Brazil is doubling down on its push to wean itself from the use of the U.S. dollar in trade, even as pressure from Washington continues to build. President Luiz Inácio Lula da Silva is still committed to BRICS Pay, the bloc’s alternative payment system, as part of a broader effort to diminish dollar dependence. But the move could prompt economic retaliation from the U.S., with Donald Trump’s threatened 100% tariffs hanging over its head.
The Biden government has also complained about Brazil’s increasing financial engagement with BRICS countries, most notably China and Russia. Trump, reiterating that he would make hardline economic decisions if returned to office, threatened blanket tariffs against nations indulging in dollar alternatives. Analysts caution that it could tension the U.S.-Brazilian trade relationship, affecting sectors ranging from agriculture to manufacturing.
In spite of the threat of economic backlash, Lula has continued to be outspoken on Brazil’s right to diversify its financial alliances. He believes that decreasing dependence on the dollar will bring economic stability and more financial autonomy to emerging economies. Brazil’s increasing trade with China, its biggest economic ally, adds strength to the country’s incentive to use alternative payment systems.
With rising geopolitical tensions, the world awaits whether Trump’s threatened tariffs will be realized. If implemented, they would increase economic tension between the US and Brazil, challenging the robustness of global trade flows. Whether Lula’s provocation will be worth it or lead to a large-scale trade war is yet to be determined.
