Brazilian President Lula said that Brazil can survive even without trading with the United States, stating that Brazil will seek other partners to replace the U.S.
This strong response came after U.S. President Trump raised Brazil's "reciprocal" tariff from 10% to 50% in one fell swoop.
In a television interview on the night of the 10th, Lula said: "We will have to look for other partners to buy our products. The trade between Brazil and the U.S. accounts for 1.7% of our domestic GDP; it is not as if we cannot survive without the United States."
● The United States is Brazil's Second Largest Trading Partner
The United States is Brazil’s second largest trading partner, second only to China. The 50% high tariff will deal a heavy blow to several key Brazilian export industries, including steel products, transportation equipment (mainly aircraft and parts), specialized machinery, and non-metallic minerals.
Lula cited a recent law passed by the Brazilian Congress, which empowers the president to retaliate against trade barriers. He said: "We have various means at our disposal, including resorting to the World Trade Organization (WTO), launching international investigations, demanding explanations, but most importantly, there is the 'Reciprocity Law' passed by Congress. If he imposes 50% on us, we will impose 50% on him as well."
According to analysts, Brazil is a major exporter of agricultural products such as coffee, orange juice, sugar, beef, and ethanol. Imposing tariffs on Brazil could also bring pain to the United States, disrupting food prices. Four trade sources told Reuters on the 10th that the proposed 50% tariff would effectively cut off the flow of Brazilian coffee to its largest buyer, the United States.
● No Need to Continue Using the U.S. Dollar in Trade
Lula reiterated remarks he made at the BRICS Summit in Rio de Janeiro. He said that a country like Brazil has no need to keep using the U.S. dollar in trade.
Last weekend, Lula called on leaders at the BRICS summit to explore ways to reduce reliance on the U.S. dollar in international trade.
Lula said: "I have no obligation to buy U.S. dollars to trade with Venezuela, Bolivia, Chile, Sweden, the EU, or China. We can trade using our own currencies."