Brazilian President Jair Bolsonaro {right) and US President Donald Trump (left). Picture: REUTERS/KEVIN LAMARQUE
Brazilian President Jair Bolsonaro {right) and US President Donald Trump (left). Picture: REUTERS/KEVIN LAMARQUE

New York/Brasilia — Brazilian President Jair Bolsonaro is learning the cost of partnering with US President Donald Trump the hard way.

During his first year on the job, Bolsonaro assiduously courted the US president, parroting his hard-line policies on Venezuela and Hezbollah while breaking with diplomatic protocol by predicting a Trump victory in 2020 during a visit to the White House.

Yet his all-in bet on Trump is quickly souring as signs mount that the alliance isn’t delivering real benefits to Brazil.

Trump’s announcement on Monday that he is reinstating tariffs on steel and aluminium from Brazil and Argentina follows a decision by the White House in late August to give priority to Romania and Argentina’s bids to join the Organisation for Economic Co-operation and Development (OECD) despite public reassurances in favour of Brazil, Latin America’s largest economy.

Bolsonaro’s inability to get a clear diplomatic victory, at least so far, from his robust support of Trump raises questions about his decision to shift Brazil’s foreign policy. It also weakens him domestically by giving ammunition to rivals who warned against joining forces with someone they see as an unreliable partner.

“In international relations there are no friends, only interests,” Rodrigo Maia, Brazil’s lower-house speaker and a centrist who has criticised Bolsonaro’s foreign policy, told Bloomberg News on Monday. “Trump is defending Americans and we need to defend Brazilians.”

On Monday, Trump accused Argentina and Brazil of cheapening their currencies to the detriment of US farmers, arguing that the two countries are “presiding over a massive devaluation of their currencies”.

The two nations have taken advantage of the trade war to become alternative suppliers of soybeans and other agricultural products to China, grabbing market share away from US farmers.

Argentina’s peso has plunged this year, especially after it became clear that President Mauricio Macri would likely lose the October election to Alberto Fernández, the left-learning candidate. The country seems headed for a third consecutive year of economic contraction. Brazil has intervened multiple times in the past month to support its devaluing real. Argentina has also tried to bolster the falling peso.

Bolsonaro said he would talk to his economy minister before reacting to Trump’s comments on the Brazilian real and the imposition of the tariffs. “If needed, I can also talk to Trump, I have an open channel with him.” 

However, the tariffs threats underscored the lack of clear results to show for all the Bolsonaro-Trump romance. For instance, a much-touted trade deal with the US has failed to gain traction despite Bolsonaro publicly praising Trump at every turn. The US has ranked first as a destination for Brazilian steel exports for most of the past decade. In 2018, exports by volume to the US increased by 17%, when compared to 2017.

Diplomatic shift

Brazil, historically a cautious US ally, threw in its lot with Trump when Bolsonaro took office in January and railed against leftist ideologies and globalist institutions. That was a marked shift from the country’s traditional, internationalist approach, which sought to amplify its influence through regional alliances and multilateral organisations such as the UN.

In the meantime, China, Brazil’s largest trading partner, has been quietly working to deepen economic ties

Yet Bolsonaro’s enthusiastic alignment with Trump, together with his clashes with world leaders such as French President Emmanuel Macron, as well as Fernández, have left his nation increasingly alone in the world stage, a trend underscored by a recent vote at the UN where it was one of two countries siding with the US against 187 members on the Cuban embargo.

Brazilian diplomats, speaking on condition of anonymity, downplayed Trump’s tweets, arguing the scope and size of the tariffs are unknown and that their implementation isn’t certain. They also argued his claims are inaccurate as Brazil has a free-floating currency regime and works hard against exchange rate depreciation.

A US official stressed that the government still supports the OECD bid and that ties with Brazil have blossomed under Trump and Bolsonaro. The official, who asked not to be identified discussing bilateral ties, said the US is still very interested in advancing a free trade agreement.

Officials at the White House didn’t immediately respond to a request for comment on whether the president’s tariff decisions undermine the relationship he and Bolsonaro have sought to establish.

China pivot

In the meantime, China, Brazil’s largest trading partner, has been quietly working to deepen economic ties.

Facing an onslaught of pressure from his generals, the agriculture lobby, and other policy makers, Bolsonaro, who early on had accused China of predatory business practices, without fanfare, shifted his stance even before Trump’s tariff threat. During a visit to Beijing in October, he said the two countries “were born to walk together”. He later received President Xi Jinping at a BRICs summit in Brasilia, where he called for deeper trade relations.

US-Brazil ties will face a further test as Trump administration officials urge Brazil not to let Huawei Technologies build its ultra-fast 5G mobile network. The head of Brazil’s institutional security cabinet, Gen Augusto Heleno, has thus far ruled out banning the Chinese tech company’s bid in next year’s auction.

The possibility that Trump loses his re-election bid next year is another reason for the Bolsonaro administration to be more careful about the association, said Roberto Simon, senior director for policy at Americas Society and Council of the Americas.

“I really can’t think of any way in which this partnership with Trump has benefited Brazil,” he said. “It’s leading to the gradual undermining of Brazil’s credibility internationally. If Trump loses, Brazil could become an international pariah.”

Bloomberg