following protectionist actions can provoke countermeasures from the Brazilian government:

- Interference in Brazil's sovereign choices through the adoption of unilateral trade measures;

- Violation of trade agreements; or

- Demanding more onerous environmental requirements than the parameters, norms, and standards of environmental protection adopted by Brazil, described in the Paris Agreement, the Brazilian Forest Code, the National Climate Change Policy, and the National Environmental Policy.

Among the countermeasures that can be adopted by the Brazilian government are:

- Imposing taxes, fees, or restrictions on imports of goods or services from a country;

- Suspension of trade or investment concessions; and

- Suspension of concessions relating to intellectual property rights.

Countermeasures must be proportional to the economic impact caused by the actions, policies, or practices carried out by other countries. Diplomatic consultations to mitigate or annul countermeasures are also required.

Recently, the United States announced tariffs on imports from more than 180 countries. Brazil got the lowest tariff, 10%, for all products. Steel and aluminum, which have their own tariffs already announced, are still subject to a 25% tariff.

With the new law, the Industry and Trade Ministry's Foreign Trade Chamber (Camex) will have the power to suspend trade and investment concessions in response to countries or economic blocs that negatively impact the competitiveness of national products.