News / Brazil and India eye tariff relief as trade needs bring Trump to the table

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Brazil and India could be in for something of a reprieve on the US tariff front: a looming meeting between presidents Trump and Lula is set to result in a reduction in the former’s exorbitant rates and India looks set to benefit from the Russia situation.

Following a positive meeting between Brazil’s minister of foreign affairs, Mauro Vieira, and US secretary of state Marco Rubio and trade representative Jamieson Greer, a statement confirmed the meeting would happen “at the earliest possible occasion”.

Scant detail on the talks was provided, but they were described as “very positive regarding trade and ongoing bilateral issues”, with both sides agreeing to “collaborate and conduct discussions on multiple fronts in the immediate future and establish a working path forward”.

Brazil is dealing with tariffs of 50%, with the US making no effort to disguise their political nature, slamming the prosecution of former president and Trump ally Jair Bolsanaro’s planned coup and assassination attempt on President Lula.

In the aftermath of Mr Bolsanaro’s conviction and a 27-year jail sentence, however, there appears to have been something of a shift, with Mr Lula referring to a “friendly” video call  with President Trump, in which he urged a reduction in tariffs.

And the latest meeting between representatives of the two countries has increased levels of speculation President Trump may be willing to do just that, with trade law and consultancy firm, Sandler, Travis, & Rosenberg suggesting as much.

“The statement made no explicit mention of any potential changes to tariffs but given that President Trump has the final say on that issue, a meeting with his Brazilian counterpart could offer an opportunity to announce such changes,” the firm wrote.

Some have suggested to The Loadstar the pivot in Washington towards a friendlier approach may be driven as much by necessity as anything else, with the US seeking rare earths and raw materials to bolster domestic manufacturing, and South America offering as much.

One forwarder told The Loadstar that inflation on Brazilian products, including coffee, fruit, meat, and wood, had brought the US back to the negotiating table, with expectations that the two presidents could meet as soon as this Sunday in Malaysia.

“It was this inflation that made Trump want to talk to Brazilian government, and it has the potential to make all vessels from Brazil to US get full again soon,” the forwarder added, pointing to the power of US consumer anger to prompt a change in course, with Brazil the world’s largest producer of coffee and the US the largest consumer.

But others are remaining circumspect on how things will play out, given the US administration’s willingness to ‘spin on a dime’ when it comes to policy announcements.

Nonetheless, the noise has been echoed in South Asia, with President Trump set to offer India a tariff reprieve in exchange if it stops buying Russian oil – this comes after the US hit Moscow with new sanctions following its intransigence on the Ukraine peace initiative.

Like Brazil, India has faced a 50% tariff rate, but a deal appears to be edging closer, with sources telling CNBC News the rate could be cut by between 15% and 16%, with New Delhi cutting its Russian oil imports in return.

Carriers have been left euphoric by news of the potential cut, with sources telling The Loadstar Indian trade flows would “get a sudden push”.

And it is not surprising that carriers have been quick to express their delight; container volumes to the US have slowed to such a point that it has been impossible to hold rates firm, let alone increase them.

One carrier executive told The Loadstar: “If tariffs are brought down to the speculated level, a 25% increase in volumes is likely for the tradelane. As of now, all tier-1 importers are performing to targets.  But we have seen volume drops from smaller accounts.”