Brazil will not impose new reciprocal tariffs on US goods, according to president Luiz Inacio Lula da Silva, backing down from earlier pledges to counter the US' 50pc tariffs on Brazilian products.
"We are negotiators," Lula said Wednesday after signing a decree to offer a line of credit to small businesses to counter the new US tariffs, which have been in effect since 6 August. "We do not want, at first, to do anything that would worsen our relationship [with the US]."
Previously Lula said reciprocal tariffs could be used against the US, but earlier this year Lula also signed a new economic reciprocity law that spelled out how the country could react to limits on its trade — including provisions to negotiate and avoid actions that would further harm the country.
The US tariffs affect over 35pc of Brazilian products that head to the US, representing 4pc of Brazilian exports, while 700 other products remain under 10pc charges effective since April.
Brazil has a trade deficit for goods and services with the US, adding up to over $400bn over the last 15 years, finance minister Fernando Haddad said in a televised interview in early July. The US' trade surplus with Brazil reached $2.3bn in the first half of 2025, a more than seven-fold increase from a year before, according to US-Brazil chamber of commerce Amcham.
The US is Brazil's second-largest trading partner behind China, receiving $40.3bn worth of exports in 2024, according to the Brazilian secretary of foreign trade.
Brazil is seeking to challenge the US tariffs before the World Trade Organization, saying they "flagrantly violate core commitments made by the US to the WTO, such as the most-favored-nation principle and the negotiated tariff ceilings".
Industry urges cautious response
Lula's decision follows pleas from different industry groups to not retaliate against the US tariffs.
"There is no technical or economic justification for the tariff hike, but we believe now is not the time to retaliate," said Brazilian industry lobby group CNI's president Ricardo Alban in July. "We continue to defend negotiations as a way to convince the American government that this measure is a lose-lose situation for both countries."
An Amcham survey of Brazilian companies found that 86pc believe reciprocal action from Brazil against the US would "worsen bilateral tensions and reduce space for negotiations".
Haddad was to meet US treasury secretary Scott Bessent on 13 August to discuss the tariffs, but he said that the meeting was cancelled.
Brazil will also seek to continue to open markets with other countries, Lula said. It has has been speaking other Brics countries — the informal forum of Brazil, Russia, India, China and South Africa — to improve relations among countries affected by the US tariffs, Lula said. The group accounts for around 40pc of the global economy, according to IMF.
Brazil will send at least 500 business representatives to India in January to discuss opportunities in trade, energy, critical minerals and other areas, according to the government.
"Instead of crying over losses, we will seek winning somewhere else," Lula said. "The world is big and is eager to negotiate with Brazil."
