President Donald Trump has used tariffs to pressure world leaders on a host of non-trade issues. Brazilian President Luiz Inácio Lula da Silva is one of the few who isn’t budging.
The left-wing South American president has taken a forceful response to the 50 percent tariffs Trump announced in July, last week calling on India, China and other emerging economies to unite against the U.S. levies. Lula, as Brazil’s president is known, called the tariffs “unacceptable blackmail” and filed a complaint with the World Trade Organization, after Trump tied the levies in part to the prosecution of former Brazilian president and far-right Trump acolyte Jair Bolsonaro.
Unlike countries that have caved to Trump’s demands on digital services taxes or defense spending, Trump has tied tariffs so large they are effectively sanctions to an issue Lula’s government has made clear it won’t negotiate on.
It’s left the two most populous nations in the hemisphere at a standstill, according to eight current and former U.S. and Brazilian officials and others familiar with the situation, many of whom were granted anonymity to discuss sensitive dynamics between the two countries.
“The way the White House has structured this, has organized this issue, does not give us any option because if we decide to engage on the terms they have suggested, it would be a straightforward capitulation from our side and we cannot allow anybody to do, to get involved in issues pertaining to the internal politics in Brazil,” said a Brazilian official. “They created this impasse.”
The standoff comes at a delicate time for geopolitics as the tariffs drive not only Brazil but India, which is set to face a separate 50 percent levy later this month, closer to China and Russia. While Trump's frustration with the group of emerging economies known as BRICS, and chatter that it might move away from the dollar, contributed to his decision to slap the 50 percent tariffs on Brazil, the move appears to be only bolstering the alliance.
In recent days, Lula has spoken by phone both with Indian Prime Minister Narendra Modi and Russian President Vladimir Putin to discuss boosting ties.
“The effect of the tariffs has been to push Brazil close to China — even closer than Brazil was — to double down on the BRICS, and to basically move away from the United States,” said Matias Spektor, professor of politics and international relations at Fundação Getulio Vargas in Brazil. “Politically, diplomatically, I think the Chinese are big winners of these tariffs.”
An administration official acknowledged that the situation with Brazil is at a standstill, saying that the U.S. isn’t willing to open talks unless the issues the president has raised in his executive order — including the prosecution of Bolsonaro and Trump’s complaint that the country’s regulation of social media platforms is censoring free speech — are on the table.
Bolsonaro, who was placed under house arrest by Brazil’s Supreme Court last week, is set to stand trial in the coming weeks on criminal charges that he orchestrated a coup following his 2022 election loss, a story Trump relates to, according to allies.
“We’re well aware of their unwillingness to engage on a lot of the more national security-related issues, and so until there’s an appetite there, we’re not keen to waste time engaging either,” the official said, adding that Brazil’s special tariff rate reflects “reflects that this is not a minor issue or a minor spat.”
Brazilian officials say leniency for Bolsonaro is a nonstarter, but Lula would negotiate on other issues important to both countries, including critical minerals and big tech. The government is hopeful that a U.S. investigation into Brazil’s trade practices, a slightly more technical and wonky process that was set in motion alongside the new tariffs, may be a forum through which to make some progress.
“The Brazilian interest is in getting this into normal institutional negotiation channels. They can play hardball, and they’re used to hardball from us in the trade arena,” Ricardo Zúñiga, who served as consul general in São Paolo during part of the first Trump administration. “Like everybody else, they’re living the rollercoaster on the political side.”
The White House had a three-part goal with the Brazil tariffs: target the Supreme Court judge involved in the Bolsonaro case, Alexandre de Moraes, for curtailing Americans’ free speech rights; limit the influence of BRICS, and help boost U.S. allies in Brazil, said one person familiar with the White House’s thinking. The tariffs becoming about Bolsonaro have hurt those objectives, the person said.
“The problem is not looking like we’re favoring one Brazilian political figure over another. If this becomes about Bolsonaro, this all gets garbled,” the person said.
Experts in U.S.-Brazil relations say there’s a key reason Lula has been able to stand up to Trump in a way that other world leaders haven’t: While the U.S. is Brazil’s second-largest trading partner, the latter only exports about 10 percent of its goods to the U.S. — about a third of what it sells to China. That means it’s far less economically dependent on the U.S. market than the European Union, Japan or India, which export closer to 20 percent of their goods to the U.S.
And, unlike other countries that the U.S. has slapped with tariffs, Brazil actually has a trade surplus with the United States, meaning that prior to the Bolsonaro-related levies it was only facing a baseline 10 percent tariff.
Meanwhile, about 45 percent of Brazilian goods — including hundreds in key industries like orange juice, pulp and oil — have secured exemptions allowing them to pay the lower baseline tariff rate. That has also helped blunt the impact of the tariffs on Brazil’s economy, even as other key sectors like coffee and beef remain subject to the higher rate.
That doesn’t mean Americans won’t feel the pinch. The U.S. imports about 30 percent of its coffee from Brazil, which is the world’s biggest exporter of coffee beans.
Lula has also worked hard to find other endmarkets, forging closer ties with Mexico, Vietnam, Indonesia and the Gulf states in recent months.
Brazil’s business community sees the lack of an open line of communication between Lula and Trump as the biggest barrier to any reduction of the overall tariff rate, which is their preferred outcome. While Secretary of State Marco Rubio met with Brazil’s minister for foreign relations, Mauro Vieira, in July, there have been limited conversations between the two countries, and a planned meeting between Treasury Secretary Scott Bessent and Brazil Finance Minister Fernando Haddad set for Monday was canceled due to Bessent’s “lack of availability.”
Lula last week said that he doesn’t think Trump is ready to talk and that he won’t “humiliate myself” by calling him.
“There is dialogue, but there is not a negotiating process between the two countries, and there’s no dialogue at all between the White House and Planalto here in Brazil,” said one Brazilian business official. “You don’t have ways of trying to deescalate or decompress the whole situation when we get to very stressful moments.”
“It’s a very delicate situation,” the business official added. “It’s a bit difficult to see where the endgame of this is going.”
And, politically, Lula, facing an election in 2026, is benefitting, seeing a bump in polling last month for the first time this year. Lula, 79, has said that he will run again at the top of the Workers’ Party ticket — known as Partido dos Trabalhadores — so long as he remains healthy.
That means Trump’s tariffs may have made it harder for Bolsonaro’s far-right Liberal Party to win come 2026.
“The one direct result of all this? The [Partido dos Trabalhadores] is dead. There’s no heir to Lula. The economy was collapsing because of bad policies. The only thing accomplished by all this was Lula announcing he’s running for reelection. And the only person in the [party] who can win is now running,” the person familiar with the White House’s thinking said. “Does that mean he’ll win?”
“He now has more chance than he did two months ago,” the person added.
Eric Bazail-Eimil contributed to this report.
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