U.S. may give Brazil 90 days to strike trade deal after tariff pause

The “gesture of goodwill” requested by Brazil from President Trump is expected to be on the table in Washington next week, pending confirmation of the meeting. Brazil maintains that the 50% tariff penalty is unjustified, a position reiterated both during the meeting between presidents Lula and Trump and in the first working session between their teams the following day in the Malaysian capital.

Temporary tariff suspensions have been a common practice for Washington. That was the case with India, which received a 90-day window, until July 9, to negotiate after the U.S. imposed an additional 26% tariff. When patience with New Delhi ran out, the full 50% rate was enforced.

With China, the agreement reached in May granted a 90-day truce for most tariff hikes, cutting U.S. rates from very high levels to about 30% while talks continued. That truce was later extended to November 10. Mr. Trump and Chinese President Xi Jinping are expected to meet this week, when a deal will likely be finalized.

Similarly, with Mexico, on July 31 the U.S. postponed for about 90 days an additional tariff increase on Mexican imports to allow more time for broader trade discussions that remain ongoing. With Canada, Washington temporarily suspended a tariff hike scheduled to take effect on March 4 but later toughened its stance after a Canadian advertisement featuring Republican icon Ronald Reagan criticizing tariff increases reportedly irritated the Trump administration.

As part of other bilateral negotiations, the U.S. and the European Union announced on August 21 a “framework agreement” setting lower tariff ceilings, effectively delaying or avoiding higher rates while talks progressed.

In general, Washington expects trade partners to align more closely with U.S. positions on national security, economic, and foreign policy issues.

This week, on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit in Kuala Lumpur, Mr. Trump signed reciprocal trade agreements with Malaysia and Cambodia and completed the framework for similar deals with Thailand and Vietnam.

Under those agreements, the U.S. will maintain “reciprocal” tariffs currently in place—19% for Malaysia, Cambodia, and Thailand, and 20% for Vietnam—but will eliminate them for a specific list of products (details yet to be disclosed). In return, those countries will virtually eliminate their own tariffs on U.S. goods.

Key provisions in these agreements include: tariffs; removal of non-tariff barriers on U.S. industrial and agricultural exports; elimination of obstacles to digital trade, services, and investment; rules on geographical indications and market access; protection of intellectual property rights; anti-piracy measures; stronger economic security alignment; labor and environmental protections; and limits on state-owned enterprises and subsidies.

The U.S.-Malaysia deal offers a preview of what might be proposed to Brazil.

Malaysia agreed to lower import tariffs on U.S. products and waive import licensing requirements. It also confirmed plans to buy—or facilitate purchases by Malaysian companies of—U.S. goods. The country pledged nondiscriminatory or preferential market access for U.S. industrial and agricultural products and vowed not to sign agreements with third countries that impose non-scientific technical standards, discriminatory sanitary or phytosanitary measures, or other rules incompatible with U.S. or international norms.

Malaysia will also provide a “robust standard” of intellectual property protection and extend to the U.S. any trade in services commitments it grants in deals with other partners. The country agreed to ban imports of goods made with forced or compulsory labor, uphold internationally recognized labor rights, and address labor issues contributing to non-reciprocal trade.

Environmental commitments include enforcing domestic laws, maintaining strong governance frameworks, and tackling environmental issues that distort trade. Malaysia also pledged not to apply value-added taxes or digital service taxes that discriminate against U.S. companies.

The agreement devotes significant space to digital trade. Malaysia will refrain from imposing taxes on digital services or other levies that discriminate against U.S. firms and will promote digital commerce with the U.S. by avoiding restrictive measures. It will also consult Washington before entering new digital trade agreements that could compromise essential U.S. interests.

If the U.S. imposes import restrictions—such as tariffs, quotas, or bans—on a third country for reasons related to economic or national security, Malaysia will be notified for coordination purposes. If Washington determines that Malaysia is cooperating to address shared security and economic concerns, such cooperation may be considered when applying U.S. export controls, investment reviews, and related measures.

Should Malaysia sign a free trade or preferential economic agreement with another country that undermines U.S. interests, Washington may terminate its bilateral deal with Kuala Lumpur if consultations fail to resolve its concerns.

The agreement also commits Malaysia to facilitate and promote U.S. investment in sectors such as critical minerals, energy resources, power generation, telecommunications, transportation, and infrastructure services.

In particular, the pact opens the door to cooperation on critical and rare-earth minerals. Malaysia pledged the “expedited development” of these sectors in partnership with U.S. companies, including: (1) refraining from banning or limiting exports of critical minerals or rare-earth elements to the U.S.; (2) granting extended operating permits to ensure expanded production capacity; and (3) guaranteeing unrestricted sales of rare-earth magnets to U.S. firms.