Brazil has become one of the latest targets of U.S. President Donald Trump’s ongoing tariff crusade. In addition to threatening the largest economy in South America with crippling 50% tariffs starting in August, Washington has now taken aim at Brazil’s instant payment system, Pix, which has been massively embraced by Brazilians since its introduction in 2020. It’s simply something foreign companies with active business in or coming to Brazil need to be aware of, especially now that it’s been making headlines daily due to Trump’s attacks. These developments raise several pressing questions: Why is Brazil in Trump’s crosshairs? Is there any merit to his claims? How important is this payment system to Brazilians? And what political interests are behind these moves? Let’s take a closer look.
What’s behind Trump’s offence in Brazil
Before diving into what the Pix system is, how it works, and why it’s become essential to daily banking in Brazil, it’s important to understand the political undertone driving Trump’s latest move. His threat to impose a 50% tariff on Brazil appears to be more about politics than trade. In a letter posted on Truth Social, Trump alleged Lula is carrying out a “Witch Hunt that should end IMMEDIATELY!”, referring to legal proceedings against right-wing former president Jair Bolsonaro. Caps lock and all. By tying the proposed tariff hike, set for August 1, to Brazil’s domestic judicial actions, Trump signals an attempt to pressure a sovereign country to hold its former leader accountable.
President Lula da Silva responded swiftly, defending Brazil’s independent institutions and vowing retaliation under the Law of Economic Reciprocity. “Brazil is a sovereign nation with independent institutions and will not accept any form of tutelage,” he wrote on X. His response reflects the seriousness with which Brazil sees the threat, not just as economic aggression, but as political interference.
Crucially, this isn’t about balancing trade. Unlike the 21 other countries recently targeted by Trump, the U.S. enjoys a large trade surplus with Brazil of $6.8 billion last year. Top American exports include aircraft, fuels, machinery, and electrical equipment. That makes Trump’s threat even more puzzling. A retaliatory tariff from Brazil could hurt key U.S. industries and, paired with Trump’s pro-Bolsonaro rhetoric, reinforces the idea that this move is indeed about politics, not economics.
What is Pix, and why is Trump coming for it?
Brazil’s instant payment system, Pix, has revolutionized the country’s financial landscape. Launched in 2020 by the Central Bank, it allows individuals and businesses to transfer money instantly and nearly free of charge, 24/7, a major departure from the traditional wire model that’s costly and sometimes far from immediate. Users can send and receive money through mobile apps, QR codes, or account-linked keys, essentially transforming how Brazilians bank, trade goods, and make both everyday and more complex transactions.
It’s so good and effective, it has grown into the dominant payment method in Brazil in less than five years. And a bit of national pride too, as it’s deemed a symbol of innovation and a piece of technology that actually directly benefits people. With over 150 million users and more than 60 million businesses accepting it, Pix is now embedded in every aspect of everyday life when it comes to payments and transactions. It has drastically lowered transaction costs for consumers and merchants alike, while boosting financial inclusion for millions of Brazilians who were previously underserved or overcharged by traditional banks.
Also, let’s not forget, foreign companies operating in Brazil benefit from Pix the same way a Brazilian company does. There are plenty of American companies generating millions of dollars per month via Pix by allowing users to choose it from their payment methods list. The system is not exclusive to Brazilian companies, and it doesn’t take much for a foreign company to be Pix-ready.
Pix also rapidly evolved far beyond simple instant transfers between individuals. The system now supports a wide range of functionalities that mirror those offered by traditional banking and credit solutions. Brazilians can make contactless payments using Pix por aproximação (tap and pay), schedule future transactions with Pix agendado (scheduled Pix), and automate recurring payments, such as bills or subscriptions, with Pix automático (automated Pix). Most recently, the Central Bank has begun testing a credit-based version of Pix, allowing users to make purchases on credit directly through the platform. All of that in five years! Apparently, the sky is the limit for Pix. Well, not for Trump.
That success, however, is drawing scrutiny from Washington. The U.S. has opened a formal investigation into Brazil’s digital trade practices, claiming the country may be unfairly favouring Pix over foreign competitors. At the heart of the probe is a concern that Pix’s dominance is crowding out U.S. payment giants like Visa, Mastercard, and other fintech companies, which charge higher fees and operate within a more commercially driven framework. From Washington’s perspective, a state-run system gaining this much ground in a key emerging market raises questions of market access and competitive fairness.
Criticism of Pix also reflects a broader U.S. unease with Brazil’s shifting global alignment. As Brazil plays a more active role in BRICS, a group formed by eleven major emerging countries (Brazil, Russia, India, China, South Africa, Iran, Saudi Arabia, Egypt, Ethiopia, the United Arab Emirates, and Indonesia), joining talks of creating an alternative to the dollar for trade within group members and allies, deepening tensions with the U.S. Following the latest BRICS summit in Rio, Trump accused the bloc of trying to “devalue our dollar” and warned that countries challenging the U.S. currency would face steep tariffs. He went as far as saying that losing the dollar’s dominance would be like “losing a world war”.
Yet, just as with Trump’s recent tariff threats, many in Brazil see the investigation as politically charged. After all, Pix is not a protectionist tool; it’s a public infrastructure designed to modernize financial services and democratize access to banking. It’s an international benchmark. An established, solid and widely accepted financial solution for easy access to transactions and financial inclusion. For the U.S. to frame Pix as a trade barrier suggests either a discomfort with an alternative model that puts consumer needs before corporate profit or the plain unwillingness to see developing nations thriving while leaving the American-centred status quo behind. I think it’s both.
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