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Brazil’s leftwing president is standing firm against Donald Trump’s 50 per cent tariff threat, as Luiz Inácio Lula da Silva seizes the confrontation with Washington to revive his re-election prospects.
After the US president jolted Brazil on Wednesday with a letter citing political justifications for imposing supercharged duties, Lula immediately promised to retaliate, saying his nation “would not be tutored by anyone”.
The foreign ministry also summoned the acting US ambassador and returned Trump’s “insulting” tariff letter to him. Brasília views the Trump threat as blatantly political, given the US has a trade surplus with Brazil.
Trump’s letter, which outlined the highest updated “reciprocal” tariff of any country, described former hard-right president Jair Bolsonaro’s trial on charges of plotting a coup as a “witch-hunt” and accused Brazil’s supreme court of issuing “secret and unlawful censorship orders” against US social media companies.
One senior official in Brasília said the Lula government would stand firm in the face of Trump’s threats. “It’s an attack on Brazilian democracy,” he said. “There’s no negotiation possible on this.”
Brazil’s real fell by more than 2 per cent on Trump’s threat, which would hit exports of Brazilian aeroplanes, coffee, orange juice and crude oil if implemented from August 1. “If this 50 per cent tariff scenario becomes long-lasting, Brazil’s GDP could potentially be reduced by 0.8 per cent to 1.2 per cent,” said Vinicius Moreira at JPMorgan in a note to clients.
But even the normally staid pro-business newspaper Estadão de São Paulo described Trump’s threat as a “mafia thing” and called on “those who are truly Brazilian . . . not to allow themselves to become lackeys” of the US president.
Lula’s supporters flooded social media with nationalist messages accusing Bolsonaro’s family, which has been waging a lobbying campaign in Washington against Lula’s government, of selling out their own country.
“Now you will have to decide whether you are on Trump’s side or Brazil’s side,” said leftwing deputy Guilherme Boulos in a fiery speech. “That Trump tax now has a name . . . it is the Bolsonaro tax”.
Lula’s government had been flagging in the polls, as the 79-year-old leftist struggled to convince voters hit by high food inflation that he could make them better off. But Trump’s aggressive attack on Brazil has breathed fresh life into an unpopular government’s efforts to win re-election, a phenomenon already seen in Canada.
“Lula is back in the game,” said Thomas Traumann, a political analyst in Rio. “Two weeks ago there was a consensus that the opposition were the favourites, but no longer. If the elections were this year, I have little doubt that Lula would win.” Brazil chooses a new president in October 2026.
The magnitude of Trump’s tariff threat even took by surprise some Brazilian rightwingers who have been calling for US sanctions against Alexandre de Moraes, the supreme court judge overseeing the Bolsonaro case. One ally of the US-based Bolsonarista lobbying camp said: “[They] never asked for anything at this scale, nor expected it”.
The conservative opposition appeared unsure how to respond to the draconian tariff threat, even as the left flooded the internet with memes of rightwing leaders such as São Paulo governor Tarcísio de Freitas wearing Make America Great Again caps.
CNN Brasil reported that Bolsonaro, alarmed by the possible electoral blowback, was considering asking the White House to reverse the tariff threat.
Brazil is already heavily dependent on trade with China, its biggest trading partner, and has few options for diversification. Its hopes of securing ratification of a long-planned free trade deal between the EU and the Mercosur bloc of South American nations are fading after fierce opposition from European farmers.
France is demanding that only produce made to EU standards should be allowed to benefit from tariff reductions, which would require changing the treaty and would be rejected by Latin American countries.
Poland, Italy and the Netherlands also want more protection for farmers. The European Commission has yet to send the deal to member states despite promising to before the summer.
In Brazil’s corporate world, which has soured on Lula’s tax-and-spend economic policy, there was a mood of wariness.
Caio Megale, chief economist at XP Investimentos, said while the overall macroeconomic effect would be limited, a bigger concern for investors was the political uncertainty. “The first impact was an increase in the perception of risk. It creates disproportionate noise.”
“This episode shows that polarisation in Brazil is far from over and the 2026 election will be very tight,” said Ricardo Lacerda, chief executive of investment bank BR Partners. “This movement creates flags for the radical wings of the right and the left. The loser is Brazil.”
