Brazil Lula Seeks Trump Call on Tariff Dispute

Lula’s decision to prioritize a call underscores how quickly the dispute has become both a trade and political issue. Brazilian officials are trying to project strength while avoiding a broad tit-for-tat that could damage growth, lift import costs and complicate inflation management at a time when policymakers are already balancing weaker activity against fragile confidence.

The market reaction has been mixed but still reflects caution. EWZ, the iShares MSCI Brazil ETF, slipped to $33.85 on Aug. 18, down from $33.97 a day earlier and $37.68 earlier this month, leaving it below both its 50-day moving average of $34.89 and 200-day moving average of $35.23. The ETF’s RSI reading of 31.6 suggests it is nearing technically oversold territory, while the broader backdrop remains dominated by trade-policy uncertainty.

Brazil’s approach also matters beyond the bilateral fight. A drawn-out tariff dispute could pressure Brazilian exporters, raise volatility in local markets and weaken foreign appetite for Latin American risk more broadly, especially if investors conclude that trade policy is becoming another flashpoint in a year already shaped by geopolitics and election positioning.

For now, the absence of immediate retaliation buys time for negotiations, but it also leaves markets waiting for a signal from Washington. Any Trump-Lula contact, or failure to secure one, is likely to shape the next move for Brazilian assets, the real and sectors tied to U.S. demand.