Brazilian President Luiz Inácio Lula da Silva vowed to pursue alternative trade partners and pledged to attend next month's G7 summit in France, as his government scrambled to contain the fallout from sweeping new US tariff proposals that could hit a broad range of Brazilian exports.

The US Trade Representative (USRT) proposed two separate tariff measures this week. The first, announced on June 2 and triggered by a Section 301 investigation focused exclusively on Brazil, would impose a 25% duty on a range of products that, according to the Planalto Palace, account for roughly a fifth of Brazil's sales to the US.

The investigation concluded that certain Brazilian government policies were "unreasonable" and imposed undue restrictions on US trade.

Among other issues, to justify the punitive levies, the agency accuses Brazil’s instant payment system Pix of “unfairly” harming US companies that provide electronic payment services, such as credit card operators MasterCard and Visa, Agencia Brasil reported.

The second measure, announced the following day, would apply a tariff of up to 12.5% on Brazil alongside 59 other countries over alleged failures to effectively ban imports produced with forced labour.

Both measures remain subject to public consultation and are not expected to take effect before July, according to O Globo.

Speaking to his cabinet, Lula made clear he did not intend to absorb the blow passively, and committed to diversifying trade routes.

“We will seek out other partners. If they don't want to buy, we'll sell to whoever does. We won't just sit around complaining. Brazil is its own master. This is a democratic and sovereign country," he was quoted as saying.

He also signalled a willingness to engage diplomatically, reversing an earlier decision to skip the upcoming G7 summit in France.

"I wasn't even going to the G7, but now I am. Someone needs to try to bring order to the house and stop this dismantling of multilateralism,” Lula said.

Behind the scenes, Lula's government has been working on a dual-track strategy, with July 15 emerging as the effective deadline for reaching a deal, O Globo reported.

Officials believe they have a stronger hand in fighting the 25% tariff — which targets Brazil specifically — than in escaping the forced labour measure, which covers dozens of countries including close US allies such as Argentina, making a bilateral carve-out difficult to secure.

The forced labour tariff may nonetheless prove useful as a negotiating tool: Brazilian officials plan to argue that, since the country is already subject to a 12.5% levy, there is no justification for an additional 25% surcharge.

Sectors on the table in bilateral talks include medical equipment and technology hardware, areas where Washington is keen to expand its foothold in the Brazilian market.

Tariff concessions by Brazil are also under consideration, according to sources cited by O Globo.

The government has reaffirmed it reserves the right to invoke the Reciprocity Law, passed unanimously by the National Congress in April 2025 in response to the first round of Trump tariffs, which allows Brazil to respond to foreign measures that "negatively impact Brazilian international competitiveness."

However, a Lula aide was quoted as saying the law was, for now, being treated as a last resort rather than an active instrument.

On the domestic economic front, in an electoral year in which the seasoned leftist leader is seeking a fourth term, the government moved in parallel to cushion potential damage to Brazilian firms.

In a joint decree, the Ministries of Finance and Development lowered the minimum export revenue threshold required to access financing under the Sovereign Brazil 2 (Brasil Soberano 2) credit programme from 5% of gross revenue to 1%, opening the lines to a far broader pool of exporters and their supply chain partners, Valor reported.

The move was described as independent of the new tariff threat, but officials acknowledged a fresh round of US levies could require additional measures, and that worsening trade tensions might improve the prospects of a provisional measure underpinning the programme — currently stalled in Congress amid disputes over amendments — finally being approved.

At risk is the operationalisation of up to BRL21bn ($4.15bn) in BNDES credit earmarked under the initiative.

The tariff saga is also rippling through Brazil's domestic politics, with analysts noting the awkward position it creates for the Bolsonaro camp ahead of October's congressional elections.

Right-wing candidate Flávio Bolsonaro visited the White House on the same day the 25% tariff was proposed, with President Trump posting a photograph praising Jair Bolsonaro's eldest son as "a smart young man who loves his country."

Political analyst Matias Spektor of the FGV School of International Relations cautioned against reading too much into the optics. "The idea that we will have Trump clearly on Flávio's side by October is premature and assumes he has a discipline that is not real," Spektor said, quoted by O Globo.

For now, Brasília is betting that the July window is wide enough to negotiate its way off the more damaging list, and that Lula's trip to Cannes could yet yield the face-to-face encounter with Trump that no formal agenda currently anticipates.