US Terror Label for Brazilian Gangs Tests Lula-Trump Reset

The United States’ decision to classify Brazil’s two best-known criminal factions as foreign terrorist organizations has opened a new point of tension between Brasília and Washington, just weeks after Presidents Luiz Inácio Lula da Silva and Donald Trump had appeared to be easing a strained relationship.

The measure, announced by the US State Department on May 28, applies to Primeiro Comando da Capital (PCC), a São Paulo-born prison and drug-trafficking network, and Comando Vermelho (CV), a Rio de Janeiro-based criminal faction. According to BBC Brasil, Secretary of State Marco Rubio said the groups would be formally designated as Foreign Terrorist Organizations from June 5.

A Wider Diplomatic Risk

Brazilian officials had tried to avoid the designation, according to O Globo. Specialists interviewed by the newspaper said the immediate consequences remain uncertain, but warned that the classification could create legal openings for US sanctions, asset freezes and pressure on financial institutions with indirect exposure to people or companies linked to the gangs.

Feliciano Guimarães, academic director at the Brazilian Center for International Relations (Cebri) and a professor at the University of São Paulo, told O Globo that the move could be more damaging than Trump’s earlier tariffs on Brazilian goods because it goes beyond trade and touches national security, banking and foreign influence.

Retired ambassador Roberto Abdenur, who served as Brazil’s ambassador to the US during Lula’s first administration, told the newspaper that Brazil now faces an unprecedented risk of interference in more than two centuries of relations with Washington, although he said concrete US action has not yet materialized.

Lula Pushes Back

Lula rejected any suggestion that the designation could justify foreign intervention. Speaking in Sergipe on May 29, the president said PCC and CV are “terrorists” for Brazilian communities, but not for the United States.

“Comando Vermelho and PCC are terrorists, but for Brazilian communities,” Lula said, according to Agência Brasil. “They are terrorists and we will fight them here.”

The president said Brazil has approved anti-faction and organized-crime legislation and argued that the gangs do not fit the profile of terrorist groups usually pursued by Washington. He also linked Brazil’s security problems to illegal weapons flows, saying many firearms used in Brazil originate in the United States.

Lula framed the dispute as a sovereignty issue. “We do not accept being treated like children. We do not accept being treated as if we were a banana republic,” he said, according to Agência Brasil.

The Bolsonaro Factor

The timing has also made the decision politically sensitive in Brazil. BBC Brasil reported that Flávio Bolsonaro, a senator and son of former president Jair Bolsonaro, met Trump at the White House two days before the announcement and had asked the US president to classify the factions as terrorist organizations.

BBC Brasil cited The New York Times as saying the move followed “months of aggressive lobbying” by Bolsonaro’s sons. The BBC also reported that the Financial Times said Washington had already been considering the designation for at least a year, but that the timing could benefit Flávio Bolsonaro, who presents himself as tough on crime.

That political context matters because Brazil heads into an election year in which public security is a central issue. Lula’s allies see the US decision as potential pressure on Brazilian domestic politics; Bolsonaro supporters have celebrated it as a harder line against organized crime.

What Comes Next

The most immediate concern for analysts is not a US operation inside Brazil, which O Globo’s sources described as possible in theory but unlikely for now. The greater risk is financial and diplomatic: sanctions on people, assets or institutions linked to criminal networks that have infiltrated parts of the formal economy.

O Globo reported that experts see Lula’s direct relationship with Trump as one of the few short-term channels for reducing tension. Abdenur suggested a long phone call between the two presidents could help reset the issue, while Eurasia Group analyst Julia Thomson told the newspaper she expects no major bilateral progress for now, but only a modest escalation if both sides avoid sharper moves.

For Brazil, the challenge is to fight PCC and CV without giving Washington a broader role in domestic security. For the Trump administration, the designation adds Brazil to a wider Latin American strategy that has already targeted criminal groups in countries such as Mexico, Peru and Ecuador. The legal effects begin on June 5; the political effects have already started.