US President's Tariff Tirade: Brazil pushes back, India soft-pedals

Lula resists Trump as Modi seeks to ink trade deal

Twenty-five years ago, Brazil took a leading role in undermining ALCA, the Free Trade Area of the Americas (modelled on NAFTA, the North American Free Trade Agreement). After stabilising its national currency during the 1990s while undergoing a wave of privatisation of state assets, Brazil considered it inopportune to accept pressures from its most important trade and investment partner, the United States, to sign the trade agreement proposed by Bill Clinton.

The deal was seen as a threat to Brazil’s renewed industrial capacities. At that time, Brazil was the second-largest recipient of FDI (behind only China, which had just entered the WTO). MERCOSUR had reached a peak of economic integration between Brazil and Argentina. As Goldman Sachs economist Jim O’Neill included Brazil in a group of emerging economic powers, the country appeared to be a bright spot for the global economy in a new century.

In 2025, Brazilian reactions to the unilateral imposition of trade tariffs by US President Donald Trump were incensed. Unlike India – considered a strategic US partner – Brazil under President Lula da Silva did not immediately reach out to Trump’s economic team in search of “a deal.” US-Brazilian relations had remained strained since the ALCA debacle, and they deteriorated further after Trump’s return to the White House. Currently, the US has no ambassador accredited in Brasília. Trump also declined Lula’s invitation to attend the forthcoming COP30 conference in Belém.

Once an industrial powerhouse, Brazil is now a commodity giant. Globalisation slowly favoured Brazilian agribusiness, boosting GDP contributions and gaining decisive influence in Brasília. As the flipside to commodities’ return to centre stage, deindustrialisation took hold of the Brazilian economy, leaving behind “rust belts” where workers and impoverished middle classes crave a way out. This circumstance – quite like what happened in the US after the Cold War – fuelled right-wing populism. Former president Jair Bolsonaro, a Trump supporter, attempted a coup d’état in January 2023, narrowly averted by a collective response from civil society and republican institutions.

Currently, Bolsonaro is on trial at the Supreme Court, a development that intensified US-Brazil tariff disputes. Trump blamed Brazil for undermining civil liberties, justifying trade tariffs on political grounds (building upon previous clashes between judge Alexandre de Moraes and US tech giants Meta and X). The outcome of this process remains uncertain. The authority of the Supreme Court is at stake, challenged by Congress (controlled by Bolsonaro allies). On the sidelines, Vice-President Geraldo Alckmin led a task force to Washington, composed of industry and agribusiness leaders, seeking a middle ground. So far, political tensions in Brazil, as well as strained ties between Lula and Trump, have prevented progress on the diplomatic front.

Brazil’s stance diverged from that of other BRICS members, such as India – which, even before tariffs were imposed, sought trade deals with both the US and the European Union. For Washington, India seems more inclined to long-term and fruitful partnerships, not only due to impressive and sustained economic growth over the century (while Brazil stagnated after 2015). After 2001, China replaced the US as Brazil’s largest economic partner and investor, with significant geopolitical implications. Now, only 15% of Brazilian exports travel northwards through the Panama Canal, the lowest level since World War I. Therefore, Brazil’s diplomatic posture on Trump’s tariffs looks more like damage control (driven by domestic pressures) than a rapprochement with a former key ally.

During the latest BRICS summit in Rio in July, Brazil attempted to mobilise the group against US tariffs. The idea of replacing the US Dollar in intra-BRICS banking systems resurfaced on the agenda. However, in a meeting overshadowed by ongoing wars in West Asia and Eastern Europe, Lula received only a lukewarm response from partners.

As Brazil seeks closer ties with other BRICS members, political tensions with the US are coming to the forefront. In August 2025, Trump cancelled joint military exercises with Brazil just days before a US fleet sailed to the coast of Venezuela, Brazil’s neighbour. The action was justified as part of a police raid against drug traffickers “flooding into the US.” Around the same time, a politically divided MERCOSUR rushed through the details of a long-delayed trade agreement with the EU – a sign that Lula is prepared to negotiate, but not on Trump’s terms or at his instigation. Additionally, Brazil participated in military parades celebrating 80 years since the end of World War II in Russia and China. As Lula travelled to Moscow, the political gulf between Brazil, the US and NATO became even more apparent.

If Lula and Trump now share very few commonalities, India remains an indispensable member of the Quad. Prime Minister Narendra Modi was welcomed at the White House in February 2025 and is scheduled to meet Trump again in New York on the sidelines of the United Nations General Assembly next week – despite disagreements following the Pahalgam terrorist attacks. Trade relations between India and the US are on the rise, reaching 130 billion dollars in 2024, with a 46 billion surplus for India. However, such figures alone do not justify the imposition of trade tariffs. India still accounts for less than 2% of total US global trade.

India and Brazil received the same tariff rate from the US (50%) and initially reacted in a similar way. Lula and Modi both spoke of bringing production closer to home and favouring local producers. In foreign policy, however, their responses diverged sharply. Tariffs on India appear likely to be reduced soon (as eventually happened with those imposed on the EU and UK). Brazil, by contrast, seems prepared to endure them, not least because in a multipolar world the US appears “smaller.”

On the verge of a re-election campaign, Lula faces persistent unpopularity. Yet tariffs have provided a mixed blessing. Economic liabilities are offset by a firmer foreign policy stance that benefits the president domestically. Therefore, the Brazilian government – much like President Claudia Sheinbaum in Mexico – has invested in speeches, slogans and campaigns emphasising national sovereignty. If Trump wants to make America “great again,” in Latin America, trade tariffs once again fuel sovereignty.

(The writer is an Assistant Professor at Shiv Nadar Institution of Eminence, IRGS)