Trump meddles in Brazilian politics

Brazil holds an unusual position in President Donald Trump's trade war because his complaints are more political than economic. Bureau chief Vanessa Dezem writes today about how the US intervention has so far strengthened the position of the current government. Plus: A plot to kill a weapons maker, a potential rift in the Republican coalition and a surprising market surge for Israel.

If this email was forwarded to you, click here to sign up.

President Donald Trump's call for a 50% tariff on Brazilian exports is already reshaping the presidential race in Latin America's largest economy. And that's precisely the outcome investors fear most.

The US move was an unexpected political gift to President Luiz Inácio Lula da Silva. Once battered by inflation, rising crime and discontent over fiscal policy, Lula quickly reframed himself as the defender of the nation in the face of American aggression. The tariffs—which Trump has said are in response to Brazil's prosecution of former President Jair Bolsonaro over an alleged coup attempt—ignited a surge of anti-US sentiment and allowed Lula to redirect public anger. His allies went on the offensive: "Lula wants to tax the super-rich. Bolsonaro wants to tax Brazil," read a viral slogan on social media.

Meanwhile, the Brazilian right was thrown into disarray. Bolsonaro and his inner circle thanked Trump for the gesture of solidarity—aligning themselves with foreign coercion at a politically sensitive moment. Lula's approval rebounded, and Bolsonaro's camp looked fractured and tone-deaf. When Trump rolled out a surprising 700 exceptions to the tariffs, Lula's team claimed it as evidence that Brazil hadn't bowed to US pressure and that the president's strategy worked.

Luiz Inácio Lula da Silva. Photographer: Ton Molina/Getty Images

In a July poll by AtlasIntel for Bloomberg News, Lula's approval rating reached its highest point this year, overtaking key rivals early in the race for 2026. In a way, it's an echo of what unfolded in Canada's vote earlier this year. Polling showed a decisive issue for voters was how the candidates for prime minister would handle US threats. That dynamic helped propel Mark Carney to victory, as many Canadians saw him as someone who would stand up to Trump, not accommodate him.

Investors are growing anxious at the prospect of the leftist Lula securing what would be his fourth term. In São Paulo's Faria Lima district, Brazil's financial hub, talk of capital flight and economic disruption is picking up. For many, the ideal candidate is São Paulo Governor Tarcísio de Freitas, Bolsonaro's protégé. Viewed as pragmatic and fiscally focused, backed by a pro-government Congress, Freitas was expected to usher in pro-market reforms. But since Trump's intervention, his momentum has stalled.

In one other scenario, a Bolsonaro family member—such as his son Eduardo, known for his lobbying ties in Washington, or his wife, Michelle—could bring back the turbulence and unpredictability of the previous administration, though likely with a more assertive economic agenda.

Bolsonaro's house arrest, ordered Monday, adds a volatile new layer to the crisis. For investors, the prospect of a US escalation in response is a looming risk. The fallout could deepen economic uncertainty, yet it also raises the possibility of Bolsonaro recasting himself as a political martyr.

Many investors are still pricing in Lula as a trailing contender in 2026, according to some market participants. If that changes, so could asset valuations—and fast.

For now, Trump's tariffs have done what Lula's team couldn't: reshuffle the political deck in the president's favor. Although there's a long way to go before the 2026 elections, and the economic effects of tariffs are far from certain, the headwinds are only amplified.

In Brief

Trump says that US tariffs on semiconductor and pharmaceutical imports would be announced "within the next week or so."
Taiwan prosecutors arrested six people suspected of stealing trade secrets from TSMC, opening an investigation into a potential breach of national security involving a global tech industry linchpin.
Texas Governor Greg Abbott ordered the arrest of Democratic lawmakers who left the state to block a controversial vote on new congressional maps.

A Target on His Back

Watch: Russia's Plot to Kill a German Defense CEO

On a clear night at the end of April 2024, arsonists slipped into a tidy residential neighborhood in Hermannsburg, a German village of about 8,000 people surrounded by flat farm fields, heathland nature reserves and military bases. Under the cover of darkness, they arrived at a large redbrick home, where they set fire to a clapboard garden house and a towering beech tree out front. They escaped undetected before the fire brigade arrived. Neighbors awoke the next morning to the smell of still-smoldering wood.

The home belonged to Armin Papperger, the chief executive officer of Rheinmetall AG, Germany's largest defense company. Papperger, a stocky, white-haired 62-year-old engineer, wasn't home at the time. In fact, he hadn't been there since 2022, when Russia launched its full-scale invasion of Ukraine, local residents say. The war had made Papperger a busy man: He was turning a sleeping industrial giant into an international defense juggernaut on track to bring in almost €10 billion ($11.6 billion) in revenue that year. Rheinmetall had already provided Ukraine with armored vehicles, military trucks and ammunition, and Papperger had recently announced plans to set up four weapons production sites inside the country.

An anonymous letter soon surfaced on a left-wing internet platform claiming responsibility for the arson attack. The letter lambasted Rheinmetall for profiting from Russia's invasion and ended with a curious demand: to free from jail a former member of the Red Army Faction, or RAF, a militant group that murdered prominent German businesspeople and public figures in the 1970s and 1980s, including the CEO of Deutsche Bank in 1989. "His place of retreat is not safe," the anonymous perpetrators wrote of Papperger.

A few months later, CNN revealed that US intelligence agencies had warned Germany earlier in the year that Russia was preparing to kill Papperger, the most advanced of a series of plans to kill defense industry executives across Europe.

So begins the story by Stephanie Baker and Aaron Kirchfeld about Papperger, whose work has been central to Europe's efforts to arm Ukraine: Russia's Secret War and the Plot to Kill a German CEO

Pesticide Rules Risk a Fracture

Illustration: Hanneke Rozemuller for Bloomberg Businessweek

Last month a House committee voted along party lines on a seemingly run-of-the-mill interior appropriations bill, allocating funds for several favored Republican policies—expanding funding for domestic mining and offshore fossil fuel production, for instance—and curbing spending on more liberal causes, such as climate and diversity. But tucked away on page 196 of the more than 200-page bill were 10 little lines of text that have both environmental advocates and the Donald Trump-backing "Make America Healthy Again" coalition readying for a fight.

To anyone outside the Beltway, the buried bit of Washington-speak might not look like much: The provision, known as Section 453, appears to limit the government's ability to mandate or approve labeling changes on chemical pesticides. "It seems so innocuous," says Geoff Horsfield, policy director at the not-for-profit Environmental Working Group, which opposes the rider. "I think that's what the pesticide manufacturers are trying to portray this as."

Opponents, though, say the language would tie the hands of the Environmental Protection Agency, states and even pesticide manufacturers themselves from making labeling changes or issuing voluntary guidance that deviates from current standards—even if those standards have been shown to be outdated. The only way labeling changes could be made would be if the EPA performed a full human health assessment for a registered pesticide, a lengthy process that's mandated only once every 15 years, or a carcinogenicity classification, another extended and infrequent process.

It's a surprising move, Deena Shanker and Rachel Cohrs Zhang write, for an administration that includes Robert F. Kennedy Jr., who had repeatedly railed against pesticides: The GOP Is Choosing Pesticides Over the MAHA Moms

Amid Israel's War, Stocks Are Climbing

The Tel Aviv Stock Exchange is defying wartime expectations. Photographer: Kobi Wolf/Bloomberg

When Eylon Penchas talks to foreign investors these days, some complain the private equity executive isn't enthusiastic enough. "They say I should begin any presentation with a slide saying, 'A new era' or 'It's a new Middle East,'" says Penchas, founder of Israel Legacy Partners. "But I have so many worries about what's happening in Israel, and I would have expected the economy to go in a different direction."

He isn't the only one scratching his head that Israeli assets are soaring despite 22 months of a brutal multifront war. The Tel Aviv Stock Exchange's benchmark index climbed 21.3% in the first half of 2025—outperforming almost every other global market—driven largely by investors outside Israel. The stocks of insurance and financial-services companies have fared especially well, jumping 68%. Initial public offerings more than tripled from last year, and the shekel is one of the world's best-performing currencies, strengthening more than 9% against the US dollar over the past four months.

January through June marked the strongest six months for Israeli tech funding in three years, according to nonprofit foundation Startup Nation Central, which estimates $9.3 billion of private capital has been raised—a 54% jump from the second half of 2024.

But, as Galit Altstein and Ethan Bronner write, for many following the horrors of the conflict, the enthusiasm from foreign investors seems to defy understanding: Israel's Financial Markets Are Soaring Despite 22 Months of Brutal War

Switzerland's Squeeze

39%

That's the tariff the Trump administration has threatened to impose on Switzerland, a stunning number after talks the Swiss viewed as promising. An across-the-board levy at that rate would put up to 1% of Switzerland's economic output at risk over the medium term, according to Bloomberg Economics.

Staying Put

"He's doing a great job, and he wants to do what he's doing, so I just take him off. He does not want it. He likes being Treasury secretary. He's doing a really good job."

President Donald Trump

Trump, in an interview Tuesday on CNBC, said Treasury Secretary Scott Bessent told him he didn't want to be on the list to be nominated to replace Jerome Powell as the next chair of the Federal Reserve.