Lula Stares Down Trump and Scores Tariff Victory for Brazil
A worker separates coffee cherries during harvest on a farm in Guaxupe, Minas Gerais state, Brazil.
(Bloomberg) —
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From the minute Donald Trump slapped tariffs on Brazil, President Luiz Inacio Lula da Silva bet the US leader was going all-in on a weak hand. The wager paid off Thursday, when Trump limped away from the battle.
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In an executive order, Trump exempted dozens of Brazilian food products, including coffee and beef, from the 40% increased tariffs he imposed in an ill-fated attempt to help former President Jair Bolsonaro dodge a coup attempt trial.
Together with prior exemptions, the move will leave many of the nation’s major exports free from heightened US duties, a victory for an agricultural powerhouse that ranks as the world’s largest beef and coffee producer and counts the US as its No. 2 trade partner.
It’s an even bigger win for Lula, the 80-year-old leftist who staked his once-struggling presidency on the fight with Trump, and may have just provided a model for how similarly-situated nations should approach the combative American leader.
Donald Trump, left, and Luiz Inacio Lula da SilvaPhotographer: David Dee Delgado/Bloomberg
About 22% of Brazilian exports to the US are now facing tariffs, down from 36%, Vice President Geraldo Alckmin said Friday. Trump is notoriously unpredictable and doesn’t like to lose, and broader trade talks are ongoing. But for now, at least, Lula appears to have triumphed on Brazil’s most important products without making any major concessions, a feat few others have managed.
To the Brazilian and his team, it’s vindication of a strategy that mixed outright defiance with patience and a dash of charm, a cocktail that allowed Lula to outlast a counterpart who’d underestimated the domestic cost of a trade war with a nation that produces so many goods Americans love to consume.
“Everybody panicked and got nervous, but I don’t usually make decisions when I have a fever,” Lula said at an event in Sao Paulo after the exemptions were unveiled. “Today I’m happy.”
From the start, Lula and his closest allies believed they had decent odds in their favor, even as they braced for a potential 1% tariff hit to Latin America’s largest economy.
After Trump threatened levies if Bolsonaro’s trial went forward in July, the government resolved that it wouldn’t blink, according to an adviser who spoke on the condition of anonymity. Instead, Lula would make the case that Trump and Bolsonaro — whose son had moved to the US to lobby for sanctions on Brazil — were threatening its sovereignty and intervening in domestic affairs.
While he wielded a sharp tongue toward Trump in public, Lula left the door open for negotiations and made calculated arguments against the economic logic of the levies. Brazil, he often pointed out, typically runs an annual trade deficit with the US, the type of relationship Trump says he wants.
His government reasoned that Trump would ultimately realize he couldn’t save Bolsonaro from a Supreme Court over which Lula had no authority, the adviser said. And because the US depends heavily on Brazilian coffee, meat and other products, it sensed that American price pains would eventually push Trump to the table.
Lula was emboldened by rising approval ratings and early moves from Trump, who exempted hundreds of goods from the tariffs before they even went into effect. He stood firm even when high-level communication with Washington ceased and Trump ramped up the pressure with sanctions on Brazilian officials.
Lula’s team long believed that if they could get the leaders in the same room, the famously charismatic president could win Trump over with charm he’s used to woo leaders like George W. Bush and Emmanuel Macron in the past.
Finally, in September, it happened: Just two weeks after Bolsonaro’s conviction, Trump raved that he and Lula had “excellent chemistry” during a brief encounter at the United Nations. He described their subsequent phone call, in which Bolsonaro was never mentioned, as “very good.” Trump and Lula then emerged from an October meeting in Malaysia talking about a deal.
By then, the predicted US economic pain had materialized. Coffee futures spiked to record levels as stocks of Brazilian beans in exchange-monitored warehouses fell to the lowest levels since 2020, while beef prices surged as restrictions on Brazil added to domestic shortages.
Stockpiles of Brazilian coffee held by roasters in the US had fallen to near zero ahead of the reprieve, said Marcio Ferreira, the chairman of Brazilian coffee exporters group Cecafé.
Workers during a coffee harvest in Brazil’s Minas Gerais state in July.Photographer: Victor Moriyama/Bloomberg
US officials have cast the exemptions as part of a broader strategy amid ongoing negotiations. A majority of Americans, however, say Trump’s doing more to hurt the economy than help it, recent polls show.
Lula, by contrast, is in a much different spot a year from Brazil’s 2026 election. He ranked as South America’s most popular leader in October, while Bolsonaro’s legal woes have thrown the Brazilian right Trump sought to rally into disarray.
The tariff reprieve also came at a fortuitous time, after a deadly police raid in Rio de Janeiro pushed violence and crime to the forefront of political conversations, exposing potential vulnerabilities for Lula.
Now other world leaders may look to him as an example. Lula met with South Africa’s Cyril Ramaphosa on Friday ahead of the Group of 20 nations summit in Johannesburg, a gathering Trump is boycotting amid that ongoing feud. Lula is willing to “help however he can, of course,” if his fellow BRICS member felt he needed support, top foreign policy adviser Celso Amorim told reporters in South Africa.
Lula’s primary aim is to cinch a broader trade framework with the US, and Brazil’s foreign ministry said Thursday it will keep pushing for a deal. Sensitive issues like big tech regulation and critical minerals are likely to feature, and the US sanctions on Brazilian officials remain in place.
But after months under Trump’s glare, Lula clearly senses he’s on the cusp of total victory.
“I just wanted to tell President Trump the following: I’m going to thank you only partially,” Lula said in a video posted to social media. “I’ll thank you fully when everything between us is agreed upon.”
–With assistance from Beatriz Reis.
(Adds comments from Alckmin, other officials from fifth paragraph.)
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