India and Brazil, two of the largest emerging market hit hardest by Donald Trump’s trade wars, are deepening their ties, betting that a united front will help them find new market to skirt US tariffs.
The government officials and business executives from Brazil and India are converging this week in New Delhi, seeking to forge new relationships and triple the countries’ $12-billion bilateral trade, even as economists warn that Trump’s policies could shave about one percentage point from the countries’ economic growth.
The Brazilian delegation is likely to discuss potential partnerships with Indian business leaders in areas including agribusiness, biofuels and defence.
The burgeoning partnership between Brazilian President Luiz Inacio Lula da Silva and India’s Narendra Modi is among the clearest examples of the global realignments taking place as the Trump White House tears up decades-old partnerships and practices of commerce. That reboot in American diplomacy has thawed India-China relations and resulted in an India-EU trade deal.
While both Modi and Lula are manoeuvering to improve their standing in the US, they are also effectively hedging their economic bets to cope with being squeezed by Trump.
“Trump’s trade war is generating a total reorganisation of trade everywhere,” Thiago de Aragao, head of Washington-based consultancy Arko International, told Bloomberg News. “Although everyone wants to solve the problems they have with the US, everyone is weary that this mindset from the Trump administration might be a long-term trend.”
India and Brazil were hit by some of the harshest tariffs since the Trump administration came to power—50% on their goods.
While the White House later issued carve outs for hundreds of Brazilian products and exempted Indian pharmaceutical and electronics, the levies pose a serious economic risk.About 12% of Brazil’s exports went to the US last year, so the South American country has much to lose if tariffs curtail demand for key goods like beef and steel.
India-Brazil Bilateral Meeting
Vice President Geraldo Alckmin will lead the Brazilian delegation in India, which will also include executives from oil giant Petrobras, the mining company Vale SA and food processor BRF SA.
The delegation is particularly interested in tapping into 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 expanding the Mercosur–India preferential trade agreement, signed in 2004.
Lula, 79, had already been looking to diversify Brazil’s trading partners when he started his term in 2023—targeting Indonesia, Malaysia and Turkey, among others—but he has doubled down on that effort since Trump came to power promising to shrink the US trade gap.
US tariffs on Brazil
In August, Trump slapped tariffs on Latin America’s largest economy in response to the prosecution of former President Jair Bolsonaro, a Trump ally who was convicted of attempting a coup last month.
Washington and Brasilia have since taken steps to repair relations following an impromptu face-to-face between the two presidents at the United Nations General Assembly in September. But the 50% import taxes remain in place.
Brazil has rerouted some of its US exports to Argentina and China over the past few months. India, Brazilian officials say, is the destination that holds the most potential growth. Both India and Brazil are founding members and de facto leaders of the BRICS, the bloc of emerging world powers that Trump loathes.
“Perhaps the biggest increase in trade flows we’ll see, regardless of the tariff hike, but also because of it, will be with India,” Jorge Viana, head of Brazilian Trade and Investment Promotion Agency, or Apex Brasil, said in an interview.
US tariffs on India
India is even more dependent on its trade relationship with the US, the Asian nation’s top export destination. Nearly a fifth of all Indian exports are shipped to the US, led by electronics, jewellery and pharmaceuticals.
Trump had exasperated Modi with claims that he had “solved” the latest military escalation between India and Pakistan, an idea the Indian leader squarely rejected. Meanwhile, the Brazilians rolled out the red carpet for Modi at the BRICS meeting in Rio de Janeiro, followed by a lavish state luncheon at the presidential palace.
Ultimately, Lula’s entreaties proved persuasive and Modi cast his lot with Brazil, blasting the “double standards” their countries faced from the West.
The White House hit India with two rounds of 25% levies shortly after Modi’s Rio visit over the Asian nation’s continued purchase of Russian fuel, which the US says is funding Vladimir Putin’s war machine.
There’s been a notable cooling in tensions since the tariffs were imposed, with Modi and Trump holding two calls in recent weeks and calling each other “friend,” and US and Indian trade negotiators resuming talks.
India-Brazil Relations
Brazil and India have previously banded together to confront Washington. In the early 2000s, the countries successfully partnered with other emerging-market allies against Western powers during WTO negotiations known as the Doha Round. Developing nations resisted demands to liberalize trade, which scuttled the talks and helped foster their own domestic industries.
Still, regardless of how much Lula and Modi want to improve their trade ties, they are unlikely to wean themselves off the US. Part of the challenge is that they sell many of same products abroad, such as coffee and sugar. Then there is their mutual reliance on China, which is Brazil’s top trade partner and India’s No. 2.
“Washington provides markets for Brazil and India that they cannot provide for one another,” said Matias Spektor, an international relations professor at the Getulio Vargas Foundation in Sao Paulo. Changing patterns of trade and the structure for value chains is “not something governments can do by fiat,” he said.