Lula receives contingency plan as U.S. tariff hike nears without deal - Valor International

Finance Minister Fernando Haddad presented a contingency plan Monday (28) to President Lula to support companies likely to be hit by the 50% tariff hike announced by U.S. President Donald Trump. Despite this, Mr. Haddad said the government’s priority remains reaching a negotiated solution with American authorities before the measure takes effect on Friday, August 1.

Speaking to reporters after a meeting with Mr. Lula and other cabinet members at the Planalto Palace, Mr. Haddad said the president is fully informed. “All possible scenarios are already known to President Lula. We've reviewed them now. What matters is that he has in hand all the scenarios outlined by the four ministries,” he said, referring to the Finance Ministry, the Ministry of Development, Industry, Trade and Services (MDIC), the Presidential Chief of Staff’s Office, and the Ministry of Foreign Affairs.

Still, President Lula has not made a final decision on the contingency plan, as the government is prioritizing diplomacy. “The focus remains on negotiations. Vice President Geraldo Alckmin is in constant and direct contact with U.S. officials. What we said last week remains true, Brazil will not leave the negotiating table at any point,” Mr. Haddad said.

He added, “By order of the president, the focus is to negotiate and try to avoid unilateral measures, but regardless of the decision made by the U.S. government, we will remain open to negotiations.”

Minister Haddad once again declined to disclose details of the contingency plan. Last week, he hinted that it includes a credit line for affected companies. The government estimates more than 10,000 companies could be impacted by the tariff hike, and job protection measures are also under discussion.

“The material was distributed to the ministers, and it’s fairly comprehensive. They will go over it carefully, and the president may call [additional meetings], but the priority is receiving a response from the U.S. to the letters we sent [proposing talks],” Mr. Haddad said.

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Leading the interministerial committee on the tariff issue, Vice President and Industry and Trade Minister Geraldo Alckmin echoed this stance and said the administration is making “every effort” to solve the 50% surcharge problem.

“The contingency plan is being finalized, it’s quite thorough and well-constructed, but all efforts this week are focused on solving the issue. We’re currently engaging through institutional channels. This dialogue began in March, I had a long videoconference with the U.S. Secretary of Commerce. In May, they asked us to send a confidential letter addressing numerous points raised by Brazil, but we haven’t received a response,” Mr. Alckmin told reporters.

On another front, the Brazilian government sent new signals to U.S. authorities to underscore its willingness to negotiate. These gestures came from both Brazil’s embassy in Washington and Foreign Minister Mauro Vieira, who is in New York until this Tuesday.

Although Mr. Vieira traveled to the U.S. for a United Nations conference on the two-state solution to the Israel-Hamas conflict, he and his aides used the visit to reinforce Brazil’s intention to resolve the trade issue through dialogue.

According to officials, Mr. Vieira even indicated he would be willing to go to Washington to speak directly with members of the Trump administration. So far, however, Brazil has not received a positive response.

Earlier, at a ceremony in the presidential palace for the signing of a new export stimulus program, Mr. Haddad said Brazil cannot be paralyzed by internal or external threats. “We must work together to build the necessary solutions for Brazil to continue growing,” he said during the launch of the Acredita Exportação Program.

Haddad also said Brazil “can and will” grow at an average of 3% a year. “We’ve already made the IMF revise its estimate of our potential GDP,” he noted. The International Monetary Fund forecasts Brazil’s growth at 2.3% this year. However, Mr. Haddad believes that figure “falls short of the Brazilian economy’s potential.”

Market projections are aligned with the IMF forecast. The Central Bank’s Focus survey, released Monday, showed the median estimate from economists for Brazil’s 2025 GDP growth remains at 2.23%. For 2026, the forecast inched up from 1.88% to 1.89%.

This article was translated from Valor Econômico using an artificial intelligence tool under the supervision of the Valor International editorial team to ensure accuracy, clarity, and adherence to our editorial standards. Read our Editorial Principles.