Brazil readies 'tough' retaliation to new Trump tariffs, sources say

BRASÍLIA, July 16 - Brazil's government convened top ministers and staff at the presidential palace on Thursday to prepare the country's response to Washington's latest tariffs, which could include non-tariff measures affecting the audiovisual sector and pharmaceutical and agricultural patents, three people who attended the meetings told Reuters.

The measures under consideration are in line with Brazil's reciprocity law, which President Luiz Inácio Lula da Silva pledged his government would invoke after the Trump administration announced a 25% tariff on many Brazilian products on Wednesday in response to what it said were unfair trade practices by Brazil.

"How we proceed from here will depend on the instructions the president gives us, but it is highly unlikely there won't be a tough response," one of the people said.

According to another source, Brazil is expected to revisit countermeasures studied last year under the reciprocity law, including curbs on dividend and royalty remittances by U.S. audiovisual companies.

The government is also considering suspending patent protections for pharmaceutical products and agricultural seeds.

Officials in Brasília view such options as preferable to tariffs on imports from the U.S. because they would be less likely to disrupt Brazilian supply chains or fuel domestic inflation.

U.S. officials have warned Washington would "review its actions" if Brazil retaliates, a prospect that has fueled concerns among Brazilian exporters and pushed some to diversify away from the U.S. market.

Shipments to the United States fell 13% in the first half of the year, even as the country's overall exports rose 5.1% over the same period.

On a separate track, Brazil will also revive the World Trade Organization dispute it launched last year over customs duties for electronic transmissions, another source familiar with the matter said, allowing it to move more quickly to establish a dispute settlement panel.

A ruling in Brazil's favor would strengthen its legal basis for retaliatory measures under international trade rules. REUTERS