Lula's victory and Flávio's trip to the USA put relations with Washington under pressure
Eurasia Group sees more stressed bilateral relations, but without US retaliation, and trade negotiations continue
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM MONEY TIMES · 3 MIN
Lula's victory in Sunday's presidential election (25) and Flávio Bolsonaro's (PL) trip to the United States shortly after the defeat put the relationship between Brazil and the USA back at the center of the political and economic debate. According to Money Times, Eurasia Group's analysis is that the relationship is likely to remain difficult, and the most cited risk is that Washington will not accept the result of the vote well.
Donald Trump's silence also draws attention. According to Money Times, the American president spent around 24 hours without commenting on Lula's victory and then stated that the election seemed rigged. The US government has not officially commented on the election. Julia Thomson, political scientist at Eurasia Group, points out the risk that Washington will not accept the result well.
Flávio also became the centerpiece of this crisis. According to Estadão, he even declared himself “president of Brazil”. In a letter, he promised to lead the opposition from abroad, and Vinicius Torres Freire, cited by Times Brasil, recalls that the strength of this strategy depends on the support of allies in the country, such as agribusiness and evangelicals. According to Exame, Trump granted visas to Flávio, his wife and daughters.
In the reading of Christopher Garman, director for the Eurasian Americas, there is no sign of US retaliation against Brazil. He admits that the bilateral relationship could become more tense, but believes that the balance tends to be maintained. According to Estadão, the analyst also considers it difficult to remove the tariffs without a Brazilian counterpart, as Brazilians would not accept demands from the USA.
The commercial side, however, has less gloomy signs. According to Exame, the MDIC team that negotiates with the USTR assesses that Flávio's trip to the USA should not hinder the negotiations. The central question is whether the political dispute and the tariff agenda will remain separate, something that is not yet clear.
What changes for the investor
The Eurasia reading suggests that the main channel of impact for the market is trade policy, not open confrontation. If negotiations with the USTR continue separately from the electoral dispute, as assessed by the MDIC team, the risk tends to be concentrated in noise and declarations. If Washington's tone hardens and the tariff issue returns to the center, sectors more exposed to the American market may feel the effect first. It is worth monitoring official signals from the USA, the progress of tariffs and the reaction of Flávio's allies in Brazil. This article does not provide a purchase or sale recommendation or price projections.
Automatically translated from Portuguese.
