Brazilian President Luis Inacio Lula da Silva called on President Donald Trump in a call Monday to lift the 40% additional trade tariffs imposed by the US government on Brazil’s imports.
The leader spoke for 30 minutes. During the call, they exchanged phone numbers to maintain direct contact, and President Lula repeated his invitation to Trump to attend the upcoming climate summit in Belem, according to a statement from Lula’s office.
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The obviously friendly call could indicate a turnaround between the two relationships that have been straining in recent months, experts say. And following Trump’s comments, the comments that he had “good chemistry” with his Brazilian counterpart, even exchanged embraces after the two exchanged a hug on the sidelines of the UN General Assembly (UNGA) in New York last Tuesday.
“I was really surprised,” Lula said of accepting the US president. “I was going to get the paperwork and leave. And Trump came by my side. So friendly face, is it so nice?
Since then, both sides have suggested that a formal in-person meeting between the two could take place later this month.
Trump and Lula were in the Logger Heads since July, when US leaders imposed a total of 50% tariffs on Brazilian exports (in addition to the 40% tariffs, the 10% standard tariffs imposed by the current administration in Washington in all countries). In announcing these tariffs in Brazil, Trump cited what he described as a “fraudulent” prosecution of former President Jae Bolsonaro, who was recently sentenced to 27 years in prison for trying to overturn the 2022 presidential election in which he recently lost to Lula.
Why did tensions build between Trump and Lula?
The US has a surplus of trading with Brazil, which means exporting to Brazil rather than imports, but nevertheless, Trump imposed a total of 50% tariff on many Brazilian exports in July. Generally, Trump says tariffs imposed on exports in other countries are designed to correct the balance of the US trade deficit. That’s not the case here.
Bolsonaro, known as “tropical Trump,” led Brazil in a single term from 2019 to 2023. Last month, Bolsonaro was sentenced to 27 years in prison for attempting a military coup following his 2022 election defeat to Lula.
Similarly, Trump said he had a lot of “shared values” with Bolsonaro, as he lost a “deceived” election to Joe Biden in 2020.
In a letter to Brazil to announce the new tariffs in July, Trump wrote:
“This trial should not be held,” he added. “It’s a witch hunt that should be over soon!”
In addition to Sky High’s tariffs, Trump has attacked Supreme Court judges over a visa ban and attempted to put more pressure on Lula to lower the case by blaming the judge Alexandre des Moraise.
He also revealed in a customs letter to Brazil that he had directed US trade representative Jamieson Greer to investigate Brazil for unfair practices under the Trade Act of 1974.
However, in the end, Brazil proceeded to prosecute Bolsonaro, and the former president was found guilty.
And despite Trump expressing surprise at Bolsonaro’s verdict, he described him as a “good man” on the day he was sentenced – since then, the US president has not escalated further tariffs or other penalties against Brazil.
In mid-September, Lula described Trump’s tariffs as “very political” in an interview with the BBC, telling consumers that Brazilian goods are priced high as a result.
Why is Trump easing his attitude towards Lula now?
The two presidents spoke in person for the first time last Tuesday in an unplanned exchange of UNGA bystanders in New York. “For at least 39 seconds we had excellent chemistry,” Trump said after their encounter.
“He actually looked like a really nice guy,” Trump told reporters. “He liked me, I liked him,” his comments have been interpreted by some analysts as a potential thawing in recent US-Brazil relationships.
But Trump’s soft tone could have been driven by difficult economic realities, according to Andres Abadia, a Chief Fraten America economist in Pantheon Macroeconomics. The US relies heavily on Brazil for its coffee and meat imports, and both became hits during the tariff war. Result: Prices have risen.
Brazil is the largest source of imported coffee for the US, and is responsible for $1.333 billion of total US coffee imports in 2023, according to the Economic Complexity Observatory (OEC). However, since the 50% tariff began, Cecafe, Brazil’s Council of Coffee Exporters, said exports to the US fell 46% in August and increased by 20% by September 19th.
Among its crunch supply, U.S. coffee prices rose 21% compared to a year ago, compared to a year ago, according to the US Bureau of Labor Statistics (BLS).
“The outlook for coffee prices to rise,” Abadia said, “it’s going to be bad for Trump.”
Brazil is also the third largest source of imported meat in the United States, after Australia and Canada, according to the US Department of Agriculture. “Like coffee, Trump is hit when the beef price increases,” Abadia told Al Jazeera.
According to BLS, beef and veal prices rose almost 14% in August compared to the previous year.
In contrast, Brazil appears to have weathered Trump’s tariffs better than the US expected. Its overall exports grew compared to a year ago as they expanded their offering to other markets, including China and Argentina.
According to a new survey released by the New York Times and Siena University on September 29, Trump’s approval rate has fallen recently, with 58% of respondents thinking the country is heading in the wrong direction.
“Inflation is definitely biting in the US,” Abadia says. “And anything you can do to relieve pain, especially as we approach the holiday season, will be considered positive.”
What’s in there for Lula?
Although Brazil’s exports have not declined overall, a decline in access to the US – a critical market – could undermine the profits of export-oriented industries.
Experts say they can add to a long list of Brazilian products, such as civil aircraft and orange juice, which are already exempt from tariffs, at least in search of additional from Trump. At this time, both meat and coffee are 50% tariffs.
But the Brazilian president may not want to win their own trade contracts with the same kind of unilateral concessions that Japan and the European Union agreed to cut tariffs and investment pledges, analysts say.
Certainly, for his part, Lula’s feud with Trump increased his popularity, and Washington’s intervention in Brazilian politics put the country’s conservatives behind him. Before next year’s presidential election, Lula is currently voting ahead of his top opponent, but the 79-year-old has not officially announced his bid. Lula was also the president of the country from 2003 to 2011.
Still, Abadia believes there is an opportunity for reconciliation. The most fertile area for compromise may be in rare earth minerals. Brazil has the world’s second largest reserves after China. And for now, they remain largely undeveloped.
“The key minerals are one area where bilateral interests are consistent,” he said. “The US wants to diversify away from China and play an important role in the Brazilian market.”
Trump has shown a clear interest in rare earths, putting them at the heart of his contract with Ukraine, for example. Brazil wants to emerge as an exporter and supplier of these minerals.
“Clearly,” Abadia pointed out, “it’s positive for cooperation. But Trump’s diplomatic unpredictability continues to overshadow. If confidence breaks again, trust could erode for some reason and make relationships even worse.”
