Brazil was the worst negotiator in Trump's tariff hike

With the highest tariff in effect on the planet — 50% on exports to the United States — Brazil has risen to the not-so-honorable podium of worst negotiator in Donald Trump's tariff spree.

The title is a result of the strategy — or lack thereof — of the government of Luiz Inácio Lula da Silva (PT), which, since the announcement of the American offensive on April 2, has become entangled in speeches and narratives that, in practice, have only postponed negotiations with the largest economy on the planet.

While all the affected countries or economic blocs reached some agreement to reduce the surcharges in talks with Donald Trump, Brazil still runs the risk of facing sanctions and additional tariffs due to its significant imports of diesel oil from Russia , seen as supporting the "Putin regime" and the "war machine" in Ukraine.

Not for lack of time, Trump and Lula have not yet discussed the issue. The Workers' Party member has called the tariffs "unacceptable blackmail," as part of Trump's justification for the tariffs is what he calls political persecution against former President Jair Bolsonaro and his supporters.

Under pressure from the productive sector, the Planalto Palace spent the last four weeks in meetings led by Vice President Geraldo Alckmin, with very little real negotiation: there was only one high-level meeting, between Chancellor Mauro Vieira and Secretary of State Marco Rubio, which produced no concrete results.

In the meantime, Lula has focused on bravado and speeches about sovereignty and national dignity in an attempt to boost his popularity by confronting the external enemy. The culmination of this disastrous scenario occurred on Wednesday (6), when, in an interview with Reuters, Lula said he would not be "humiliated" in trade negotiations with the White House.

The international press, which covered the case, noted that the Americans left the door open. Trump himself even said that Lula could call him whenever he wanted to discuss tariffs. It was no use. "My intuition tells me he [Trump] doesn't want to talk," Lula said.

For Juliana Inhasz, an economist at Insper, Lula isn't "knowing how to read" the game correctly. "Not negotiating and constantly opposing—this kind of forced opposition—makes us lose more," she says. "He seems to have 'Chihuahua syndrome,' like a puppy that goes after a Rottweiler or a Doberman, without considering the consequences."

Simão Sílber, a professor at the University of São Paulo (USP), says that Lula's "bravado" borders on insanity. "[Brazil] imposed the highest import tax on the planet," he emphasizes. "A very large portion of Brazilian products can no longer enter the United States. Cheating on the United States is crazy."

Production sector pushes for negotiation

Since the executive orders imposing the tariffs took effect on August 6, the affected sectors—from meat and coffee to pulp and minerals—have been seeking alternatives to minimize the damage , which has yet to be calculated in terms of job losses and revenue. Even with the approximately 700 items on an exception list—which will pay a 10% tariff—more than half of current Brazilian exports are still affected.

"Lula's attitude is not rational," says Mauro Rochlin of FGV-SP, noting that Trump's exceptions were not the result of any kind of bilateral negotiation, but rather the US's need to maintain its supply chains. "We need to put alternatives on the table, such as the issue of big tech and rare earths."

Finance Minister Fernando Haddad is one of the government's voices advocating for the use of critical minerals in negotiations to try to reverse at least part of the impacts of the tariff hike, including so-called rare earths , essential for cutting-edge technologies, electric cars and defense systems.

Brazil has the world's second-largest reserves of these minerals, behind only China, and Washington is actively seeking to diversify its supply sources to protect its industry and technological autonomy.

In 2020, during his first term, Donald Trump declared a national emergency in the critical minerals sector, aiming to cut dependence on China. Agreements have already been reached with countries like Ukraine and Indonesia to guarantee access to these resources. Brazil appears to be a potential alternative in this scenario.

The chargé d'affaires of the US embassy in Brazil expressed interest in an agreement that would include the exploration of rare earths on Brazilian soil. "If this mineral is already critical, I'll take it for myself. Why would I let someone else take it?" Lula responded, omitting the fact that Brazil lacks the capacity to process these minerals and that the Chinese are "snatching up" the deposits in ever-increasing quantities.

Tarifaço is an opportunity for electoral speech

Analysts believe Lula persisted in his rhetoric of confrontation with the US after popularity polls indicated support for his stance among certain segments of the population. However, the assessment is that this scenario won't hold water. While the Planalto Palace will likely use tariffs as an excuse for everything that goes wrong in the economy, the blame for an adverse economic situation will likely fall on the president. "Lula's mind is set on 2026," says the Insper economist. "But until then, there's still half a year of 2025 that will be difficult to swallow, and the strategy could backfire."

Therefore, for Inhasz, the best alternative would be to attempt negotiation. "His [Lula's] role there is to reduce the losses—he can't eliminate them, because that's impossible—but he can mitigate them," he says. "They [the US] have a significant strategic negotiating advantage. When President Lula takes a very reactive stance, he's taking risks."

Contrary to this reasoning, the Planalto Palace officially opened a consultation with the World Trade Organization (WTO) against the United States this Wednesday. The Foreign Ministry denounced the tariffs as an affront to the WTO's fundamental principles—especially the Most Favored Nation principle—and characterized the surcharges as "arbitrary and chaotic," warning of the "risk of destabilizing global value chains and paralyzing the global economy."

The measure reaffirms the Planalto Palace's unwillingness to engage in direct negotiations with Trump, opting instead to reinforce the multilateral system as a means of resolution. Analysts, however, point out that the WTO's dispute settlement system is weakened—largely paralyzed since 2019 due to US-induced blockades—which limits the effectiveness of any formal appeal. In other words, Brazil could end up isolated.

At the same time, the government is making the opposite move of turning to the BRICS as a counterpoint to Trump. Lula called Indian Prime Minister Narendra Modi on Wednesday (6) to reinforce the trade partnership between the two countries, the most affected by the trade war.

The conversation took place just days after Trump increased the tariff imposed on India to 50%, seen as indirect retaliation against Russia for not giving in to American calls to end the war in Ukraine.

"Running into the lap of BRICS won't solve the problem," says Inhasz. "The bloc can't absorb all of the American demand for Brazilian products, and it will also irritate Trump and worsen trade relations with the American economy. It's a reckless option."