Artículo World Politics Review, 28.07.2025 James Bosworth, fundador de Hxagon (riesgo político) y académico del Wilson Center
Geopolitical tensions between Brazil and the U.S. have surged in recent weeks across a half-dozen different issues. Amid his efforts to rewrite the rules of U.S. trade policy, President Donald Trump threatened 50 percent tariffs on Brazilian goods beginning on Aug. 1. But while the move is partially driven by Trump’s desire to negotiate new tariff rates on many countries as part of his global trade war, it is also driven by political reasons that are specific to Brazil.
To begin with, Trump sympathizes with former Brazilian President Jair Bolsonaro, who has already been banned from running in next year’s presidential election and is currently on trial for allegedly leading an attempted coup following the 2022 election. Moreover, the Republican Party in the U.S. views Brazil’s restrictions of hate speech and disinformation on social media sites as an affront to their often-hypocritical views on free speech issues. On top of all that, U.S. Secretary of State Marco Rubio has long distrusted Brazilian President Luiz Inacio Lula da Silva, an old-school leftist who remains too comfortable with the authoritarian regimes in Cuba and Venezuela. For those political reasons, in addition to the threatened tariffs, the U.S. government has revoked the visas of nine Brazilian Supreme Court judges, including Justice Alexandre de Moraes, who has spearheaded the court’s efforts on both of the contentious issues. Trump is also unhappy about the recent BRICS Summit hosted by Brazil, one of the grouping’s original members.
Personalities play a role as well. Both Lula and Trump are old and stubborn men who dislike ever giving the appearance of losing or backing down. They also don’t like or trust each other. This has made potential negotiations far more difficult than with countries whose leaders have shown flexibility and a willingness to operate cautiously, while waiting for Trump to back down. To the contrary, both Lula and Moraes have demonstrated that they are willing to double down in their fights against Trump. Lula threatened counter-tariffs, and Moraes issued a ruling confiscating Bolsonaro’s passport and placing the former president in an ankle bracelet to prevent him from fleeing to the United States. Moreover, as Sylvia Colombo wrote for WPR last week, Lula sees some political advantages in this fight, as it has divided Bolsonaro’s coalition and boosted Lula’s own approval ratings in initial polling following the spat.
However, the fight goes beyond personalities and the specifics of Trump versus Lula. There is a longstanding and longer-term contest for regional influence between the U.S., with its long and sometimes dark history of acting as a dominant force in the hemisphere, and Brazil, which as the largest and most powerful country in South America believes it should be able to act as the region’s hegemon.
That bigger fight means the next battleground between the two sides may be over the future of the U.S. dollar. Many countries, including Brazil, have bemoaned the dollar’s central role in the global financial architecture, and particularly how the U.S. uses the dollar’s dominance to “weaponize” interdependence. But Brazil’s Central Bank has already done something about it by building Pix, a government-run interbank transfer system that allows people and businesses to easily send money and make payments across bank accounts. Over 90 percent of Brazilians have used Pix, and about two-thirds of the country’s citizens say they are regular users.
There is a longstanding and longer-term contest for regional influence between the U.S. and Brazil. That bigger fight means the next battleground between the two sides may be over the future of the U.S. dollar.
Several developments in the past month have moved up the timeline of this fight. First, the U.S. Congress passed new regulations meant to strengthen stablecoins, which are privately issued cryptocurrencies that are pegged to the U.S. dollar to limit their volatility. The bill reflects an undercurrent of general distrust among the Republican Party of Central Bank Digital Currencies, or CBDCs, due to concerns that these digital versions of existing currencies could undermine the dollar. That distrust puts Brazil squarely in the GOP’s crosshairs, because for years, and even under Bolsonaro, Brazil’s Central Bank has been planning to launch a digital real, as its currency is called, known as DREX. Once it is implemented, the DREX would be among the first CBDCs in the world and one of the most important.
Second, on July 15, U.S. Trade Representative Jamieson Greer initiated a Section 301 investigation—meant to identify nontariff barriers to U.S. companies and products—that explicitly names Brazil’s digital payments regime, including Pix, as potentially being “unreasonable or discriminatory” toward U.S. firms. It’s true that Pix has eaten away market share not only from Brazil’s domestic banks, but also from major U.S. credit card companies that operate globally. But that is not because of any sort of unfair protectionism, which does in fact exist in many other Brazilian sectors.
Instead, it’s simply because Pix is a superior product that Brazilians have chosen to use. As economist Paul Krugman recently wrote, by offering swift and frictionless money transfers, Pix has accomplished what many cryptocurrency promoters have claimed to offer but failed to provide. Lula’s government views the Section 301 investigation as an effort by Washington to unfairly target its currency, but that’s a feeling that will cross ideological and party lines, given Brazilians’ widespread adoption of the Pix system.
Third, on July 22, Verifone and PagBrasil announced an exclusive deal that allows U.S. merchants to use QR codes to accept Pix payments in Brazilian reais—the plural of real—via Verifone’s existing point of sale software and PagBrasil’s “International Pix” API. Significant regulatory hurdles still stand in the way of deploying Pix in the U.S., including the fact that Verifone and PagBrasil likely need licenses to operate it as a money transfer business in most U.S. states. Still, the threat of foreign companies operating a major payment system within U.S. borders will frighten the Trump administration as well as established players in the payment market. As the Trump versus Lula conflict continues, the U.S. will likely find reasons to block this, whether fairly or not.
But Brazil doesn’t need to deploy Pix in the U.S. to expand its regional market share. It could easily start in Argentina or Venezuela, whose failing currencies—the peso and bolivar, respectively—have led the populations of both countries to already use foreign currencies and cryptocurrencies at much higher levels than most of the rest of the world. Bolivia’s recent devaluation and cash crisis could also make it a tempting market. Separately, Brazil could also deploy a Pix-like transfer system to Colombia, a large economy where most payments continue to be made in cash due to how fragmented electronic transfer systems are among traditional banking companies in the country. Using a digital transfer system linked to the Brazilian real, a relatively stable currency in South America, would be a simple transition in any of these countries. And it would help cement Brazil’s role as a regional hegemon, while representing a real threat to the dollar there.
The clash over currencies would occur no matter who was currently leading the U.S. and Brazil. But if it were to occur under Trump and Lula, it would make the conflict particularly volatile. Trump’s rhetorical and real embrace of “America First” will clash with Lula’s vision of Brazil as a global power that deserves a greater role in the Western Hemisphere and the world. Brazil’s real may not be a bigger challenge to the dollar than the euro or the yuan, but Brazil has built and deployed the technology to potentially make it a more immediate one.
