Lula resets with Trump while doubling down on the Global South

President Luiz Inácio Lula da Silva opened the window cleaning up after the worst rupture with Washington in decades — a 50% Trump tariff that had been tied to the prosecution of former president Jair Bolsonaro — and closed it shaking hands with Donald Trump in the Oval Office. The two presidents met for roughly three hours on May 7, 2026, talking trade, organized crime and Brazil's critical-minerals reserves. Lula said he left "very, very satisfied" and Trump praised the encounter. Brazilian goods still face an extra 10% tariff set to expire in July, and a US Section 301 investigation into Brazilian trade practices remains open, but the meeting locked in a follow-on negotiating track and drained much of the heat from the relationship.

The path to that handshake was not smooth. On February 28, the United States and Israel began striking targets inside Iran, and Lula spent much of March denouncing the war. On March 9 he hosted South African President Cyril Ramaphosa in Brasília and the two leaders issued a joint call for diplomacy. On March 20 Lula said the US thinks "they own the world," and on March 21, at a Community of Latin American and Caribbean States (CELAC) summit hosted by Colombia's Gustavo Petro in Bogotá, he warned that wealthy powers want to "colonise us again" and seize Brazil's critical minerals. Brazil also denied a US visa in March to Trump adviser Darren Beattie after the foreign ministry concluded his visit could amount to interference in Brazil's October 2026 election. Lula postponed a planned March 16 trip to Washington because of the Iran war; the May meeting was the rescheduled version.

The biggest structural shift of the window was the EU-Mercosur trade agreement crossing the finish line after more than two decades of talks. Brazil's House of Representatives approved the deal in late February, the Senate followed, and Lula signed Brazil into the agreement ahead of provisional entry into force on May 1. Argentina ratified on February 26, Uruguay on February 27 and Paraguay on March 17, with the European Commission greenlighting provisional application the same week. The pact creates a 700-million-person free-trade zone, eliminates EU tariffs on 95% of Mercosur goods within 12 years, and pulls Brazil deeper into the European orbit on agriculture, autos and industrial trade.

Lula spent February 18-22 in New Delhi for a state visit with Indian Prime Minister Narendra Modi. The two countries signed a critical-minerals and mining cooperation pact aimed at curbing India's dependence on China for rare earths and committed to roughly doubling bilateral trade to US$30 billion by 2030. Defence cooperation expanded alongside, with talks on Scorpene submarine maintenance and joint industrial work. With China, the picture was more mixed: Brazil let a tariff exemption for imported Chinese electric and hybrid vehicle parts expire on January 31, kept antidumping duties on Chinese steel and other goods, and pushed publicly for a partial Mercosur-China trade deal as a hedge against US tariff pressure. Beijing remains Brazil's largest trading partner and biggest single source of foreign investment, and the strategic relationship continues to deepen even as specific trade frictions accumulate.

Intra-regional politics turned sour fast. In early January, Argentine President Javier Milei insulted Lula on social media; Brasília responded by ending its arrangement to represent Argentine interests in Caracas, and an Argentine paper called it "the worst moment in the bilateral relationship." Milei skipped a Mercosur leaders' meeting and travelled to the Conservative Political Action Conference (CPAC) alongside Bolsonaro instead. Mexico moved in the opposite direction: Lula and President Claudia Sheinbaum spoke repeatedly through the window, agreed to deepen cooperation on trade, science, pharmaceuticals and ethanol, and coordinated their public stance on Venezuela and on regional autonomy from Washington. Lula formally invited Sheinbaum to visit Brazil in May.

Venezuela cast a long shadow. Nicolás Maduro had been captured in a US special-forces raid on January 3, and Lula publicly called it "a very serious affront to Venezuela's sovereignty." On February 21 he said Maduro should face trial in Venezuela, not the United States. Brazil refused to join Trump's "Shield of the Americas" security summit at the Trump Doral resort on March 7, alongside Mexico and Colombia, signalling a clear refusal to be enlisted in a US-led right-wing hemispheric bloc. Lula's broader message — visible at the CELAC summit, the Ramaphosa visit, and his Iran statements — was that Brazil intends to remain a non-aligned, Global-South-leading middle power even as it patches up trade with Washington.