Lula to Trump: If You Charge us 50%, We’ll Charge you 50%

Tensions between Washington and Brasília persist. On July 7, Trump sent a letter to the Brazilian government urging an end to the alleged persecution of former Brazilian president Jair Bolsonaro and threatening a 50% tariff on Brazilian goods.

Lula responds

Brazilian President Lula da Silva swiftly responded to Bolsonaro’s close friend and ally, asserting that Brazil’s decisions and its judiciary are sovereign and that they reject any interference whatsoever. He announced reciprocity in the measures taken by Trump: “If he charges us 50%, we will charge him 50% … Brazil is respected!”

In a post on X, Lula wrote: “Brazil is a sovereign country with independent institutions that will not accept being tutored by anyone. The judicial process against those who planned the coup d’état is the sole responsibility of the Brazilian justice system and is therefore not subject to any interference or threat that would harm the independence of national institutions.”

Lula stated that the information about the “alleged US deficit is false”, pointing out the fact that the US is not currently the main country to which Brazilian products are sold. In other words, the United States sells more to Brazil than it buys from it, meaning the US may stand to lose more from a trade war.

The Brazilian president noted: “The US government’s statistics show a surplus in trade in goods and services with Brazil of around 410 billion dollars over the last 15 years. In this sense, any measure to raise tariffs unilaterally will be responded to in light of the Brazilian Law of Economic Reciprocity. Sovereignty, respect, and the uncompromising defense of the interests of the Brazilian people are the values that guide our relationship with the world.”

However, it is important to emphasize that Lula is not closed to talks with the Trump administration: “We have several options. We can go to the WTO [World Trade Organization], initiate international investigations, and demand explanations [from the White House]. But the main thing is to show that Brazil is respected.”

The crisis has also involved other institutions of both countries. On July 9, the US Embassy released a public statement defending Bolsonaro: “Jair Bolsonaro and his family have been strong partners of the United States … The political persecution against him, his family, and his supporters is shameful and disrespectful of Brazil’s democratic traditions.”

In response, the Brazilian Secretariat of State, which called the statement “undue meddling” in Brazil’s internal affairs, summoned the US chargé d’affaires, Gabriel Escobar, in an expression of diplomatic displeasure.

Lula’s progressive government has now taken further concrete measures to respond to Trump’s threats. On Monday, July 14, Lula signed a decree regulating the country’s Reciprocity Law. According to the announcement by the President’s office, the decree, “establishes criteria for suspending trade concessions, investments, and obligations related to intellectual property rights in response to unilateral measures adopted by countries or economic blocs that negatively impact Brazil’s international competitiveness.”

The decree also calls for the creation of a committee which will be responsible for “deciding on the application of provisional countermeasures and monitoring negotiations to overcome the unilaterally imposed measures.”

Bolsonaro’s case

Bolsonaro, together with several generals and civilians aligned with his ultra-right program, is accused of participating in a plot to overturn the election that he lost to Lula at the end of 2022. According to the prosecutor’s office, part of this plot was the coup attempt on January 8 in Brasília, when thousands of Bolsonaro supporters stormed the Three Powers Square and other Brazilian government buildings, and vandalized and destroyed them.

The episode on January 8, 2023 somewhat resembled January 6, 2021, when hundreds of Trump supporters stormed the US Capitol building to protest the allegedly “stolen elections” in November 2020. Though hundreds were prosecuted for their participation in the January 6 riots, Trump pardoned 1,500 of those convicted, in one of his first actions in office.

People’s movements in Brazil and left groups have demanded that the Lula government hold those responsible for the January 8 coup attempt responsible to ensure it does not happen again  .

Mobilizations in Brazil

Social and trade union movements in Brazil organized a mass mobilization on July 10 in São Paulo against a veto by the Brazilian congress that aimed to thwart Lula’s project to increase taxes on the richest and most powerful companies.

The protest soon incorporated the tension between Washington and Brasília, with demonstrators rejecting Trump’s threats: “The demonstration had been born as a response to the Congress veto against Lula’s government projects that sought to charge more taxes on large companies and banking transactions, but given the situation it became a march to repudiate the tariffs imposed by Trump against Brazil,” said journalist Nacho Lemus on X.

In this way, it is entirely possible that Washington’s measures could backfire: not only could they deepen the unity around a sovereigntist sentiment and behind Lula as a defender of the nation’s interests, but many businessmen may even distance themselves from a crisis that carries risks for them as well.

Geopolitical implications

Brazil is South America’s leading economy and is currently part of the BRICS. Its main trading partner is China, far ahead of the United States. Some analysts have seen in Trump’s statements more than a simple gesture of generosity to Jair Bolsonaro, but rather a tactic to enter negotiations from a stronger position with one of the largest economies in the Global South and one of the fundamental nations involved in building a multipolar world not subordinated to US financial hegemony.

It is a surprise to no one that Lula, for the moment, has not approached the second Trump administration for negotiations, so there has been a kind of tense calm for the last six months between the countries. The calm, however, was abruptly ended with the back and forth messages from the top officials in the public and on social media.

For now, it seems that Brasilia has extended its hand to negotiate a “ceasefire” on social media. Fernando Hadad, secretary of finance, has reiterated his government’s willingness to engage in dialogue with the US government. For now, it is unclear if Washington has responded to this gesture, although it is likely that the economic advisors of the White House would caution the president against ignoring the clear geo-economic reality.

Courtesy: Peoples Dispatch