Lula’s Talisman for Dealing with Trump’s Bullying

President Lula of Brazil sent an important message at his press conference in New Delhi by suggesting that countries should bargain as ‘negotiating blocs’ with US president Donald Trump regarding his ‘reciprocal tariffs’. Nations would have to give up their ‘beggar thy neighbour’ approach. He translated his experience as a trade union leader regarding bargaining with employers who are much more powerful than the individual worker to argue that when a small country bargains with a larger one, it tends to lose. So, Global South needs to “act together” in negotiating with global superpowers. Possibly, India and Brazil could bring together the Global South.

The idea that other nations should bargain as a bloc with president Trump has been voiced since Trump announced his plan to tariff countries, including the closest allies, Canada and EU. Now President Lula, an important member of BRICS, suggesting it gives the idea the importance it deserves.

Consequences of the US Supreme Court's Order

The situation has suddenly changed since the US Supreme Court has declared ‘that president Trump exceeded his authority to invoke the 1977 International Emergency Economic Powers Act (IEEPA) to impose reciprocal tariffs’ – they have become unconstitutional. This nullifies the basis of the various agreements signed by the US with other countries since mid-2025. Even if Trump levies fresh tariffs under other laws, the agreements become invalid.

That taxation power lies with the US Congress and not the executive is a foundational principle of the US constitution. The US fought for independence on the principle, ‘No taxation without representation’. Trump violated this by levying tariffs without the approval of the legislature. It is the US public that pays most of the increased tariffs (exporters have cut their margins) without their representatives having approved them.

The US law provides for levy of tariffs under other sections, like, 122 and 301. But these are not the basis of the agreements signed. Though a new levy of 15% under 122 has been announced, that is not a part of the agreement. Hence nations can legitimately claim that the agreements they signed with the US are invalid and need to be renegotiated.

But how many nations would dare to do that? Most would keep quite lest they antagonize Trump and he takes some other action against them. India has certainly not said much since the US SC pronouncement.

This is where president Lula’s suggestion is important. If all countries act in concert, Trump would not be able to bully nations as he has done in the last one year. The US economy is currently estimated to be about 25% of the world's Gross Domestic Product (GDP). So, while singly it dominates over all other economies of the world that would no more be the case if the rest constituting 75% of the world economy act in concert.

China as number two economy, at about 19%, is the only economy that comes close and due to its special position in world trade it has been able to withstand US bullying. India at about 3% of world GDP is not in a position to singly stand against the US unless it changes its economic and diplomatic strategy. Or, it acts in concert with other countries.

Disruptions

EU has said that it would not accept the higher tariff under Section 122. India has postponed its meeting to work out the Interim deal, earlier said to be signed by mid-March. So, resistance to arbitrary US tariffs is beginning to increase. So, confusion prevails and uncertainty has increased.  It is also argued that there could be challenge to the new 15% tariff levied under section 122. So, it is unclear as to how long this may last. Also what after 150 days?

The US SC judgment has weakened president Trump’s position both within the US and vis.-viz. rest of the world. It is likely to embolden more Congressmen and even the Courts to challenge the unconstitutional positions Trump has been pushing. Other nations that have been bullied in the last one year are likely to take a tougher view of Trump’s diktats. To divert attention and restore his image, could Trump order an attack on Iran? The failure to resolve the Palestine and Ukraine issues must also rankle him.

Advantage of getting together

If the US persists with its 15% tariff (for 150 days) under section 122, all other countries together could agree to put 15% tariff on US exports. This would reduce global trade with the US. That would lead to a reduction of import from the US and provide a market to other countries to export more to each other. But, nations would have to agree not to resort to dumping. China has already decided to allow duty free imports from African nations to get greater access to their markets.

An agreement among nations could be worked out under the existing World Trade Organisation (WTO). The US by imposing arbitrary tariffs has gone against WTO agreements and can be penalised.

The rest of the nations need to urgently work out such an agreement. Trump will try to thwart other nations getting together by offering concessions. He has managed to divide other nations since April 2025, when he said he would sign 90 agreements in 90 days.

Trifecta disrupted

Trump could also try to activate other provisions like 201, 232 and 301. But these would require investigation and approval from the US Congress. That may take some months. Section 338 could also be used. Under these provisions there is no limit to the tariff imposed. So, other nations need to act before these provisions can come into play. The concerted retaliation by other nations would be seen by the US Congress as against US interest and therefore, they may not vote for higher tariffs proposed by Trump.

Effectively, not giving in to Trump’s bullying may succeed because the trifecta has been disrupted. Not only the SC has not supported him but even the legislature may not back his tariffs because the public has to pay them in the form of higher prices. In the coming mid-term elections in November that would not look good for the Congressmen. Chances of success increase further if the rest of the nations act concertedly.

So, Lula’s suggestion deserves urgent attention. Since the deals signed by Trump are one-sided, including with the other rich nations, all are aggrieved and could come on board and that would ensure success.

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