91��Ƶ

Former Brazil President Jair Bolsonaro and U.S. President Donald Trump at the White House in 2019. (Andrew Harrer/Bloomberg)

President Donald Trump’s administration is preparing a new emergency declaration as a basis for tariffs on Brazil, people familiar with the matter say.

The move, which is not yet final, would be necessary to impose Trump’s threatened 50% levy on a country whose situation is far different from others who’ve been hit with reciprocal tariffs. While other nations targeted hold goods trade surpluses with the U.S., Brazil is running a deficit.

The office of the U.S. Trade Representative acknowledged the plans for a separate emergency declaration in meetings with staff in Congress this week, one of the people said. The people were speaking on condition of anonymity to share details of private negotiations.

RELATED: Brazil Vows Retaliatory Tariffs if US Sets 50% Rate

USTR declined to comment, and the White House did not respond.

The Brazilian real hit new lows for the day following the announcement, dropping as much as 1% against the dollar.

The preparations are a sign of how the administration is searching for a legal authority to impose Trump’s increasingly wide-ranging tariff threats. Trump announced the potential 50% rate, set to take effect Aug. 1, in a show of support for ally Jair Bolsonaro, Brazil’s former president.

Image

Brazil President Luiz Inacio Lula da Silva by Bruna Prado/Bloomberg��

Trump has looked to pressure President Luiz Inacio Lula da Silva to end what he calls a “witch hunt” against the Brazilian’s predecessor. Bolsonaro will soon stand trial for his alleged role in an attempt to overturn his defeat in the 2022 election. Lula has shown no sign of ceding to U.S. demands, instead emphasizing the independence of Brazil’s judiciary and threatening retaliatory measures.

In a July 25 speech, Lula said Trump had been “misled” on Bolsonaro’s legal woes. Brazil is ready to engage in negotiations, Lula reiterated.

“If President Trump had called me, I certainly would have explained to him what’s happening with the former president because I have a good relationship with everyone,” Lula said. “But no, he was led to believe a lie, that Bolsonaro is being persecuted. I would have explained to President Trump that he is not being persecuted, he is being tried.”

The new emergency declaration as the legal basis for tariffs on Brazil is evidence that Trump is acting with purely political intent against Lula’s government, according to two people in Brazil familiar with the matter, who said that it amounts to an admission that the 50% tariff is a sanction in search of legal justification.

Trump issued the threat of a 50% rate earlier this month, substantially widening the scope of his tariff fight and showing he would look to use presidential authorities and import duties to bolster his allies abroad. It’s unclear whether he will adjust the rate.

Trump’s administration has separately launched a so-called Section 301 investigation for Brazil, which could ultimately provide legal authority for tariffs but is likely to take months.

Trump’s original reciprocal tariffs, under the International Emergency Economic Powers Act, were imposed on the grounds of “large and persistent” trade deficits, according to a White House statement. The initial countries who have faced reciprocal rates higher than 10% all run trade surpluses in goods with the U.S., except Brazil.

Earlier this week, a group of Democratic senators wrote to the Trump administration to express “significant concerns about the clear abuse of power inherent in your recent threat to launch a trade war with Brazil” to support Bolsonaro.

“Interfering in another sovereign nation’s legal system sets a dangerous precedent, provokes an unnecessary trade war and puts American nationals and companies at risk of retribution,” wrote the senators, led by Jeanne Shaheen of New Hampshire and Tim Kaine of Virginia.

Josh Wingrove, Eric Martin and Simone Iglesias contributed to this report