Tariffs and rare earths: New chapters in negotiations between Brazil and the US

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Representatives from the governments of Brazil and the US held their first official meeting to discuss tariffs, but the outcome of the negotiations remains uncertain.

This week, delegations from both countries met to discuss the 50% tariffs imposed by the US on Brazilian products, in effect since the beginning of August.

“Today [October 16], Secretary of State Marco Rubio and United States Trade Representative Jamieson Greer met with Brazilian Foreign Minister Mauro Vieira and held very positive discussions on trade and ongoing bilateral issues,” the governments said in a joint statement .

“Secretary Rubio, Ambassador Greer, and Minister Mauro Vieira agreed to collaborate and conduct discussions on several fronts in the immediate future, in addition to establishing a roadmap for joint work. Both parties also agreed to work together to hold a meeting between President [Donald] Trump and President Lula [Luiz Inácio Lula da Silva] at the earliest possible opportunity,” the statement added.

Relations between Brazil and the United States have been tense since the beginning of Donald Trump’s administration.

The US government claims that former Brazilian President Jair Bolsonaro suffered political and judicial persecution, which would be among the main reasons for the imposition of tariffs against Brazil.

Right-wing politician Bolsonaro was sentenced this year to more than 27 years in prison for an attempted coup d’état in the 2022 elections, when he was defeated by leftist President Lula.

In addition to the tariffs, the US recently imposed sanctions on Supreme Court Justice Alexandre de Moraes under the Magnitsky Act, alleging alleged human rights violations. Moraes was the rapporteur in Bolsonaro’s trial, which has denied wrongdoing.

The current rapprochement between the Trump and Lula administrations began in September, when the two presidents attended the UN General Assembly in New York and had a brief meeting described as cordial. Earlier this month, Lula and Trump spoke again by phone, in a dialogue considered friendly by aides on both sides.

Despite signs of progress, analysts believe there is still a long way to go before concrete results.

“Minister Mauro Vieira’s meeting with US government representatives is a step forward, but truly concrete measures should only begin to materialize after a face-to-face meeting between Lula and Trump. From there, we can expect a reduction in tariffs by the United States, and, in return, Brazil is also likely to review some tariffs,” Welber Barral, former Brazilian Secretary of Foreign Trade and founding partner of BMJ Consultores Associados, told BNamericas.

While Brazil complains about the 50% tariffs, the United States has been complaining, behind the scenes, about the 18% tariff imposed by Brazil on US ethanol.

The Brazilian government has stated several times that it is willing to negotiate tariff issues, but rules out any negotiations related to the legal proceedings involving the former president.

Critical minerals

Another topic expected to gain ground in the negotiations is US access to critical minerals in Brazil, particularly rare earths. This is a central point on the US global agenda, especially given recent export restrictions imposed by China, which are affecting the supply chain of US companies.

China holds the largest reserves and production of rare earths in the world. Brazil has the second largest reserves, but production remains limited.

“Rare earths represent enormous potential for synergy between Brazil and the United States. The US has a great need for these raw materials for its industry, while Brazil has ample reserves. Negotiations should ensure that Brazil attracts at least part of the processing of these minerals, so as not to be solely an exporter of the commodity,” Mário Sérgio Lima, political analyst at Medley Global Advisors, told BNamericas.

The Brazilian government has already indicated that the issue of critical minerals has become a priority on its agenda.

While representatives of the two governments discussed tariffs, President Lula participated in the first meeting of the National Mineral Policy Council (CNPM) in Brasília.

The committee, which brings together several ministries, was created to discuss measures to encourage production and the development of a value chain associated with critical minerals.