Despite lower U.S. tariffs, Lula administration warns of global risks
04/07/2025
Members of the Lula administration say there is no reason to celebrate Brazil’s inclusion in the lowest tariff tier under the sweeping measures announced last Wednesday (2) by U.S. President Donald Trump. While Brazil secured a “comparative advantage” with lower rates, officials warn the move could signal a breakdown of the multilateral trade system, with unpredictable and potentially harmful consequences for all countries.
This concern is shared by sources at the Planalto Palace and the Foreign Ministry, including Celso Amorim, special advisor to President Lula.
Mr. Amorim said that weeks of talks between Brazilian diplomats and representatives of the Office of the United States Trade Representative (USTR) helped secure Brazil a place among the few countries facing a 10% tariff—alongside Argentina, the United Kingdom, Australia, Singapore, Chile, and Colombia—nations with which the U.S. runs a trade surplus. By comparison, the new tariffs are 20% for the European Union, 24% for Japan, 25% for South Korea, and 32% for Indonesia.
“The Foreign Ministry did an excellent job of clarifying that the U.S. has a consistent surplus with Brazil,” Mr. Amorim told Valor. “It’s much better to start bilateral negotiations from that position than from one where the situation could be much worse [with higher tariffs]. I just don’t think we should be thanking the U.S. This is incompatible with the multilateral system. There’s nothing to celebrate.”
Defending the multilateral system, Mr. Amorim cited Brazil’s past victories, such as the 2014 resolution of the cotton dispute with the U.S. at the World Trade Organization (WTO), and the country’s success in overriding patents for HIV treatment drugs in the 1990s, backed by international bodies.
The full impact of the U.S. tariff package is still being assessed by the Brazilian government and business associations. At the presidential palace, officials believe this will be a long-term effort, as the final assessment depends on developments such as retaliatory measures from other countries and broader effects on global trade.
On Thursday (3), President Lula said Brazil would take “all appropriate measures to defend our companies and Brazilian workers.”
He said Brazil’s response would be guided by WTO rules and the reciprocity law passed by Congress on the same day as the U.S. tariff announcement.
One source said the Reciprocity Bill puts “all cards on the table” for Brazil. However, any retaliatory move will take time. For now, the focus is on negotiation.
Next week, a new round of talks will be held by Ambassador Mauricio Lyrio, the Foreign Ministry’s secretary for Economic and Financial Affairs, with the USTR. Officials in Brasília believe the negotiations could take months or even years. Brazil has already requested a return to tariff-free quotas for its steel exports to the U.S.—a demand that remains on the table.
The government is also coordinating with the private sector through industry groups like the National Confederation of Industry (CNI), the National Confederation of Agriculture (CNA), and the Brazil Steel Institute.
Milei’s U.S. tariff pledge
While Brazil continues to advocate for multilateralism, the current trade context could push the country to impose additional tariffs to prevent a flood of Chinese and other Asian goods—a scenario also being considered in the European Union.
There is growing concern in Brasília over the future of Mercosur. During a visit to the U.S. on Friday, Argentine President Javier Milei said he would align Argentina’s tariffs with a U.S. basket of 50 products.
This poses a challenge, as Mercosur is based on a Common External Tariff (CET) and joint trade negotiations with outside partners. If Mr. Milei follows through—something few expect—it could spell the end of the South American bloc, or at least Argentina’s exit from it.
Next Wednesday, President Lula will travel to Honduras for the summit of the Community of Latin American and Caribbean States (CELAC). Gisela Padovan, the Foreign Ministry’s secretary for Latin America and the Caribbean, said Thursday that while the U.S. tariff hike is not officially on the agenda, it may be mentioned in the summit’s final declaration.
Other sources expect the declaration to include a general “defense of multilateralism.” The issue may also be raised during Mr. Lula’s bilateral meetings with other leaders, which have yet to be confirmed.
- By Fabio Murakawa – Brasília
- Source: Valor International