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Dow Jones NewsJul 11, 1:56 AM UTC
DJ Trump Doubles Down on Using Tariffs as Tool of American Power -- WSJ
By Gavin Bade in Washington and Marcus Walker in Rome
President Trump's threat for a 50% tariff on Brazilian imports expanded his use of punitive duties over matters that have nothing to do with trade, breaking with more than a half-century of global economic precedent.
Trump cited the trial of the president's close political ally, former Brazilian President Jair Bolsonaro, as the rationale for new tariffs set to take effect Aug. 1 on imports from the largest economy in Latin America.
It is one of the latest -- and perhaps most brazen -- examples of Trump using tariffs as a cudgel for political priorities outside of trade. In January, he threatened tariffs on Colombia over repatriation flights for migrants back to that country. Then he imposed steep duties on Canada, Mexico and China over their role in the fentanyl trade, and threatened eye-watering tariffs on countries that buy oil from Venezuela. He has also used the threat of tariffs to attempt to secure more military spending from Asian nations such as Japan and South Korea.
And on Thursday evening, in a new letter to Canada's leader, Trump said the U.S. will impose 35% tariffs on some Canadian imports starting Aug. 1, citing the fentanyl crisis among other grievances with the country.
The president is betting the threat of reducing access to the American consumer will force nations to capitulate on his political priorities. But he risks getting rebuked by the courts -- and political blowback if prices for goods rise.
Trump "views tariffs as a tool that is effective in getting results, not just in terms of economic impact, but also leverage in all sorts of situations," said Kelly Ann Shaw, former deputy director of the National Economic Council in Trump's first term.
Bolsonaro is facing charges that he plotted to overturn his 2022 election loss by fomenting a January 2023 insurrection at the Brazilian Congress, when thousands of his supporters overran the legislative body after the election of current left-leaning president, Luiz Inácio Lula da Silva. In his tariff letter, Trump called the trial "nothing more, or less, than an attack on a political opponent -- Something I know much about," adding "LEAVE BOLSONARO ALONE!"
Trump's moves have shaken the global trade order established in the 1940s, when market economies sought to put tariffs and trade among them on a stable footing.
Although often controversial and sometimes volatile, such as when the Smoot-Hawley Act hiked U.S. tariffs in 1930, tariffs have generally been motivated by economic or domestic political goals. For twisting the arm of another country, usually a geopolitical adversary, trade embargoes were often used, such as when Napoleon tried to cut off Britain from all trade with continental Europe, or when the U.S. cut off Japan's access to American oil in 1940 to punish the country for expansionism.
After World War II, the U.S. led an international effort to build a rules-based trading order that kept politics out of tariffs. The General Agreement on Tariffs and Trade, signed in 1947, required countries to stick to agreed tariffs and not discriminate against imports from other nations. Its core principles were adopted by GATT's successor, the World Trade Organization, in the 1990s.
The rise of China as a state-backed export juggernaut and the decline of manufacturing jobs in Western countries have undermined the consensus for the postwar trading order.
"The perceived gains from a rules-based trading system came to be taken for granted," said Jennifer Hillman, a trade-law specialist at Georgetown University and a former U.S. and WTO official. "Major shifts in geopolitical power, and perceptions of unfairness and growing income inequality in the U.S. and other importing countries, are seen as justifying the breaking of the rules."
Since 2010, China has pioneered the use of trade restrictions to punish other countries over political issues unrelated to trade. Among other incidents, China slapped heavy tariffs on Australian wine and barley after Australia called for an international inquiry into the origins of Covid-19.
During Trump's first term, the president baffled U.S. allies such as Canada when he invoked national security to justify tariffs on steel and aluminum imports.
But his second-term linkage of trade measures with a growing array of political concerns has little precedent.
"This is brand new," said Hillman. "What we don't know is, is this purely Trump, or is this the future?"
Trump's approach carries legal risks. In May, the U.S. Court of International Trade struck down many of the president's tariffs, saying they weren't justified by the emergency legal authority that he cited. An appeals court will hear the case on July 31, a day before Trump's so-called reciprocal tariffs are scheduled to go back into effect on Brazil and scores of other nations.
Trump's Brazil tariffs risk compounding those legal risks. The reciprocal tariffs were justified in part on the grounds that persistent trade deficits with other nations constitute a national security threat. The U.S., however, runs a trade surplus with Brazil -- over $7 billion last year.
The administration argues the U.S. government has always used economic tools to extract foreign-policy concessions from other nations, like the extensive use of economic sanctions against adversarial nations such as Russia, Iran, Cuba and more. Treasury Secretary Scott Bessent has said Trump believes that the U.S. has "gotten over our skis" on sanctions and that they could be driving nations away from the U.S. dollar.
"Other countries routinely use tariffs to advance their foreign policy and national security interests, and President Trump is committed to using every tool at his disposal -- including access to the American economy, the world's biggest and best consumer market -- to put Americans and America First," said White House spokesman Kush Desai.
Many Trump allies are supportive of the president's shift to use access to the U.S. consumer market as leverage to extract concessions across a number of political issues. Others in Trump's own party have decried the economic uncertainty.
"The idea of haphazardly talking about 50% tariffs on a country based on different policies that are going on in that country is chaotic for the markets, it makes it hard for businesses to predict, and if it's done for every country's current events, will lead to chaos," said Sen. Rand Paul (R., Ky.), a frequent critic of Trump's trade wars.
Trade-reliant U.S. businesses say the tariffs make it harder to plan investments.
"Businesses and consumers will face cost pressures every time the president follows through on his tariff threats," said Jake Colvin, president of the National Foreign Trade Council, which represents large U.S. firms.
Write to Gavin Bade at gavin.bade@wsj.com and Marcus Walker at Marcus.Walker@wsj.com
(END) Dow Jones Newswires
July 10, 2025 21:56 ET (01:56 GMT)
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