Latam Insights Encore: The TACO Realization Destroys Trump’s Tariff Threat Credibility

Latam Insights Encore: Latin America Is Noticing Trump’s Tariffs Are All Bark and No Bite

Even under the threat of humongous tariffs, Brazil has vowed to continue its path to de-dollarization. Brazil’s president, Luiz Inácio Lula da Silva, stated that, even with the reiterated threat of suffering a 100% tariff on exports, his government has decided to follow the de-dollarization path in line with the policies of the BRICS bloc.

Talking to Le Monde, Lula highlighted that “Trump’s threats don’t scare anyone. We will act in the interests of our countries and fight for fairer international trade.”

Furthermore, President Lula added:

Asking Washington for permission to choose the currency we consider most appropriate for our trade transactions is out of the question.

Lula’s statements signal that Trump’s threats have started to lose credibility in the world, as he has repeatedly backed off from his strongest measures, including the tariff standoff with China and the European Union (EU).

This has sparked a new phenomenon called Trump Always Chickens Out (TACO), a strategy seeking to take advantage of financial markets with the premise that the president, more often than not, will withdraw his most controversial measures affecting other countries.

This behavior is likely to continue affecting all his decisions at a national and international level, with leaders like Lula noticing this and acting in consequence.

If Trump continues to follow this erratic behavior, showing a lack of determination to carry out his decisions to their ultimate consequences, it might promote a weak image of his administration and the U.S.

In this regard, Lula also stated that if U.S.-Brazil negotiations fail to progress, he was ready to retaliate with reciprocal tariffs. And, unlike Trump, he is not a man known for backing out.

Read more: Brazil Defies Trump Tariff Threats, Backs Dollar-Free BRICS Trade

Read more: The New Trade in Town: TACO