US Launches Formal Probe Into Brazil’s Digital Trade and Payment System
The United States has opened a formal investigation into Brazil’s trade practices, with particular focus on its government-backed instant payment system, Pix, which has quickly reshaped Brazil’s financial landscape and challenged established American companies.
Announced by US Trade Representative Jamieson Greer, the inquiry will assess whether Brazil’s policies unfairly hinder US firms across digital trade, tariffs, and other sectors.
Is Pix an Unfair Advantage for Brazil’s Financial Ecosystem?
Pix, introduced by Brazil’s Central Bank in 2020, enables instant, low-cost payments nationwide.
It has become a dominant force with over 150 million users and acceptance at more than 60 million businesses, often replacing credit card networks entirely.
Unlike traditional systems, Pix allows seamless money transfers 24/7 through mobile apps and QR codes without relying on credit cards.
The US investigation will scrutinise whether Brazil’s government is giving preferential treatment to Pix and similar platforms, effectively sidelining major US fintech players like Visa and Mastercard.
A USTR document notes concerns over “unfair practices with respect to electronic payment services,” including support for government-developed platforms.
Tariffs and Trade Disputes Stir Tensions
The probe comes amid escalating tensions between the two nations.
Last month, former US President Donald Trump threatened a 50% tariff on Brazilian imports starting 1 August, linking it explicitly to the legal proceedings against former Brazilian President Jair Bolsonaro, which Trump called a “witch hunt.”
Greer echoed Trump’s stance, stating,
“At President Trump’s direction, I am launching a Section 301 investigation into Brazil’s attacks.”
The investigation will also examine tariff policies, including Brazil’s lower tariffs for other trading partners while imposing higher duties on US products, such as ethanol.
Greer mentioned that Brazil’s tariff and non-tariff barriers “merit a thorough investigation and potentially responsive action.”
Vice President Geraldo Alckmin noted that Brazil has not yet received a response to a trade offer made to Washington months ago.
Political Speech and Social Media in the Spotlight
Another contentious issue is Brazil’s treatment of American technology companies, particularly those that resist censorship demands.
In August 2024, Brazil’s Supreme Federal Court ordered a suspension of social media platform X, after Elon Musk declined to appoint a legal representative in the country.
This move is part of broader concerns about Brazil penalising US firms for refusing to censor political speech.
The Broader Geopolitical Context of Financial Innovation
Brazil’s adoption of Pix reflects a wider trend among BRICS nations aiming to reduce reliance on Western financial infrastructure.
The country is involved in BRICS Pay, a cross-border payment system designed to bypass SWIFT and enable local currency transactions.
Discussions at the recent BRICS Summit included plans for a joint reserve currency, which reportedly aggravated US officials.
Additionally, crypto-fintech solutions like Truther facilitate global transfers that settle instantly via Pix, bypassing traditional services such as PayPal, Western Union, and SWIFT.
This shift poses a challenge to longstanding US-dominated finance channels, intensifying the trade conflict.
Is the US Response Aligned with Trade Realities?
Trump’s decision to impose a 50% tariff surprised trade experts, given Brazil imports more US goods than it exports.
The tariff’s direct link to Bolsonaro’s trial raised eyebrows as it diverges from conventional trade dispute reasons.
Past US investigations under Section 301 of the Trade Act targeted China and digital taxes affecting US tech firms.
The US also accuses Brazil of failing to enforce anti-corruption laws and neglecting illegal deforestation rules, which harm American timber producers’ competitiveness.
These complaints add layers to the trade dispute beyond digital payments and tariffs.
Could Digital Trade Become the Next Battleground in Geopolitics?
With technology reshaping how money moves and governments asserting control over digital platforms, the lines between commerce, politics, and sovereignty blur.
As countries like Brazil develop their own payment infrastructures and alternatives to traditional Western systems, the global balance of economic power faces new tests.
How the US and Brazil navigate this will shape not just bilateral ties but the future of digital trade worldwide.
Catherine
Weatherly
Alex
Kikyo