US President Donald Trump has picked a fight with a leader, Brazilian President Luiz Inácio Lula da Silva, who has long relished a political brawl. Photo / Getty Images
Brazil believes it can withstand a 50% tariff, and aides to Lula say he is unlikely to shrink from confrontation.
Since returning to the White House, United States President Donald Trump has used trade as a cudgel to exert concessions from smaller nations.
Brazil, his newest tariff target, is a much more formidable adversary, analysts said, and is less likely to bend to pressure from Washington.
Latin America’s largest nation has a relatively closed economy, more insulated than many of its peers from fluctuations in global trade.
China, not the US, is now Brazil’s leading trade partner, limiting Washington’s economic leverage.
And in Brazilian President Luiz Inácio Lula da Silva, who lost a finger working in a factory and rose to prominence battling the country’s military dictatorship, Trump has picked a fight with a leader who has long relished a political brawl.
In interviews with the Washington Post, aides to Lula said the Government believes it can withstand a 50% tariff on Brazilian goods, which Trump announced yesterday would go into effect on August 1.
In his letter addressed to Lula, Trump said the move was “due in part” to the prosecution of former president Jair Bolsonaro, a far-right ally of the American president, on charges of plotting to retain power through military force following his 2022 electoral loss.
“There could be impacts that could slow our growth a little bit,” said one senior official in the Foreign Ministry, speaking on the condition of anonymity.
“But from an economic point of view, Brazil doesn’t have a strong economic dependency on the United States.”
The United States is seen here as an important trading partner - purchasing US$40 billion ($67b) worth of goods in 2024 - but not a crucial one.
Exports to the US, according to a recent Moody’s report, account for only 1.7% of Brazil’s economic output.
Countries more reliant on the US have been more susceptible to Trump’s economic pressure campaign.
When he declared a massive tariff on goods from Vietnam - where US exports account for nearly one-fourth of its gross domestic product - the Southeast Asian country moved quickly to reach a deal that lifts tariffs on most American imports.
In January, when Colombian President Gustavo Petro refused to accept US deportation flights and Trump announced a 25% retaliatory tariff, Petro hastily backed down, fearful of jeopardising his country’s leading export market.
“Brazil is less dependent on the United States,” said Pedro Abramovay, vice-president of programmes at the Open Society Foundations. “It’s not irrelevant, but Brazil can withstand it; this won’t break the country.”
In recent years, Brazil has strengthened market ties with peer countries in the BRICS bloc - historically made up of Brazil, Russia, India, China and South Africa - at the expense of trade with Western nations.
As of 2023, Brazil’s trade with the bloc was roughly 50% greater than with the US and Europe combined, according to government data reported last year by CNN Brazil.
Lula, aides said, could also benefit politically from a fight with the US.
Although Lula is historically one of Brazil’s most popular figures, his third term in office has been marked by growing public disillusionment.
Despite significant efforts - including new messaging and a revamped communications team - Lula has failed to reverse his falling polling numbers, which have bottomed out at historic lows. Recent surveys show a close race between Lula and Bolsonaro if such a rematch were to occur.
Bolsonaro, who faces 40 years in prison, is expected to go on trial later this year, accused of leading an extensive plot to overthrow the government and kill his political rivals.
He retains a fiercely loyal, if diminished, following. His prosecution, decried by Trump as a “witch hunt”, is seen by many other Brazilians as a test of their democracy.
Trump’s announcement yesterday, analysts said, has shifted the country’s political dynamic.
Lula now has a clear foe and a potent line of attack against Bolsonaro, or whoever takes on his political mantle in next year’s presidential election - able to tar them as being aligned with a hostile foreign power.
“Lula wants to tax the super-rich,” read a viral political message sent out by the President’s supporters. “Bolsonaro wants to tax Brazil.”
Aides said Lula called an emergency meeting to discuss Trump’s tariff.
They said he wanted to establish immediately that Brazil would not cower before the US.
Within hours, Lula had released a statement that rebutted all the points in Trump’s letter - ranging from complaints over Brazil’s trade tactics to its hard-line regulation of social media - and threatened economic retaliation.
“They made politics out of this, and we’re going to play the game,” said one Lula aide, speaking on the condition of anonymity. “He won’t make threats or fall into provocation, but his responses will be firm and bold.”
It wouldn’t be the first time that Trump has altered the course of a foreign election.
Canadian Prime Minister Mark Carney and his Liberal Party overcame a 20-point deficit in recent elections, in part due to Trump’s trade war and threats of annexation.
In Australia, Peter Dutton, the conservative candidate for prime minister, saw his poll numbers fall sharply after Trump’s initial round of global tariffs and ultimately suffered a resounding defeat.
Brazil went through a similar round of brinkmanship last year, when a feud erupted between tech mogul Elon Musk, who owns X, and the Brazilian judiciary.
As part of a probe into online misinformation, Brazilian Supreme Court Justice Alexandre de Moraes ordered the removal of accounts he said had violated the country’s speech laws.
Musk declined. Moraes suspended X.
Both sides said they wouldn’t give in, but Musk ultimately did, agreeing to take down the accounts.
Trump referred to the controversy in his letter yesterday, alleging “hundreds of SECRET and UNLAWFUL Censorship Orders”.
This is a different fight, and the stakes are significantly higher. But aides to Lula said the Government would not compromise on Bolsonaro’s prosecution.
“What’s new here is that Trump is using commercial tactics for political ends, weaponising trade,” said a senior Lula adviser, speaking on the condition of anonymity.
“But the deal he wants is not acceptable.”