Brazil's Lula and U.S. President Trump Hold Friday Phone Call Covering Trade and Tariffs
Key Takeaways
- •Presidents Lula and Trump held a phone call on Friday covering the bilateral relationship, the broader global agenda, trade, and tariff negotiations.
- •During the call, Lula reaffirmed Brazil's commitment to cooperating with the United States in combating organized crime, and Trump suggested that officials from both countries resume meetings as soon as possible.
- •On the same day as the call, Trump announced a 90-day increase in the amount of beef allowed into the United States without the normal out-of-quota tariff, aiming to boost supplies and lower high beef prices.
- •Brazil is one of the world's largest beef exporters, and its imported lean beef is blended with fattier domestic beef in U.S. ground beef production.
- •There is no confirmation that the beef announcement was linked to the call, and while beef was recently exempted from the additional 25% U.S. tariff on Brazilian products, the longstanding 26.4% out-of-quota tariff still applies once quotas are filled.
Brazilian President Luiz Inácio Lula da Silva and U.S. President Donald Trump spoke by telephone on Friday, with trade and tariffs among the issues discussed.
According to the Brazilian government's account of the call:
- Lula and Trump discussed both the bilateral relationship and the broader global agenda.
- Lula reaffirmed the need for negotiations over tariffs between Brazil and the United States.
- Lula reiterated Brazil's commitment to cooperating with the U.S. in combating organized crime.
- Trump suggested that Brazilian and U.S. officials resume meetings as soon as possible.
The timing of the call is notable given Trump's separate announcement on beef. Earlier the same day, Trump announced a 90-day increase in the amount of beef that can enter the United States without the normal out-of-quota tariff, as the administration looks to increase supplies and bring down elevated beef and hamburger prices.
That measure, taken together with these developments, brings Brazil squarely into the discussion. Brazil is one of the world's largest beef exporters and already supplies significant quantities of beef to the United States. Brazilian beef is also particularly useful to the U.S. market because much of the imported lean beef is blended with fattier domestic beef in the production of ground beef.
There is no confirmation that Trump's beef announcement and his conversation with Lula were directly connected, so any linkage remains speculation, though the source notes a connection can be inferred. It would make economic sense to at least have that discussion: Brazil has the production and export capacity, while the United States is dealing with a historically tight cattle supply and high beef prices.
Trump recently exempted beef from the additional 25% tariff imposed on a range of Brazilian products, but Brazilian beef can still be subject to the longstanding 26.4% out-of-quota tariff once the applicable quota is filled. Removing that hurdle temporarily could make it significantly easier—and cheaper—for additional Brazilian beef to reach the U.S. market.
While there is no indication of whether beef was specifically discussed during the Lula-Trump call, the combination of Trump's beef initiative, Lula's push for tariff negotiations, and Trump's desire to quickly restart U.S.-Brazil meetings keeps Brazil a country to watch as details of the beef plan emerge.
Source: ForexLive
