Brazilian President Luiz Inacio Lula da Silva announced on Wednesday that his government will not impose reciprocal tariffs on US products, stepping back from earlier threats of retaliation against Washington’s 50 percent levy on Brazilian imports.
Lula signed a decree offering a line of credit to small businesses affected by the US tariffs, which have been in force since August 6. “We are negotiators,” Lula said. “We do not want, at first, to do anything that would worsen our relationship with the US.”
The US tariffs target over 35 percent of Brazilian products bound for the United States, representing approximately 4 percent of Brazil’s total exports. An additional 700 products remain under separate 10 percent charges imposed in April. Finance Minister Fernando Haddad was scheduled to meet US Treasury Secretary Scott Bessent on August 13 to discuss the dispute, but the meeting was cancelled.
Industry Groups Urged Restraint
Lula’s decision followed strong pressure from Brazilian industry to avoid escalation. The CNI, Brazil’s largest industry lobby group, said there was “no technical or economic justification for the tariff hike” but urged caution. An Amcham survey found that 86 percent of Brazilian companies believed retaliation would “worsen bilateral tensions and reduce space for negotiations.”
Brazil is challenging the tariffs before the World Trade Organization, arguing they violate the most-favored-nation principle and negotiated tariff ceilings. The US trade surplus with Brazil reached $2.3 billion in the first half of 2025, a more than seven-fold increase from the year before.
Brics Pivot and Trade Diversification
Lula also said Brazil would accelerate trade diversification, including sending at least 500 business representatives to India in January to discuss trade, energy, and critical minerals. Brazil has been coordinating with other Brics nations, which account for roughly 40 percent of global GDP according to the IMF.
The decision represents a significant retreat from Lula’s earlier stance. In July, he invoked Brazil’s Economic Reciprocity Law and warned that retaliatory measures were on the table. The reversal reflects the complex reality of US-Brazil trade, where the US holds a cumulative trade surplus exceeding $400 billion over 15 years, making direct retaliation risky for Brazilian exporters.
Sources: Argus Media; Amcham; Brazilian Secretary of Foreign Trade; AP
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