Brazil's government has reached consensus to reduce the extra tariff on US-imported ethanol in exchange for progress in negotiations with Donald Trump over his 50% tariff on Brazilian products. The measure could be announced before the first meeting in Washington, involving Vice President Geraldo Alckmin and key ministers. This concession is seen as a gesture to ease trade talks.
President Luiz Inácio Lula da Silva's government is internally discussing the reduction of the 18% tariff on US ethanol, one of the main US complaints that prompted trade investigations. Government members are commenting behind the scenes on the possibility of zeroing this tariff as bargaining leverage to mitigate the impact of Trump's 50% tariff on Brazilian exports, such as coffee and meats.
The first negotiation meeting in Washington, scheduled for next week or the following, will include Vice President Geraldo Alckmin, Finance Minister Fernando Haddad, and Foreign Relations Minister Mauro Vieira. There are debates about announcing the reduction before this meeting, which could unlock discussions. However, the measure is politically sensitive, pitting the president against agribusiness sectors that have positioned themselves against the Lula government and mobilized the ruralist bloc in Congress to block or minimize the impact.
The strongest resistance comes from political leaders in the Northeast, a region with significant influence in parliamentary votes. The Executive relies on these leaders' support to pass important economic agendas. Despite this, the president aims to address tariff issues in isolation, prioritizing concessions that advance the bilateral trade balance. Experts warn that offering concessions before negotiations could weaken Brazil's position, unless it is part of a larger Planalto strategy.