Lula Got More Popular in Lead-Up to Trump’s 50% Tariffs on Brazil

Brazilian President Luiz Inacio Lula da Silva's approval rating rose to just over 50% in late July, up from 49.7% two weeks prior, with his disapproval falling to 49.7% from 50.3%, according to a LatAm Pulse survey conducted by AtlasIntel. This increase in popularity occurred in the days leading up to anticipated 50% tariffs from Donald Trump, suggesting potential domestic political strengthening amidst escalating international trade tensions.

Analysis

Recent polling data from an AtlasIntel survey indicates a marginal improvement in Brazilian President Luiz Inacio Lula da Silva's domestic political standing, with his approval rating rising to just over 50% from 49.7% in late July, while his disapproval rating concurrently fell to 49.7% from 50.3%. This minor shift, within the survey's 1% margin of error, suggests a highly polarized electorate and a fragile political mandate. The timing of this polling is significant, occurring just ahead of a threatened 50% tariff imposition on Brazilian goods by a potential US administration under Donald Trump. The slight uptick in popularity could signal a nascent 'rally 'round the flag' effect, but it does little to mitigate the substantial macroeconomic risk posed by a potential trade war. The primary takeaway for investors is the juxtaposition of a tenuous domestic political situation against escalating geopolitical and trade policy risks, which introduces significant uncertainty for Brazilian assets.

Key Decisions for Investors

• Investors should treat the near 50-50 split in presidential approval and disapproval ratings as a key indicator of persistent political polarization in Brazil, a risk factor for policy stability and implementation.
• The explicit threat of a 50% tariff from the US necessitates a re-evaluation of portfolio exposure to Brazil, with particular scrutiny on export-oriented sectors vulnerable to trade disputes.
• Monitor subsequent polling data and official communications from both the US and Brazil to gauge whether this minor shift in public opinion translates into a stronger negotiating position for Lula or if the underlying political fragility remains a primary concern.