Brazil spent months flying under the radar as Donald Trump upended global trade. Now that it’s in the spotlight, President Luiz Inacio Lula da Silva may stand to benefit from the attention.

Hours after the U.S. president threatened to hit Brazil with 50% tariffs, the leader known universally as Lula announced that, rather than rush to appease Trump, his government would retaliate with measures of its own.

It’s a decision that sets Brazil on a path of escalation with its No. 2 trading partner at a time when Lula is already confronted with a slowing economy, a fragile fiscal outlook, limping voter approval going into an election year — and the prospect of another currency selloff after the real sank sharply on Wednesday’s news.

But unlike the other targets of Trump’s tariff letters, Lula may not have much choice but to resist.

With Trump citing a “Witch Hunt” against his ally Jair Bolsonaro, and criticizing steps taken against U.S. social media companies, Lula has little hope of avoiding the levies, multiple people close to him said. That’s because these are legal matters and therefore demands he simply doesn’t have the power to meet.

“The challenge is that the justification is political, based on former President Bolsonaro’s trial and social media,” said Christopher Garman, a managing director at the political risk consultancy Eurasia Group. “These are non-negotiable issues.”

That’s on top of the enmity that’s suddenly flared between the two, making a climbdown less likely. All the less so as Lula prepares a run for a fourth term in 2026.

‘Irresponsible’ threats

The Brazilian leader was hosting the BRICS bloc of emerging-market leaders in Rio de Janeiro last weekend when Trump popped up to threaten members with additional tariffs over “Anti-American policies.” The group had released a declaration criticizing trade-distorting levies and airstrikes on Iran, both clear swipes at Trump even if they didn’t mention him or the U.S. by name.

Lula fired back on Monday, calling the threats “irresponsible.” Trump also came to the defense of Bolsonaro, Lula’s immediate predecessor who is facing trial on charges that he attempted a coup after his 2022 election defeat. Lula responded that Trump should butt out of domestic Brazilian affairs.

The U.S. president has tilted at BRICS before, so Lula’s position as head of the bloc’s rotating presidency put him first in line following the bloc’s critical statements and calls for reducing international trade reliance on the dollar.

But South African President Cyril Ramaphosa also blasted Trump’s tariff threats, and Trump maintained the same 30% levy on the country he’d initially proposed in April. Brazil, which had been set to face the minimum 10% charge under the announcement of so-called reciprocal tariffs, now confronts a hike to 50% — despite running a deficit in goods trade with the U.S.

That places the onus on Trump’s political complaints rather than any trade issues as the root cause. Trump allies have long raged at Brazil’s Supreme Court over both the case against Bolsonaro and its efforts to crack down on so-called fake news, blasting it as a threat to free speech. Eduardo Bolsonaro, a son of the former president, has spent months in the U.S. lobbying the administration to take action.

Trump’s letter made a direct link to the case, saying the new levies were “due in part to Brazil’s insidious attacks on Free Elections, and the fundamental Free Speech Rights of Americans.” The trial of Bolsonaro, which is expected to begin later this year, “should not be taking place,” he said. “It is a Witch Hunt that should end IMMEDIATELY.”

The case is independent of Lula’s government, giving the leftist president no power to shape the Supreme Court’s proceedings. Instead, Trump’s assertions seemed tailor made to push Lula into a fighting posture — and the Brazilian leader quickly made clear that’s what he planned to do.

After the announcement, Brazil’s Foreign Affairs Ministry summoned the U.S. charge d’affaires for the second time in hours — and used the meeting to return Trump’s letter, calling it offensive, according to an official with knowledge of the situation.

Lula began weighing whether to recall Brazil’s ambassador from Washington, according to two others. And in an emergency ministerial meeting, he decided he’d argue that Brazil is merely the latest victim of Trump’s efforts to infringe on the sovereignty of other nations — no different, the officials said, than Canada, Panama or the U.S. unilaterally renaming the Gulf of Mexico and seeking control of Greenland from Denmark.

Lula, whose career as a politician began in the labor movement during the days of Brazil’s military dictatorship, also spotted an opportunity to use the fight to his political benefit. Where his approval has been stuck below 50% for months, the president can now argue that Trump is trying to interfere in the country’s political affairs, derail its economy and turn Brazil into a backyard of the U.S., the officials said.

The right-wing is still figuring out how to react to Trump. Eduardo Bolsonaro praised the tariff threat, but the agribusiness caucus, a strong Bolsonaro supporter, advocated for “caution, sharp diplomacy, and an active presence at the negotiating table.”

The governor of Sao Paulo, Tarcisio de Freitas, a potential right-wing presidential candidate, criticized Lula while avoiding comment on Trump’s measure. Bolsonaro merely quoted a biblical proverb: “When the righteous are in authority, the people rejoice; but when the wicked rule, the people groan.”

Inherent risks

There are risks to Lula’s strategy. The pledge to retaliate — under a law on economic reciprocity enacted immediately after Trump’s announcement of so-called reciprocal tariffs — could trigger an escalating fight akin to that waged between the U.S. and China. In that instance, levies were steadily ratcheted up before both sides negotiated a de-escalation.

The 50% tariff risks a 1% hit to Brazil’s economy, according to projections from Bloomberg Economics. And while Brazil’s ability to divert some exports to other markets — including Beijing — could lessen the pain, further weakening of the real could exacerbate the central bank’s struggles to bring inflation under control, a problem that has weighed heavily on Lula’s popularity this year.

That provides an incentive to seek negotiations. Vice President Geraldo Alckmin said prior to the announcement that Brazil intended to keep doing so. But Lula’s government hadn’t made much progress in its efforts to avoid Trump’s steel tariffs, and it may prove even harder to please him on the broader levies.

Yet in running a narrow deficit with the U.S., Brazil has exactly the sort of trade relationship Trump regularly demands. As Lula is now realizing, that may no longer be the point. And there are other points of contention looming, with Brazil due to host the U.N. climate summit later this year, after Trump again withdrew the U.S. from the Paris accord.

“Respect Brazil,” the government advocates in a snap PR campaign launched overnight into Thursday. The president “affirms national sovereignty” and Brazil won’t be lectured by anyone, it says.

It looks like the 2026 presidential campaign may have just begun.

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—With assistance from Josh Wingrove and Josue Leonel.

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