SAMBA TARIFAÇO
Trump's 50% tariff threat has scrambled the Brazilian political chessboard.
On Wednesday, U.S. President Donald Trump posted a copy on social media of a notification letter to the government of Brazil that a 50% across-the-board tariff would be imposed on all imports from that country beginning on August 1. In the letter, Trump cited the motives for this tariff as being his objections to the criminal trial of former Brazilian president Jair Bolsonaro currently taking place as well as Brazilian judicial orders imposed upon U.S. social media companies operating in Brazil. Trump stated that if Brazil eliminated “Tariff, and Non-Tariff, Policies and Trade Barriers” he would consider adjusting the new tariff, adding that it could be “modified, upward or downward, depending on our relationship with your Country.”
Brazilian assets and the BRL quickly declined following the news. President Lula da Silva publicly replied that if the new tariff was imposed, he would invoke Brazil’s new trade reciprocity law adopted by the conservative-leaning Congress earlier this year and retaliate in kind. But he also left the door open for negotiations before the August 1 deadline and offered to speak to Trump. The U.S. president, when asked today about Lula’s offer of talks, said that “maybe at some point I’ll talk to him; right now, I’m not.”
What is underneath?
While Trump’s tariff threat against Brazil was not expected among the notification letters being issued in recent days, it did come within a wider context that explains it:
As I wrote in March, Bolsonaro is on trial before a panel of Brazil’s Supreme Court for his role in an alleged plot to hold onto power through a military coup after he lost the 2022 election. Bolsonaro’s son, Eduardo, has been in Washington to lobby for U.S. intercession to keep his father out of prison. There is a well-known and long-standing political affinity between the Bolsonaro and Trump families on a wide range of political and policy matters. Trump cited his own personal experience with criminal prosecutions in decrying Bolsonaro’s predicament, and emotional relatability by the U.S. president on this matter cannot be undervalued when analyzing this action.
In February, Trump Media & Technology Group sued Brazilian Supreme Court Justice Alexandre de Moraes in U.S. federal court in Florida, accusing him of censoring political discourse in the United States by suspending the social media accounts of a Brazilian national for allegedly spreading disinformation and threatening judges in that country. This followed a public call by Bolsonaro for Trump to take action against de Moraes, who has handled the Brazilian ex-president’s criminal indictment for the high court.
Trump’s tariff notification came on the heels of the latest BRICS Summit in Rio de Janeiro, which featured the usual obliquely anti-American rhetoric from Lula who attacked U.S. tariff policies as violating the sovereignty of other countries. “We don’t want an emperor,” he quipped without any evident irony as he stood with China and Russia. It also didn’t escape most Brazil observers that Lula’s country has built its substantially closed economy on trade protectionism.
A number of topline publications in the U.S. and Brazil have claimed to tell the “inside story” of Trump’s decision by saying it was due to one of these various factors above. The truth, most observers agree, is likely a combination of all of them. There is a U.S. trade surplus with Brazil, and despite social media taunts and Brazilian official protests that Trump claimed there is a bilateral trade deficit, Trump did not explicitly claim in his letter that there was. Instead, the language was more indicative of anger over the explicit political issues that he raised that are unrelated to trade.
It is also important to note that Trump’s use of tariffs as a means of bilateral pressure on foreign governments is being exercised under a national emergency legal framework that is currently under a legal challenge in the U.S. courts. At some point, the U.S. Supreme Court may determine the authority has been exceeded by the current administration. But in the meantime, Trump has made it clear he will use every available executive tool at his disposal to pursue his administration’s foreign policy priorities with each country. The tariff authority he has claimed has repeatedly been the first tactic he has used to get the attention of other countries, lay out specific demands, and negotiate an outcome he deems is fair.
Hence, the last line of the letter sent to Brazil was important, that “our relationship with your Country” (i.e. Lula and his government) will have a lot to do with what the U.S. president will do next.
Meanwhile, the Brazilian left has erupted - almost with elation - in response to Trump’s letter. Lula’s declining political base appears eager to embrace a full-on fight with the United States, particularly in the run-up to the general election next year. The tariff notice came square in the middle of a nationwide mobilization of leftist militant groups and digital activists to frame a policy fight over a foreign transaction tax in class-war terms. That leftist army as quickly added little Brazilian flags to their social media profiles and wrapped themselves in economic nationalism against a villainous “Uncle Sam”.
Veteran political activists have said the tariff threat from Washington was the best political gift Lula could have hoped for, given that he could polarize the electorate with populist nationalism, blaming all of the resulting economic damage on the U.S. and on Bolsonaro. Lula donned a blue baseball cap with the words “Brazil is for Brazilians” in order to contrast with Brazilian conservative leaders who have worn the red “MAGA” hat of Trump’s movement, particularly São Paulo Gov. Tarcisio de Freitas (Republicanos), seen as Lula’s toughest competitor for the presidency in 2026.
Our take:
There are scores of theories about what may have triggered the ire that is evident in Trump’s letter this week, and they might each hold a nugget- or more- of truth. But there is one important factor that few observers are stressing in the wake of this conflict: Lula has not only neglected his relationship with the U.S. president; he has miscalculated its strategic importance.
I have written several times here about Trump’s tariff threats against Mexico early in his term, and how President Claudia Sheinbaum understood that effectively engaging Trump at a strategic level was fundamental from the start. The famously chaotic process of threats and negotiations between the U.S. and Mexico this year became relatively predictable as Sheinbaum mastered the strategic communications play that underlines each of their movements. To date, both Trump and Sheinbaum have stressed their “good relationship” at every round of the bilateral engagement, even as they publicly trolled one another without ever getting under the skin.
Lula has been at best neglectful, and at worst antagonistic. In turn, he has feted American adversaries while - like at the BRICS Summit - repeatedly poking Trump and the U.S. in the eye. Even with a substantial list of disagreements that included Bolsonaro’s trial and the edicts of Justice de Moraes, a strategic engagement over the last seven months would have created a different field of play going into the round of tariff decisions that Trump has long said was coming. In retrospect, none of us should have been surprised at Monday’s letter.
If Lula and his leftist coalition decide instead to escalate the conflict with Trump for domestic political gain, they must understand what the warning at the end of Trump’s letter means: he will likely escalate further. If he goes this route, Lula will have to decide how much economic damage will be too much for the Brazilian voters next year. That’s not easy to game out right now.
Today’s news cycle ended with both presidents expressing a willingness to negotiate at some point. Brazil will want it to happen well before August 1, and the best outcome is a postponement of the 50% tariff pending further negotiations. That will likely take some heavy strategic engagement by Lula with the White House. What’s more, Lula needs to understand the difference between strategy and tactics.
My word of advice to Lula: call Claudia Sheinbaum and listen to her. I wrote last February about how Sheinbaum showed the rest of the region that the new American order is for strategists. It is not for impulsive short-term thinkers who only offer tactical responses. Sheinbaum has clashed repeatedly with Trump, but their relationship remains “very good” according to him and she has an astronomically high approval rating in Mexico. It wasn’t luck, and it wasn’t macumba. It was strategic engagement with Donald Trump and the United States that has delivered win-win outcomes, one after the other.