President Trump may be threatening Brazil with tariffs over a political matter involving former president Jair Bolsonaro. CBS MoneyWatch correspondent Kelly O'Grady reports.

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Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

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The Trump administration has announced a potential 50% tariff on Brazilian goods, citing the ongoing investigation of former Brazilian president Jair Bolsonaro as the primary reason. President Trump has called on Brazil to end what he described as a 'witch hunt' against Bolsonaro, who faces charges related to alleged attempts to overturn an election result.

Brazil has indicated it will reciprocate if the tariffs are imposed, raising concerns about the impact on key traded goods such as fuel, machinery, and coffee. The United States currently has a trade surplus with Brazil, meaning American businesses could also be affected by any retaliatory measures. Federal Reserve officials have expressed a range of opinions on the broader economic impact of tariffs, adding to uncertainty for businesses planning future investments.

Why Trump is threatening Brazil with a 50% tariff

The Trump administration has sent letters to several more countries announcing tariff rates while the majority are for trade disparities. The letter sent to Brazil had a different rationale. President Trump accused Brazil's government of subjecting the country's former president to a witch hunt, demanding it end immediately. Jair Bolsonaro, you'll recall, is facing charges that he tried to overturn the recent election that he lost. Does that sound familiar? Joining me now in Studio 55 is CBS News Money Watch correspondent Kelly O'Grady. Good to see you. Good to see you too. All right. So how's Brazil responding thus far and what kind of ripple effects can we see from this? So as expected, Brazil has said, you know, we're going to reciprocate. I think that's maybe a lighter word than retaliate. But what's interesting here is what sort of ripple effects are. You think about the products that we get from Brazil. Fuel is a big one. Of course, we can get fuel from other places, including the U.S. Machinery, plastics, rubber, inputs, not necessarily things that you and I are going to go out and buy at the store, but very important components to different products that manufacturing companies might make. And then the other big one that I think comes to everyone's mind, and I had two cups of this morning, coffee. Coffee. Right? Brazil is a huge producer of coffee. Yes, Vietnam, other places do as well. That's the piece of it. You could see higher coffee prices, higher prices. The other thing, though, is think about what we sell to them. We actually have a trade surplus with Brazil, which is why when the president said our unfair trade relationship with – I was like, wait, wait, I have to go back and check this. Yeah, check back here. Econ 101 book. In 2024, we sold more to them than they sold to us. And so now, if you have Brazil retaliate, you're going to have those businesses have a harder time selling into those markets. So it's not just about what we pay, but also what those businesses might lose out on. So this tariff, the way I understand it, is just retaliatory for a political reason, not for an economic one, right? When you actually look at the trade surplus, maybe Brazil has other economic barriers against U.S. businesses, but when you look at the hard math, we have a trade surplus. Yeah. All right. So the other thing that we also have some new insight into is how concerned some members of the Federal Reserve are about the president's tariffs. It's just, as you know, and I'm surprised you're not even there in Sun Valley. Where all these CEOs are hanging out. I think that they thought before the election that there would be fewer regulations and business would be booming, right? Instead, that may be true. There may be fewer regulations, but these tariffs are sort of hampering the kind of deal making that happens at Sun Valley. What are we learning about how the Fed is feeling around this? So this is interesting. We got the Fed Minutes, basically, for those that aren't a nerd like me, this is the transcript of everything that they talked about in that meeting last month. And what we're hearing from them is there's actually a wide range of how these different governors feel about interest rates. Some think we're going to get two, some think we're going to get one this year, or cuts, I mean. Some think that we're going to get zero. So you think about now, businesses, investment, that booming piece of it. They're trying to plan, when is it going to be less expensive for me to borrow money and invest that back into my business? Now you're hearing from the Fed, wow, we might get no interest rate cuts, we might get two. It's really, really hard to plan. Wow. Very interesting. Kelly, always great to have you.

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Why Trump is threatening Brazil with a 50% tariff

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