The new US tariff hike and Brazil's race against the clock, according to Marcos Troyjo.

With less than 24 hours to go before the deadline given by the United States government to decide whether to adopt a new tariff hike against Brazil, which could reach a rate of 37.5% on exported products, President Luiz Inácio Lula da Silva is acting with "a mixture of irresponsibility in an attempt to gain some points in the domestic political race."

The assessment comes from diplomat Marcos Troyjo , former president of the New Development Bank (NDB), the BRICS bank, during the Bolsonaro administration. In an exclusive interview with NeoFeed , Troyjo says that the federal government has not made any move to persuade the Donald Trump administration to back down from the decision, which is due by Wednesday, July 15th.

“There are many instances where he speaks discourteously to the American president or members of his administration. All of this has contributed to creating a less than constructive atmosphere that will hinder the possibility of lifting these tariffs,” he states.

The Office of the United States Trade Representative (USTR) has opened investigations against 86 countries, including Brazil. There are two ongoing investigations. In the first, the White House proposes an additional 25% tariff for anti-competitive practices, based on Section 301.

In another report, the Trump administration indicates an additional 12.5% tax, based on an investigation into alleged forced labor practices. In practice, if implemented, the tax would apply to 25% of the value of goods exported to the United States, due to the list of exceptions.

Even so, in Troyjo's view, the Brazilian government did not act as a protagonist in this discussion. "The most meritorious efforts were made by Brazilian companies and associations, which had the support of a political representation office in the United States."

“Many of them have done much more than the Brazilian government. Look at the examples of Weg , Embraer , Minerva , and Gerdau ,” he says.

According to the former president of the BRICS Bank, Lula is using the episode as a political platform to gain an advantage in the October elections. "He's adopting a tone more geared towards maintaining tension in the air, to extract political benefits from the situation."

Troyjo defends the view presented by Senator and presidential pre-candidate Flávio Bolsonaro (PL), who, during a public hearing in the United States last week, asked Trump to postpone the start of the tax collection until after the elections.

"The point is that Brazil would gain something fundamental, which is time. Brazil has wasted time. And if we have a little more, it's better," he says.

Below are the main excerpts from Troyjo's interview with NeoFeed :

Brazil is on the verge of facing another massive tariff increase from the United States, which could reach 37.5%. What can still be done to prevent this?
The Office of the United States Trade Representative (USTR) has open investigations against 86 countries. In the case of Brazil, the tariffs will cover approximately 25% of the value of Brazilian exports to the United States, excluding previously established exceptions. Since Brazil exports US$37 billion annually to the American market, these tariffs would affect US$9.5 billion of exports. This represents less than 3% of our total exports or 0.3% of our GDP. The macroeconomic effect is small because there is a possibility that this production will go to other markets or increase prices in the American market. But it doesn't seem to me that President Lula has done anything to mitigate this crisis with the United States.

And what should he have done differently?
Lula's government was the last among the G20 economies to have any kind of contact with the White House. There are many episodes in which he addresses the American president or members of his administration in a discourteous manner. Lula even called Secretary of State Marco Rubio a frustrated Latin American. All of this contributed to creating a less than constructive atmosphere that hindered the possibility of lifting these tariffs.

But would there still be time for some action?
Since the technical issue, on the part of the United States, has already been resolved, the effort that could be made would be at the political level. But I don't see that coming from the Brazilian government. There are few actors who have been active in this. It's mostly sectoral representatives. Political efforts could be made. If there isn't a political stance to the contrary, all these countries will have tariffs on their exports. And that includes Brazil.

Since the technical issue, on the part of the United States, has already been resolved, the effort that could be made would be at the political level. But I don't see that coming from the Brazilian government.

On July 9th, it was one year since Trump's letter regarding the 40% tariff increase, which raised the tax to 50%. In those 12 months, has Brazil failed to forge a closer relationship?
In December, the American government removed tariffs on a series of products, and in February the American Court overturned the tariffs. But it's true, Brazil should have done much more in that year. The most meritorious efforts were made by Brazilian companies and business associations, which had the support of a political representation office in the United States. The Brazilian government was not a protagonist in this game.

What role can Brazilian companies operating in the United States play in minimizing this tariff impact?
They play an important role and have done a lot. But, naturally, they will defend their business interests and those of their shareholders. Many of them have done much more than the Brazilian government. Look at the examples of Weg, Embraer, Minerva, Gerdau. The associations too. They went everywhere, they spoke with the White House. But they will never be substitutes for a government effort. That role belongs to the country's government.

Can American purchasing companies also exert pressure?
Sure. At the public hearing that took place last week, representatives of buyers were also present. They said that this action would make their lives more difficult. Either they will have to pass this cost on to the end consumer, which means inflationary pressure, or it will slow down the industrial process, leading to stagnation. And sometimes, looking for another supplier in the world takes a lot of time.

In general, then, are we witnessing a mistake by Brazil or intransigence on the part of the United States?
The United States has a flawed diagnosis for its problems. They have had a trade deficit with the rest of the world since 1977. This hasn't stopped them from overcoming crises, winning the Cold War, surviving 9/11, revolutionizing technology with the internet, and leading the world in artificial intelligence. But it's not a matter of saying whether they are right or wrong. What we need to do is fight for our interests. Brazil represents only 1% of everything the United States buys from the world. They buy US$3.7 trillion a year. This negligence in having a larger share than the largest consumer market buys is a long-standing mistake. Brazil has failed in this.

Brazil should have done much more in this past year. The most commendable efforts were made by Brazilian companies and Brazilian business associations.

What were those mistakes?
We've had many chances in the past. We had the opportunity to create a free trade area in the Americas. There were times when relations between heads of state were excellent, such as during the time of Bill Clinton and Fernando Henrique Cardoso, and later between Donald Trump and Jair Bolsonaro. But it's not entirely our fault. On some occasions, the United States lacked the necessary support in its internal governance for the commercial integration process to take place. The PT governments torpedoed the implementation of the FTAA, but there was also a lot of sabotage on the part of the American government.

But isn't there a flawed premise when the United States speaks of an imbalance in the trade balance with Brazil?
Brazil is one of the few countries in the world that has a deficit in its bilateral relations with the United States. And it's peculiar, because it has a surplus in its relations with China. But Brazil is much more protectionist than the United States. Much more closed. There was a growth strategy through import substitution. This means protecting its domestic market through quotas and tariffs. Brazil's average tariff is higher than the average American tariff on the export of Brazilian products. We are tempted to morally classify what is a deficit and what is a surplus. And having a deficit is not always bad. It has never prevented the United States from growing. They attract a lot of capital.

Didn't President Trump politicize these issues too much?
Geopolitics has taken on an important role. I agree that it was President Trump who somewhat changed the conversation about international trade and China. Before, there was a long tradition, lasting until the Obama administration, of continuing the view that the country is pro-international trade and trade agreements. But that changed in the first Trump administration. And Joe Biden continued the policy and even intensified the discussion with China. Today there is a less constructive sentiment regarding trade agreements, but this is not a characteristic unique to Trump.

And when President Lula makes strong statements against Trump, does this tension increase even more?
What advantage does someone who says things like Trump acting like a pirate in the Strait of Hormuz case expect to gain or extract from the bilateral relationship? None. It's a mix of irresponsibility and an attempt to score points in the domestic political race. That's the only explanation.

On the other hand, isn't Senator Flávio Bolsonaro politicizing the issue when he asks that the tariff increase only be implemented after the elections?
The point is that Brazil would gain something fundamental: time. Brazil has wasted time. And if we have a little more, it's better. Any extra time is valuable. Even if the macroeconomic effect is small, we are talking about companies, shareholders, jobs, families, and states like São Paulo, Paraná, Santa Catarina, and Rio Grande do Sul, which are the regions where the companies that would suffer from the loss of competitiveness resulting from the imposition of these tariffs on Brazil are located.

Many Brazilian companies are either moving there (to the USA) or to other countries, such as Paraguay and Mexico.

And how much will this impact the competitiveness of Brazilian companies?
If these tariffs are imposed on Brazil, the effects are small, but important. But where I think it will generate a competitive advantage is in relation to the tax issue. While the Trump administration is adopting this stance, at the same time it is adopting a dynamic of deregulation, debureaucratization, and tax cuts. This will help the tax burden in the United States. In Brazil, it is rising and reaches 33%. The reduction in the tax burden is something that will tip the balance in favor of the United States much more than the imposition of tariffs on Brazilian exports.

And what will the impact of this be?
Many companies will set up their manufacturing plants directly in the United States. It's as if the tax burden were a self-imposed tariff on Brazil's international competitiveness. This is much more serious and worrying than this specific imposition by the United States. It hurts companies more. Many Brazilian companies are either going there or to other countries, such as Paraguay and Mexico.

Looking at it from an American perspective, with a possible increase in inflation, does this new tariff hike in Brazil make sense?
In my opinion, no. This creates inefficiency and additional costs for the American consumer. Many countries end up choosing not to buy products from the United States, and this generates an indirect negative impact.

In your opinion, who should be at the forefront, on behalf of the Brazilian government, of defending Brazilian companies?
If you analyze the period from January 20, 2025, when Trump takes office for the second time, until September of last year, when the UN General Assembly took place, all the G20 governments had some kind of interaction with the American president, even Xi Jinping of China. The only exception was Brazil. You can't ignore an economy the size of the United States'.

But wasn't the meeting at the White House in May of this year a response to that?
The calculation made there was that if the meeting were successful, President Lula could show that his actions would bring benefits to Brazil. And, if unsuccessful, he would continue with the argument of using disagreement as an electoral advantage. I couldn't see a defense. Besides, it took too long. Lula uses the discourse of Brazilian sovereignty as a political-electoral gain. He's less interested in solving the problem. He adopts a tone more geared towards maintaining tension, to extract political benefits from the situation. It was not very results-oriented. The only chance lies in political understanding. And I haven't seen any of that from the Brazilian government.