Two of the emerging market giants most affected by President Donald Trump’s trade wars are deepening ties in response, betting that a united front It will help them withstand attacks from the United States and find new markets to avoid tariffs..
Government officials and business executives from Brazil and India meet this week in New Delhi, with the goal of forging new relationships and tripling the US$12 billion trade partnership between the two countries. while economists warn that Trump’s policies could reduce economic growth in both countries by about a percentage point. The Brazilian delegation is likely to discuss possible partnerships with Indian business leaders in areas such as agribusiness, biofuels and defence.
The burgeoning alliance between Brazilian President Luiz Inácio Lula da Silva and India’s Narendra Modi is one of the clearest examples of the global realignments taking place as the White House breaks alliances and trade practices that have been in place for decades. This restart of US diplomacy has also pushed New Delhi to thaw its relations with China and has prompted the South American bloc Mercosur and the European Union to sign a trade agreement that had not been finalized for a long time.
While both Modi and Lula are maneuvering to improve their standing in Washington, they are also effectively hedging their economic bets to meet pressure from Trump.
“Trump’s trade war is generating a total reorganization of trade everywhere,” said Thiago de Aragao, director of Arko International, a Washington-based consultancy. “Although everyone wants to solve the problems they have with the United States, everyone fears that this mentality of the Trump administration could become a long-term trend,” he reaffirmed.
India and Brazil were hit by some of the harshest tariffs since the Trump administration came to power: 50% on their goods. Although the White House later exempted hundreds of Brazilian products and Indian pharmaceuticals and electronics, the tariffs pose a serious economic risk.
About 12% of Brazil’s exports went to the United States last year, so the South American country has a lot to lose if tariffs reduce demand for key products such as beef and steel. Vice President Geraldo Alckmin will head the Brazilian delegation in India, which will also include executives from the oil company Petrobras, the mining company Vale and the food processor BRF.
The delegation is especially interested in accessing the coffee and ethanol markets, according to a Brazilian government official involved in the trip’s preparations who asked not to be identified discussing private internal deliberations. The two countries will also discuss the expansion of the preferential trade agreement between Mercosur and India, signed in 2004.
Lula, 79, was already seeking to diversify Brazil’s trading partners when he began his term in 2023, targeting Indonesia, Malaysia and Türkiye.among others, but has redoubled its efforts since Trump came to power with a promise to reduce the United States trade deficit.
In August, The United States imposed tariffs on Latin America’s largest economy in response to the prosecution of former President Jair Bolsonaro, a Trump ally, who was convicted last month of attempting a coup.
Washington and Brasilia have since taken steps to repair relations following an impromptu meeting between the two presidents at the United Nations General Assembly in September. However, 50% tariffs on imports remain in place.
In recent months, Brazil has diverted some of its US exports to Argentina and China. According to Brazilian officials, India is the destination with the greatest growth potential. Both India and Brazil are founding members and de facto leaders of the BRICS, the bloc of emerging powers that Trump so detests.
“Perhaps the biggest increase in trade flows that we will see, regardless of the increase in tariffs, but also because of it, will be with India,” said Jorge Viana, director of the Brazilian Trade and Investment Promotion Agency, or Apex Brazil, in an interview.
India depends even more on its commercial relationship with the United States, the main destination for the Asian nation’s exports. Nearly a fifth of all Indian exports are sent to the United States, mainly electronics, jewelry and pharmaceuticals.
Modi has tried to find a balance between staying loyal to developing world allies and reaching out to Trump. So much so that the 75-year-old prime minister was initially reluctant to attend the annual Brics summit that Brazil hosted in July, for fear of damaging US-India relations, according to people familiar with his thinking.
But Trump had exasperated Modi with his claims that he had ‘resolved’ the latest military escalation between India and Pakistan, an idea the Indian leader rejected outright. Meanwhile, Brazilians rolled out the red carpet for Modi at the Brics meeting in Rio de Janeiro, followed by a lavish state lunch at the presidential palace.
Ultimately, Lula’s pleas proved persuasive and Modi allied himself with Brazil, harshly criticizing the ‘double standards’ with which the West treated its countries.
The White House imposed two rounds of 25% tariffs on India shortly after Modi’s visit to Rio, due to the Asian nation’s continued purchase of Russian fuel. which according to the United States is financing Vladimir Putin’s war machine.
There has been a notable cooling of tensions since the tariffs were imposed, with Modi and Trump holding two phone conversations in recent weeks and calling each other ‘friends’, and US and Indian trade negotiators resuming talks.
Brazil and India have previously joined forces to confront Washington. In the early 2000s, both countries successfully allied themselves with other emerging market allies against Western powers during the World Trade Organization negotiations known as the Doha Round.. Developing nations resisted demands for trade liberalization, frustrating negotiations and helping to foster their own domestic industries.
Still, as much as Lula and Modi want to improve their trade ties, it is unlikely that they will achieve independence from the United States. Part of the problem is that both countries export many of the same products, such as coffee and sugar. In addition, both depend on China, which is Brazil’s main trading partner and India’s second.
“Washington provides Brazil and India with markets that they cannot provide for each other,” said Matias Spektor, professor of international relations at the Getulio Vargas Foundation in São Paulo. Changing trade patterns and the structure of value chains “is not something that governments can do by fiat,” he added.
