Over 90% of Brazilians use the free PIX network, which Washington says undercuts U.S. credit card companies
The Trump administration announced Wednesday that it will impose a 25% tariff on some 3,000 Brazilian goods, covering more than $11 billion in annual exports, the first country hit with duties under the administration’s new strategy of using Section 301 of U.S. trade law to punish alleged unfair trade practices. The administration cited Brazil’s PIX instant payment system, barriers to U.S. ethanol imports, and anticorruption enforcement among its grievances. Brazil vowed to retaliate, deepening a diplomatic rift between the Western Hemisphere’s two most populous nations.
PIX, created by Brazilian central-bank technicians in late 2020, has become the dominant payment method in Latin America’s largest economy. More than 90% of Brazilian adults — over 140 million people — regularly use the system, which allows users to transfer money instantly on cellphones at no cost. The number of active users of Brazil’s financial system nearly doubled from about 77 million in 2018 to 152 million in 2023, a surge the central bank attributes in large part to PIX. The system handles more transactions than credit and debit cards combined.
Washington argues that PIX has tilted the market against U.S. payment companies such as Visa and Mastercard. The Trump administration says Brazil requires financial institutions with more than 500,000 active accounts to offer PIX, while private providers must cover fraud prevention, technology, and shareholder returns through fees, making it nearly impossible for them to compete. There is also growing concern in Washington that Brazil and other countries are seeking to reduce their dependence on the dollar.
Brazilian officials condemned the move. Secretary of State Marco Rubio wrote on X that Lula had “put his own ego ahead of making a deal.” Brazil’s foreign minister, Mauro Vieira, called Rubio’s comments “a rude and arrogant attack” and said Brazil would take retaliatory measures.
The tariff is the first time Section 301 — which allows presidents to impose permanent duties over trade — has been explicitly used to target another country’s domestic payment system, said Alisha Chhangani, an associate director at the Atlantic Council, a Washington-based think tank. “This is the first example and it won’t be the last,” she said, calling it a warning to nations seeking greater control over their payment systems, including the European Central Bank as it develops the digital euro.
PIX has been hailed by the World Bank and International Monetary Fund as a model for financial inclusion in one of the world’s most unequal societies. Whether buying a Porsche 911, paying bills, or giving money to a beggar at a stoplight, the payment is made the same way. With PIX built into banking apps, users can send money using a cellphone number, tax ID, email address, PIX code, or QR code. While larger businesses may pay a small fee, it is generally lower than card-processing charges, allowing many retailers to offer discounts for PIX payments.
In remote Amazonian villages, the system has also shrunk distances. Marcos Rosa, an evangelical pastor who visits villages across the rainforest, said PIX and satellite internet mean villagers no longer spend days on the river to buy a bag of rice. Instead, they send a PIX payment to a store in the nearest town, which loads the goods onto a boat already heading upriver. “Everything happens much more quickly,” Rosa said. “It’s been a tremendous help.”
The diplomatic spat between the U.S. and Brazil first erupted after Washington imposed 50% tariffs on Brazil last year, demanding an end to what it called the “persecution” of Jair Bolsonaro, Lula’s political rival. The duties were soon rolled back, and the U.S. Supreme Court later struck down many of Trump’s global tariffs, ruling he had exceeded his authority. Polls suggest Washington’s attacks have boosted Lula ahead of October’s election against Bolsonaro’s son, Flávio. Many Brazilians blame the Trump-allied Bolsonaro family for the tariffs, while Lula has cast them as an attack on Brazilian sovereignty. Brazil consistently imports more from the U.S. than it exports.
Lula has defended PIX as a matter of national pride. “PIX belongs to Brazil, and no one is going to make us change it,” he said earlier this year.