Latin America News
LAST UPDATE: July 11, 2025
Brazilian Assets Fall as Trump’s 50% Tariff Threat Roils Outlook
Following President Trump’s threat of a 50% U.S. tariff on Brazilian goods (including copper), Brazilian equities and currency dropped sharply, with the real falling ~2.3% and stocks declining ~2%.
Insight
The aggressive tariff threat marks a departure from previous 10% letters, creating significant market volatility in Brazil. It underscores trade policy as an instrument of geopolitical pressure, with real-time financial impact.
Brazil’s monthly inflation slows, annual rate remains above target
Brazil’s IPCA inflation rose 0.24% in June (down from 0.26% in May), but annual inflation remained elevated at 5.35%, exceeding the 3 ±1.5% target for the ninth month, prompting the central bank to hold rates at a high 15%.
Insight
Despite slowing monthly inflation, Brazil’s annual rate remains well above target, justifying the central bank’s decision to pause at record-high rates. Future policy will depend on inflation momentum and external factors like trade.
Trump’s Tariffs Give Lula a Rallying Cry Ahead of 2026 Vote
President Lula leveraged Trump’s tariff threat, framing it as unfair treatment and rallying public and political support ahead of Brazil’s 2026 election, positioning it as national defense.
Insight
Lula is adeptly using U.S. trade aggression to boost nationalist sentiment and reinforce his domestic political standing. The tariffs have inadvertently empowered his narrative on Brazilian sovereignty.
Mexico central bank board signals smaller rate cuts amid sticky inflation, weak economy
The Bank of Mexico cut rates by 50 bp but minutes indicate preference for smaller future cuts due to persistent inflation (4.32%) and low growth (0.2% forecast).
Insight
Banxico’s shift toward gradualism signals caution. Even as inflation moderates, core pressure and weak economic activity constrain aggressive easing, pointing to steady but measured policy ahead.
Argentina appeals US court order to hand over YPF shares
Argentina has filed an emergency appeal in the U.S. Second Circuit to delay a U.S. court’s order requiring it to transfer its 51% stake in state energy company YPF to satisfy a $16 billion damage award to former minority shareholders, including Petersen Energia and Eton Park Capital. The appeal seeks a stay of the transfer pending full appellate review. The original ruling by Judge Loretta Preska gave Argentina until mid‑July. (Reuters)
Insight
Argentina is using procedural strategies to delay enforcement, buying time before handing over its flagship state asset. The magnitude of the award and strategic importance of YPF could deepen tensions with investors. Political sensitivities in Argentina around national energy sovereignty may influence the legal battle.
