Brazilian President Lula da Silva urged US President Trump to lift the 40% tariff on Brazilian goods during a cordial phone call, signaling a potential de-escalation of trade tensions that have unsettled Brazilian markets and exporters. Both leaders agreed to meet, with Lula proposing the ASEAN Summit or a US visit, aiming to restore investor and exporter confidence amid previously imposed US sanctions on Brazilian officials. While the dialogue was described as positive by both sides, it remains uncertain if these discussions will lead to the tariff's removal and a broader normalization of relations.
Lula urges Trump to lift 40% tariff on Brazilian goods as leaders plan meeting - Lula asked Trump to remove the 40% tariff on Brazilian goods amid tension between both countries. - Both leaders held a 30-minute friendly call. - Lula proposed meeting during the ASEAN Summit and is willing to travel to the US. Brazilian President Luiz Inácio Lula da Silva asked US President Donald Trump to eliminate a 40% tariff levied on Brazilian goods and reverse restrictive measures that Washington imposed on Brazilian authorities, the government of Brazil said Monday. The request was made during a 30-minute phone call earlier in the day, which both sides described as cordial. Lula and Trump spoke by phone, soon agreed to meet in person, and exchanged personal cell phone numbers to have a direct channel, announced Brasília. Lula suggested a meeting to be held at the upcoming ASEAN Summit in Malaysia, and added that he was also willing to travel to the United States if necessary, the government said. “Very Good” call focused on trade and economy Copy link to sectionSpeaking on social media after the call, Trump said their conversation was ‘very good’ and that they had discussed economic and trade relations between both nations. We are going to have more conversations and see each other in the not-too-distant future, here in Brazil and the USA,” he said. Brazilian Finance Minister Fernando Haddad called the call “constructive” and purposeful and later told reporters in Brasília the call was “positive,” while Vice President Geraldo Alckmin said the call was “better than expected.” Alckmin said he was confident the discussions could lead to a strengthening of relations between the two biggest economies in the Americas. Markets watch for signs of de-escalation Copy link to sectionThe potential thaw comes amid a particularly tense moment for Brazil’s trade outlook. Washington has slapped one of its highest tariff rates on Brazil. At first, Brazil had to pay for a 10% import goods tax, but the tariff rate on some important exports was raised by Trump to 40%, giving a total levy of 50%. The action unsettled Brazilian markets and set off new alarm bells for exporters already grappling with weak global demand. At the time, Trump said it came in reaction to what he called a “witch hunt” against Bolsonaro—his political ally—who later received a 27-year prison sentence for trying to orchestrate a coup to hang onto power in the 2022 election that saw him lose to Lula. Sanctions deepen diplomatic rift Copy link to sectionUnder the Magnitsky Act, the Trump administration had also sanctioned Brazilian Supreme Court Justice Alexandre de Moraes, who presided over Bolsonaro’s trial. It also cancelled the visas of various senior officials, including that of Solicitor-General Jorge Messias. The Brazilian government blasted the moves as unwarranted and politically motivated, escalating tensions between Washington and Brasilia. Lula spoke on the matter during his speech to the United Nations General Assembly last month, where, without naming him directly, he said there was “no justification for unilateral and arbitrary measures against the institutions and economy of Brazil.” Many viewed his comments as an indication of a negative nod towards the US restrictions. Renewed dialogue following the UN encounter Copy link to sectionMonday’s chat followed a brief meeting between the two presidents at the United Nations General Assembly in New York last month. Following that encounter, Trump stated that he intended to meet with Lula again and stressed their “excellent chemistry,” sparking hopes for a possible reset in bilateral relations. Lula believes that lowering trade tensions with Washington will help investors and exporters regain confidence. A pact may be a practical start toward healing frayed relations with one of Latin America’s greatest democracies, according to Trump, who has highlighted America’s economic leverage in foreign negotiations. While no date has been scheduled for the forthcoming meeting, both sides have shown a readiness to continue conversations. It is unclear whether such dialogue will result in the removal of the 40% tariff and a broader normalisation of relations. Brazilian President Lula da Silva's request to US President Trump to lift the 40% tariff on Brazilian goods, made during a "cordial" 30-minute phone call, signals a potential de-escalation of significant trade tensions. This dialogue follows a period where Washington imposed a 40% tariff, building on an initial 10% import tax, which had "unsettled Brazilian markets" and directly impacted exporters. Previous US actions, including Magnitsky Act sanctions against Brazilian Supreme Court Justice Alexandre de Moraes and visa cancellations for other officials, created a "diplomatic rift." The discussion, described as "positive" and "better than expected" by Brazilian officials, led to an agreement for an in-person meeting, sparking hopes for a "reset in bilateral relations." Both leaders expressed willingness to meet, with Lula suggesting the ASEAN Summit or a US visit, aiming to restore investor and exporter confidence. This potential "thaw" is seen as crucial for Brazil's trade outlook and investor sentiment, given the high tariff rates and previous sanctions. Despite the "moderately positive" sentiment and "optimistic" tone surrounding the renewed dialogue, the article explicitly states it is "unclear whether such dialogue will result in the removal of the 40% tariff and a broader normalisation of relations." The prior imposition of tariffs was linked to political motivations, including a "witch hunt" against Bolsonaro, suggesting geopolitical factors remain influential. The market impact score of 0.6 reflects this guarded optimism, implying potential upside while acknowledging unresolved issues.
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moderately positive
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