Brazil can survive without US trade, says Lula amid Trump tariff threat

Business Standard

11-07-2025

In televised interviews, Lula struck a defiant tone, saying Trump must respect Brazil's sovereignty and cannot act as if he owns other nations
Bloomberg
By Simone Iglesias and Daniel Carvalho
President Luiz Inacio Lula da Silva insisted Brazil can survive without trade with the US and will look to other partners to replace it, a sharp response to Donald Trump after the American leader threatened 50 per cent tariffs against the nation.
'We're going to have to look for other partners to buy our products. Brazil's trade with the US represents 1.7 per cent of its GDP,' Lula said in a broadcast interview with Record TV on Thursday evening. 'It's not like we can't survive without the US.'
He made clear that he had no intentions of standing down, saying during an interview on Globo TV that the tariff fight could be 'endless.'
The Brazilian also said countries like his are not obliged to continue using the dollar to trade, reiterating remarks he made at last weekend's Brics summit in Rio de Janeiro that he acknowledged 'likely worried Trump.'
'We are interested in creating a trade currency among other countries,' Lula said in the Record interview. 'I'm not obligated to buy dollars to conduct trade with Venezuela, Bolivia, Chile, Sweden, the European Union, or China. We can trade in our own currencies.'
Trump on Wednesday said he would impose the tariffs on Brazilian goods in a letter that cited the legal woes of Jair Bolsonaro, the right-wing former president and Lula rival who is facing trial on charges that he attempted a coup following his 2022 election defeat.
The US is Brazil's second-largest trading partner, following only China. Bloomberg Economics estimates that a 50 per cent tariff would risk a 1 per cent hit to Brazil's economy. The levies could cause a 60 per cent reduction in total US imports of goods from Brazil, although the South American nation could divert some exports to other markets, the report said.
The levies from the US — far higher than the 10 per cent initially announced in April — also followed the meeting of the Brics emerging market nations, where Lula and other leaders criticized tariffs and military strikes on Iran even as they avoided mention of Trump.
Despite Lula's remarks on the dollar, the Brics nations again made no significant progress toward a cross-border payments system for trade and investment they've been discussing for a decade. And Lula said Trump had no need to have concerns about the bloc of countries.
Trump's citation of the case involving Bolsonaro — he called it a 'Witch Hunt' and demanded its dismissal — angered Lula, who on Wednesday pledged to retaliate and accused the US of attempting to interfere in Brazil's justice system and internal affairs.
'No Reason to Talk'
Government ministers argued in public remarks throughout Thursday that there was no economic rationale behind the tariffs, only political motivations that left little room to negotiate given that Lula doesn't have the power to intervene in Bolsonaro's case with the Supreme Court.
Lula said Thursday that he would 'have no problem calling Trump,' but that he 'has to have a reason to call' first.
'He could have called Brazil to talk about the measures he's going to take,' he said in the Globo interview. 'It was a total lack of respect, and I don't have to accept that lack of respect. I have nothing to talk about with Trump, he gives no reason to talk.'
Instead, Lula said he would seek to talk with business leaders from companies and sectors that would be affected by the tariffs, specifically citing Brazilian planemaker Embraer SA, orange juice producers and steelmakers.
Brazil, he said, would attempt to exhaust negotiations ahead of Aug. 1, when the tariffs are set to take effect. But his government won't shy away from retaliating under a new trade reciprocity law approved by Congress this year if talks make no progress.
'We'll try to carry out every possible negotiation process,' Lula said in the Globo interview. 'Brazil prefers to negotiate, prefers dialogue. But once negotiations are exhausted, Brazil will enforce the Reciprocity Law.'