Sometimes things come along that are too good to be true. Presently, Brazilian tokenized Tesouros for investing in and lending on chain may be one of those opportunities.
When US tariffs were announced in April, the Brazilian currency, the real, weakened to its 2025 lowest value versus the US dollar. From this low point, given President Trump’s Taco behavior, the currency strengthened 7% to its present level of 5.58 Real to USD.
In the last few days it has weakened a bit, 3.37%, due to President Trump’s rhetoric regarding tariffs on Brazil. President Trump threatened Brazil with a 50% tariff. President Trump’s motivation to do this expresses a desire to meddle in Brazilian internal affairs. The stated rationale behind the tariffs is based on former President Bolsonaro’s trial, which President Trump called a “Witch Hunt”, for all sorts of bad things Bolsonaro allegedly did.
We must ask the question, what does a far-right buddy of President Trump have to do with US and Brazil tariff policy? In April Brazil was not one of the countries targeted by higher so-called reciprocal tariffs. They were exempt because the US has a trade surplus with Brazil; the US exports more to Brazil than Brazil exports to the US. A tit-for-tat tariff war could lead to a lower US trade surplus with Brazil, which is contrary to the goal of tariffs.
Sadly, President Trump’s policies seem to be rooted more in emotion than economics.
But there may be another reason for an aggressive tariff program towards Brazil. BRICS, a grouping of nations that includes Brazil, Russia, India, China, and South Africa held a meeting where they took a subtle swipe at President Trump’s policies saying they “voice serious concerns about the risk of unilateral tariff and non-tariff measures that distort trade”.
They did not mention the US or President Trump by name, but President Trump took it personally. And guess where the meeting that made this statement was held? Brazil.
In short, the threat of exorbitant tariffs on Brazil, a country the US has a trade surplus with, does not seem rational. Tariffs are designed for countries where the US has big deficits like China and Europe. The impact on US finances from high tariffs on Brazil will be negligible.
So, back to the markets. Let’s assume that President Trump’s threat is merely a “Taco Grande”. If that is the case, Brazilian tokenized bonds may make sense for investing and lending.
First, the currency weakened by about 4% from the date when BRICS made their statement and President Trump rose to the aid of Bolsonaro, but it is still higher in value than April of 2025.
The Etherfuse tokenized Brazilian Tesouro has an APY of 13%. Lending out on a crypto exchange can generate a return over 25% from the combination of owning the yield and getting paid for the lending to other crypto natives.
The risk to this action is that the Brazilian Real weakens significantly against the US dollar, or US dollar stable. A weaker Real (strong dollar) will reduce the overall return if the trade is taken back into US dollar stable.
But Brazilian real weakness would have to be very severe to negate the yield pick-up of the Tesouro versus the US dollar, about 9-10%, combined with the high rate that can be earned by lending the Real. A weakening of the real versus the US dollar of over 20% seems hard to imagine. That would be a crash, and there is no reason for a crash.
So, if President Trump’s threat to Brazil turns out to be a “Taco Grande”, the Brazilian real should hold its value against US dollar stable. Combing this with a high yield and loan rate seems to make sense.
This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.
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