📓 A trade war playbook for Brazil

Good morning! This issue of Brazil Business is a little different. 

With a second Donald Trump administration underway in the US, Brazil faces the unsettling prospect of steep tariffs from the world’s largest economy. President Luiz Inácio Lula da Silva, while steering clear of direct confrontation with the White House, has made his position clear: any US trade restrictions will be met with retaliatory measures. 

Welber Barral, a partner at the consultancy BMJ and Brazil’s foreign trade secretary from 2007 to 2011, writes about how the country should brace for a potential shift in US policy. 

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How Brazil should respond if targeted by Trump tariffs

Trade retaliation is the talk of the town. With the resurgence of protectionist measures under Donald Trump’s new administration, countries across the globe are once again confronted with the question of how to respond. 

Tariffs on Chinese goods have been hiked, new trade barriers threaten European and Latin American exports, and strategic sectors such as semiconductors and electric vehicles are caught in the crossfire of intensifying restrictions.

For trade policymakers in capitals everywhere, the issue is no longer whether to retaliate, but how to do so wisely. A poorly calibrated countermeasure risks harming domestic industries more than its intended target, while a well-crafted response can tilt the scales back toward negotiation. 

Having navigated Brazil’s high-stakes trade dispute with the United States over cotton subsidies in 2009 as secretary of international trade, I have seen firsthand the delicate art of applying pressure without triggering self-inflicted wounds.

There is no universal recipe for trade retaliation, but there are some principles that may separate effective responses from self-destructive ones.

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