• The leaders held their first in-person meeting since the U.S. imposed 25% tariffs on Brazilian steel and aluminum.
  • Talks were described as 'constructive,' with both sides agreeing to immediate follow-up negotiations.
  • The dispute, linked by Trump to the prosecution of his ally Jair Bolsonaro, risks escalating to the WTO.

President Donald Trump confirmed he spoke with Brazilian President Luiz Inácio Lula da Silva and that the two will be meeting again shortly, signaling a potential thaw in relations following a tense trade dispute. The conversation follows a sideline meeting between the two leaders at the ASEAN Summit in Kuala Lumpur in October 2025, their first face-to-face encounter since the tariff announcement.

The U.S. imposed significant tariffs of 25% on Brazilian steel and aluminum exports in February of this year, a move that rattled key industries in Brazil and prompted threats of a challenge at the World Trade Organization. Trump had previously linked the tariffs to the prosecution of his political ally, former Brazilian President Jair Bolsonaro, who was convicted of plotting a coup, a connection that had severely strained diplomatic channels.

According to people familiar with the discussions, the ASEAN meeting was "constructive" and centered on finding a resolution. Both leaders agreed to have their negotiating teams meet immediately to work toward solutions on the tariffs and broader trade concerns. A person close to the Brazilian delegation indicated that while Lula is committed to a diplomatic path, preparations for a WTO case continue in parallel as a contingency.

“We do not see a reason for conflict and are committed to resolving this,” Lula was quoted as saying after the initial meeting, striking a more conciliatory tone. The Brazilian president had previously protested that the U.S. measures would damage both economies.

The political context adds a complex layer to the trade negotiations. Trump's ties to Bolsonaro have been a persistent source of friction with Lula's administration. Without a deal, the tariffs threaten to inflict lasting damage on Brazilian exporters and could force U.S. manufacturers that rely on these imports to seek more expensive alternatives, potentially fueling inflation.

The upcoming meeting suggests a window for de-escalation is opening. Trump expressed optimism for future agreements, and the diplomatic engagement at the ASEAN summit, which also saw discussions of potential U.S. trade frameworks with Malaysia and Vietnam, provides a broader forum for negotiation. For now, markets and industry stakeholders will be watching to see if the teams can translate the leaders' dialogue into a tangible agreement.

Correction: An earlier version of this article misstated the month of the ASEAN Summit. It was held in October 2025.