Trump signals to Brazil and says he will talk to Lula at some point.
The US president is sticking to his well-known negotiation tactic: attack first, then talk.
(Reuters)- The Brazilian government on Friday downplayed the impact of the 50% tariff that US President Donald Trump threatened to impose on imports from the country, while leaders of both nations expressed a cautious willingness to negotiate in the future.
Trump told reporters that he might speak further with President Luiz Inácio Lula da Silva, who had previously said he would seek a diplomatic solution, but that he would reciprocate if the tariffs went into effect on August 1st, as promised.
"Maybe at some point I'll talk to him. Not now," Trump said as he left the White House to visit flood-ravaged Texas, again criticizing Brazil's legal proceedings against former President Jair Bolsonaro.
Trump's comments came after Lula told TV Record on Thursday that "first we will try to negotiate, but if there is no negotiation, the Reciprocity Law will be put into practice."
The Brazilian government predicted that the tariffs would have little impact on the country's economic growth this year, which it expects to reach 2,5%, since only a few specific sectors of industry would be severely affected.
But a White House official, who asked not to be named, told Reuters on Thursday that, since the new tariffs, including Brazil's, are an extension of the rates announced in April, energy products such as oil and essential minerals would remain exempt.
Oil is Brazil's main export product to the United States, and on Thursday, the Brazilian Petroleum and Gas Institute (IBP) remained uncertain whether the exemption that benefited the commodity would continue. The U.S. embassy in Brazil did not immediately respond to a request for comment.
The US is also a major importer of Brazilian steel products, pulp, coffee, orange juice, and beef—products that, according to the Brazilian government, could find other global buyers.
"Considering this scenario, the impact of tariffs is likely to be insignificant on growth in 2025, although some sectors of the manufacturing industry may be particularly affected," the Ministry of Finance said in a report.
These include the aerospace sector, with the US accounting for a large share of the revenue of aircraft manufacturer Embraer, and energy-related machinery.
NEW BUYERS
Lula had already promised to find new buyers for Brazilian products, saying that the country can survive without the US.
The Secretary of Economic Policy, Guilherme Mello, told reporters that even if "some" effects are felt on growth, they will not be as significant as before, saying that Brazil has managed to diversify its trading partners in the last two decades.
Approximately 12% of Brazil's exports go to the US, while its main trading partner, China, accounts for about 28%. This Friday, the Asian power also criticized the tariffs imposed by Trump on Latin America's largest economy.
"Tariffs should not be used as a tool of coercion, intimidation or interference in other countries," said Chinese Foreign Ministry spokeswoman Mao Ning at a press conference in Beijing.
But exporters were worried about the impact of Trump's new tariffs. The president of the Brazilian Association of Meat Exporting Industries (Abiec) said the tariffs would make it "economically unviable" for Brazil to export beef to the US.
Still, in a letter to Lula on Wednesday, Trump left Brazil with few options to respond by linking the tariffs to the country's judiciary, due to the trial against Bolsonaro, who is being judged on charges of plotting a coup to prevent Lula from taking office in 2023.
Trump reiterated his defense of Bolsonaro on Friday. "They are treating President Bolsonaro very unfairly," he said.
In an interview with TV Globo, Lula said he considered Trump's justification for the tariffs "a huge insult."
Lula said he could not accept Trump asking for the end of the process against a man who "didn't try to stage a coup, he tried to orchestrate my death."
Bolsonaro denies having committed any wrongdoing.
(Reporting by Nandita Bose and Doina Chiachu in Washington, Bernardo Caram in Brasília, Gabriel Araujo in São Paulo; additional reporting by Shi Bu in Beijing, Jarrett Renshaw in Washington, Rodrigo Campos in New York and Fernando Cardoso in São Paulo)
