Ibovespa drops as US tariff threats trigger tech rotation

Brazil’s benchmark stock index decoupled from Wall Street’s record-setting momentum, closing lower as escalating trade tensions with Washington triggered a shift in foreign capital. The Ibovespa fell 0.93% to finish at 172,447.58 points, while the US dollar hovered near the R$ 5.16 mark. The downturn coincided with the start of public hearings by the Office of the US Trade Representative (USTR) regarding proposed Section 301 tariffs on Brazilian goods.

The USTR is evaluating a proposed 25% tariff on a wide array of Brazilian products following an investigation that flagged anticompetitive digital trade practices, preferential tariffs, and environmental policies as unreasonable burdens on US commerce. The threat of these trade barriers, with a final decision expected by July 15, 2026, has prompted international investors to pull capital out of Latin America's largest economy. This capital is increasingly rotating back into US technology and artificial intelligence equities, which continue to hit new highs.

The selling pressure heavily impacted major commodity and financial heavyweights on the Brazilian exchange. State-run oil firm Petrobras (PETR4) dropped 1.25% to close at 37.77, further weighed down by softer global crude prices. Mining giant Vale (VALE3) fell 1.33% to 77.79 as trade uncertainties clouded the outlook for industrial metals. Financial giant Itaú Unibanco (ITUB4) also slipped, losing 0.42% to close at 42.56.