Brazil Keeps Tariff Retaliation on the Table
BRAZIL · TRADE
Key Facts
- The country Brazil, Latin America’s largest economy, sells farm and industrial goods to the US and votes for president on Sunday 25 October.
- What happened On Thursday 15 October, President Lula said in a national TV interview that Brazil is ready for tariff retaliation if no trade deal is reached.
- The tariffs Many Brazilian goods face a 25% US tariff since 22 July and a 12.5% duty added in late July, together 37.5%.
- The talks Brazilian and US ministers met on Wednesday 30 September, and Washington is due to send a written proposal in the coming weeks.
- Power Index Brazil ranks 1st of 14 in The Rio Times Latin America Power Index, with 75.0 points (October 2026 edition).
- Prediction markets Polymarket gives Flávio Bolsonaro a 79.2% chance of winning the 25 October runoff (16 October, 1:54 a.m. ET). Polymarket puts Flávio Bolsonaro’s chance of winning at 79% and Kalshi at 79% (Lula: 21% and 22%), as of 16 October, 3:00 am ET; prices are bets, not polls.
Runoff · Sunday, 25 October
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Brazil’s president, Luiz Inácio Lula da Silva, said on Thursday 15 October that Brazil may hit back at US tariffs. The warning came 10 days before the runoff and keeps tariff retaliation on the table for American exporters and investors.
Lula spoke in a TV Globo interview with journalist Renata Lo Prete, the first in the network’s runoff series. He said he wants to keep negotiating with Washington, but that the United States will have problems with Brazil if he has to act.
What Lula Said on Globo
Lula said he did not write Brazil’s Reciprocity Law and does not want to use it, Jovem Pan reported. In his words, “I want to keep negotiating, but if it is necessary to do it, we will do it.”
He added that Washington would then face problems with Brazil, Revista Fórum reported. “The ones who should be worried right now are the United States,” he said.
Jovem Pan quoted him saying Brazil has things the United States needs more than he needs from Trump. He said he is calm because Brazil lost trade with the US but grew it with almost 50 other countries.
Lula called his relationship with President Donald Trump the most civilised Trump has had with any president, Revista Fórum reported. He also said he expects a deal, according to Jovem Pan.
The interview was the first in Globo’s runoff series, and his conservative rival Flávio Bolsonaro follows on Friday 16 October. That is according to the news site g1, as relayed by Blog do Paulo Pereira.
The US Tariffs Behind the Warning
Brazilian goods face two layers of US tariffs. A 25% duty has applied since 22 July after a US inquiry into Pix, ethanol and Amazon deforestation, Band reported.
Pix is Brazil’s instant payment system, run by the central bank. Ethanol is a plant-based fuel that Brazil makes mainly from sugarcane.
A further 12.5% duty followed in late July as part of a US action against 60 trading partners over imports linked to forced labour. The US Trade Representative, Washington’s trade negotiator, called it a final Section 301 action in a release dated 24 July.
Revista Oeste reported that the two layers add up to 37.5% on goods such as footwear, machinery and textiles. About 2,000 items, including beef and coffee, are excluded from both rates, the outlet said.
Brazil has told the World Trade Organization that the US measures break trade rules, Band reported. Our earlier coverage explains who is hit by the 25% tariff.
What the Reciprocity Law Allows
Brazil’s Reciprocity Law, passed by Congress, is the legal route to tariff retaliation, letting the government answer unilateral trade measures, Band reported. Lula said in September that he does not need to apply it while talks go on.
Trade Minister Márcio Elias Rosa said in July that the government cannot give up the reciprocity tool, Revista Oeste reported. Business groups had asked the government not to use it.
Lula has praised his dealings with Trump before while blaming Trump’s advisers for friction, as our report on the August phone call shows. On Thursday he kept that tone while adding the warning of tariff retaliation.
Where US-Brazil Trade Talks Stand
Brazil’s foreign minister, Mauro Vieira, and trade minister, Márcio Elias Rosa, met US negotiator Jamieson Greer on Wednesday 30 September, Brazil’s trade ministry said. The meeting took place in Milwaukee on the sidelines of a G20 trade ministers’ gathering.
Both sides called the talks constructive, and a working group was created to discuss possible agreement topics, the ministry said. The US government is expected to send a proposal in the coming weeks covering tariff and non-tariff issues.
The talks followed a phone call between Lula and Trump on Friday 21 August. Brazil’s side says it wants to advance through dialogue while defending its national interests.
What It Means for You
For US exporters, Brazilian tariff retaliation could affect sales into one of the largest markets in Latin America. Lula named no products and no date.
For investors in Brazilian shares and US-listed Brazilian companies, the tariff dispute can shift with each side’s next step. It sits alongside the runoff between Lula, of the left-wing Workers’ Party, and Flávio Bolsonaro, a conservative senator and son of ex-President Jair Bolsonaro.
For shoppers, beef and coffee were among the items excluded from the US tariff layers when they took effect. Our guide to the runoff polls tracks the race that will decide who handles the talks.
What Prediction Markets Say
On Polymarket, an online prediction market, bettors give Flávio Bolsonaro a 79.2% chance of winning the 25 October runoff (16 October, 1:54 a.m. ET). Lula stands at 20.5%, and Flávio’s price fell 3.7 points over the previous 24 hours while Lula’s rose 4.0 points.
The “Brazil Presidential Election” market has drawn about US$184.2 million in total bets. These are bets, not polls, and they can move fast on campaign news.
Prediction markets · who wins the runoff
Implied chance of winning Brazil’s presidency on 25 October, from traders’ prices.
Polymarket
Flávio Bolsonaro 79.2% · Lula 20.5% (US$184 million traded)
Kalshi (regulated in the US by the CFTC)
Flávio Bolsonaro 79% · Lula 22%
As of 16 October, 3:00 am ET (08:00 Lisbon), updated every 20 minutes. Prices are bets, not polls, and can move fast.
Why we show this: prediction markets turn real-money bets into a live probability that moves within minutes of the news, which is why investors, campaigns and newsrooms in the United States now follow them closely. We show them next to polls and official results, never instead of them.
What Is Not Known
Lula named no form of tariff retaliation, product or date, and the government has not set out which step it would take first. It is open whether the US proposal expected after the Milwaukee meeting has arrived.
No US reaction to his remarks has been reported. How the tariffs would change if Flávio Bolsonaro won the runoff has not been stated.
More: Brazil news in English, every day from The Rio Times.
Frequently Asked Questions
What did Lula say about tariff retaliation on 15 October?
He said Brazil does not want to use its Reciprocity Law but will do so if talks with Washington fail. He added that the United States would then have problems with Brazil.
What US tariffs does Brazil face?
Many Brazilian goods face a 25% US tariff since 22 July and a 12.5% duty from late July, which adds up to 37.5%. About 2,000 items, including beef and coffee, are excluded from both rates.
What is Brazil’s Reciprocity Law?
It is the law that allows tariff retaliation, letting the government answer unilateral trade measures from other countries. Lula says he does not need to use it while talks continue.
When is Brazil’s presidential runoff?
The runoff is on Sunday 25 October between Lula and Flávio Bolsonaro. The winner takes over the presidency and the trade talks with Washington.
Sources: Revista Fórum, 15 October 2026; Jovem Pan, 15 October 2026; Blog do Paulo Pereira (citing g1), 16 October 2026; Brazil’s Ministry of Development, Industry, Trade and Services, 30 September 2026; Office of the US Trade Representative, 24 July 2026; Band, 21 September 2026; Revista Oeste, 24 July 2026.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief