What’s Next: U.S.-Brazil Ties

Where Are We? The Historical Context and Political Parallels

U.S. and Brazilian politics have exhibited uncanny similarities over the past decade, marked by growing polarization, the rise of right-wing populism and the crisis of moderate conservatism. President Jair Bolsonaro’s ascent reflected both a long-standing Latin American tradition of nationalist, military-linked leadership and President Donald Trump’s transnational influence on populist movements. Trump’s 2016 victory helped legitimize Bolsonaro’s 2018 victorious candidacy and emboldened the administration. President Joe Biden’s 2020 election disrupted this ideological alignment, isolating Bolsonaro diplomatically and exposing the limits of his pro-Trump strategy.

The Biden administration’s early recognition of Bolsonaro’s authoritarian tendencies, and concerns that Bolsonaro would attempt to illegally hold on to power if he lost the 2022 elections, led Washington to discreetly pressure Brazil’s military leadership to respect the electoral outcome—an approach vindicated when Bolsonaro did, in fact, refuse to concede and his supporters stormed Brasília on January 8, 2023, mirroring the January 6 insurrection in Washington two years earlier. The institutional resilience of Brazil’s Supreme Court and electoral authorities contained the crisis, culminating in Bolsonaro’s 2025 conviction for plotting a coup— a landmark decision by Brazil’s judiciary that broke the country’s long history of pardoning and reintegrating coup perpetrators into political life. By then, however, Trump was back in office and the verdict reignited bilateral tensions. The second Trump administration’s application of  50% tariffs on many Brazilian products, visa revocations targeting Supreme Court justices, and Magnitsky Act sanctions against Supreme Court Justice Alexandre de Moraes—all under the pretext of “judicial persecution.” President Luiz Inácio Lula da Silva, who defeated Bolsonaro, now faces the challenge of dealing with Washington's aggressive tariff policy, while containing the domestic costs of U.S. economic retaliation.

Tariffs and the Push for Diversification

While only 12% of Brazil's exports go to the United States – far less than what Brazil exports to China – U.S. tariffs have inflicted measurable economic damage, with Brazilian exports to the United States dropping by roughly 20 percent to $2.6 billion in September 2025 from $3.2 billion in September 2024. Although certain sectors—such as wood pulp and select iron-and-steel categories—were temporarily exempted, the tariff shock disrupted supply chains, casting considerable uncertainty over Brazil's economic ties to the United States. Lula’s government has responded by accelerating efforts to diversify export markets, seeking new trade ties with partners such as Vietnam, Mexico, Argentina and the European Union. Brazil’s public and private sectors alike have come to view diversification as a strategic imperative rather than a policy choice.

Some of Brazil’s most effective advocates in Washington are U.S. corporations dependent on Brazilian imports. In one noteworthy case, the lobbying efforts of a Brazilian wood pulp producer and several U.S. importers led the Trump administration to quietly reverse tariffs on Brazilian cellulose, which supplies 80 percent of the paper tissue and diaper market in the United States. Politically, Lula has benefited from a short-term “rally round the flag” effect, reaching his highest approval rating of the year after his public resistance to the Trump administration’s pressure tactics. Lula’s strategy represents a marked departure from regional neighbors such as Panama and Colombia, both of which were forced to adopt more accommodating stances vis-à-vis the United States after being threatened by Trump.

Beyond economics, Brazil’s diversification debate now extends into national security. Military leaders have become acutely aware of the defense sector’s dependence on U.S. software and weapons systems, prompting a strategic reassessment of procurement and partnership patterns. Even officers who long advocated for stronger security ties with the United States are engaged in closed-door debates about supply diversification and defense autonomy, signaling a broader multipolar realignment in Brazil’s strategic posture.

What’s Next: Possible Scenarios

The key drivers that will determine the trajectory of the bilateral relationship in the coming months are the chemistry between presidents Lula and Trump (the two briefly met at the UN General Assembly and may have a formal meeting on the sidelines of the ASEAN summit Malaysia later this month), Brazil's ability to leverage influence within the U.S. including via commercial and business vectors, the effects of tariffs on the Brazilian economy as next year's presidential in Brazil looms, how much of a trigger Bolsonaro's imprisonment in November is, and the extent to which the Bolsonaro family can convince Trump to refrain from normalizing ties to Lula. In addition, the success and speed of Brazil's attempts to diversify trade ties, as well as potential legal challenges to U.S. tariffs, are all key drivers that are bound to impact the trajectory of the bilateral relationship. There are three scenarios to consider in the coming months:

Scenario 1: Gradual De-escalation but Only Partial Reversal of Tariffs (Most Likely)

The Trump-Lula encounter during the UN General Assembly, a phone call in early October, and a meeting between Marco Rubio and his Brazilian counterpart Mauro Vieira mark a cautious opening after two months of free fall. Yet mutual suspicion remains high. A potential thaw between Washington and Brasília could emerge in this month, with the East Asia Summit in Malaysia in late October providing a key diplomatic opening for Presidents Trump and Lula to meet face-to-face.

Both sides have strong incentives to de-escalate: the United States risks alienating a significant partner in the Western Hemisphere, while Brazil is keen to avoid a prolonged exclusion from the world’s largest consumer market. A pragmatic compromise could take shape through the creation of a joint technical working group on trade, which would pave the way for partial tariff relief on politically sensitive goods such as ethanol, coffee, and aircraft components. Limited, symbolic gestures, like restoring select visas for Brazilian jurists, would allow each leader to claim political success at home while signaling a tentative return to normalcy. However, the ideological proximity between the U.S. administration and Bolsonaro – Lula’s main rival, despite being about to initiate a long prison sentence – may create obstacles to bilateral normalization.

Scenario 2: Stalemate and Managed Confrontation Until 2026

President Trump could decide to maintain tariffs and sanctions for the foreseeable future. A fear is that these economic tools will be used to signal resolve while demanding concessions from Brazil—possibly the purchase of more U.S. goods or cooperation in the realm of critical minerals, as about 20% of the world’s global reserves are located in Brazil. This scenario will once again prompt strategic considerations about diversifying Brazil’s trading partners. If Lula refuses to yield, he may pursue new opportunities through the EU-Mercosur agreement and expanding trade with its other major partners, though none can be expected to fully compensate for the negative impacts of US tariffs. Under these circumstances bilateral relations will remain tense but functional, with minimal high-level dialogue. This “cold peace” could last until at least late 2026, when presidential elections take place in Brazil.

Scenario 3: Escalation and Retaliation (Low Probability but High Impact)

If Washington imposes additional penalties—for instance, expanding the Magnitsky list or threatening secondary sanctions —Brazil could retaliate by tightening rules for U.S. companies operating locally or by imposing retaliatory tariffs. Such escalation would risk undermining hemispheric cooperation on a broader range of issues, including security cooperation and the fight against transnational crime.

Even without full normalization, incremental cooperation on what Brazil perceives as shared priorities—such as education, continued economic cooperation in sectors not affected by tariffs, and regional stability—could stabilize expectations and restore investor confidence. The Malaysia summit will serve as a barometer of intent: a successful meeting would set the stage for a gradual reset grounded in mutual pragmatism, while failure to engage would cement 2025 as a year defined by strategic drift and political mistrust between the hemisphere’s two largest democracies.

Statements and views expressed in this commentary are solely those of the authors and do not imply endorsement by Harvard University, the Harvard Kennedy School, or the Belfer Center for Science and International Affairs.