The United States’ May 28 announcement that it would designate Brazil’s two biggest criminal gangs—the First Capital Command and the Red Command—as terrorist organizations was hardly a surprise. After all, the Trump administration had already done the same for more than 10 groups across Latin America, including in Colombia, Haiti, and Mexico. The White House said the designation is part of an effort aimed at “keeping illicit drugs off our streets and disrupting the revenue streams funding violent narco-terrorists.”
Still, the decision sent shock waves through Brazilian politics. It will have consequences in four key areas. First, it is likely to hinder U.S.-Brazil cooperation in the fight against transnational crime. Second, it will almost certainly benefit the far right ahead of presidential elections in October. Third, it has raised concern among Brazilian diplomats and military officials about potential U.S. violations of the country’s sovereignty. Finally, and perhaps most importantly, the designation could impose serious costs on Brazil’s economy.
The United States’ May 28 announcement that it would designate Brazil’s two biggest criminal gangs—the First Capital Command and the Red Command—as terrorist organizations was hardly a surprise. After all, the Trump administration had already done the same for more than 10 groups across Latin America, including in Colombia, Haiti, and Mexico. The White House said the designation is part of an effort aimed at “keeping illicit drugs off our streets and disrupting the revenue streams funding violent narco-terrorists.”
Still, the decision sent shock waves through Brazilian politics. It will have consequences in four key areas. First, it is likely to hinder U.S.-Brazil cooperation in the fight against transnational crime. Second, it will almost certainly benefit the far right ahead of presidential elections in October. Third, it has raised concern among Brazilian diplomats and military officials about potential U.S. violations of the country’s sovereignty. Finally, and perhaps most importantly, the designation could impose serious costs on Brazil’s economy.
Branding the two gangs as terrorists plays well with Brazil’s conservative voters, who have long demanded a harder line on crime. But among specialists who deal with these gangs, the mood is closer to alarm than celebration.
São Paulo prosecutor Lincoln Gakiya, widely seen as Brazil’s foremost authority on the First Capital Command—and a man who lives under its death threats—has condemned the U.S. measure and cautioned that it could erode, rather than reinforce, bilateral cooperation against these networks.
Once groups like this are declared terrorists, Washington stops handling them as a law-enforcement problem and begins treating them as a defense issue. After the United States designated Mexico’s cartels as terrorist groups in February 2025, the CIA expanded surveillance drone flights over Mexican territory, and U.S. officials signaled that military strikes were on the table.
Currently, the U.S. Drug Enforcement Administration (DEA) and FBI are key interlocutors in anti-crime cooperation with Brazil. The terrorist label will fold much of the FBI’s work into the orbit of the Defense Department and the intelligence community. It also hands the Treasury a larger role. Altogether, the move gives the Pentagon and the White House license to treat trafficking as warfare rather than as a crime—which is also the purported logic behind the Trump administration’s lethal strikes on alleged drug boats in the Caribbean and eastern Pacific. (This week, two U.S. senators disputed that rationale, saying that the presence of narcotics on boats is not part of targeting criteria.)
These changes pose risks to Brazil-U.S. cooperation. Investigators from both countries regularly exchange information through law-enforcement channels, such as DEA country offices and FBI legal attachés, established to produce evidence that holds up in court and supports arrests and extraditions. Intelligence and military agencies, by contrast, collect information to disrupt and target adversaries, working under classification rules that often keep material from reaching foreign partners in a usable form.
More broadly, militarizing the war on drugs is unlikely to produce results. Since last year, the U.S. strikes on small boats that it claimed were smuggling drugs have killed more than 200 people. Yet as New York Times reporter Simon Romero pointed out, cocaine is still cheap and easy to find on U.S. streets; traffickers simply shifted to land routes and container ships.
Designating the two Brazilian gangs as terrorist organizations is unlikely to have an impact on the U.S. drug market for another more obvious reason: Brazil barely produces cocaine. Coca is grown almost entirely in Colombia, Peru, and Bolivia; Brazil’s provides a transshipment corridor whose cargo is overwhelmingly bound for Europe—not the United States. The cocaine consumed in the United States is largely transported from Andean countries through the Pacific.
When it comes to politics, the Brazilian far right has claimed the U.S. announcement as a win. Days before the designation, presidential candidate Flávio Bolsonaro—the son of criminally convicted former Brazilian President Jair Bolsonaro—visited U.S. President Donald Trump at the White House. Although it is unclear whether the younger Bolsonaro played a role in Washington’s decision, Bolsonaro can leverage his personal ties to Trump to promise voters better U.S.-Brazil relations under his watch. The terrorism story also draws attention away from a major banking scandal in which Bolsonaro is ensnared.
At the same time, the U.S. announcement hurts Brazilian President Luiz Inácio Lula da Silva. Public security has long been a weak flank for the Brazilian left, and Brasília had lobbied against the U.S. decision. Lula insisted that Brazil was already moving against crime groups on its own, including via a roughly $2 billion plan launched earlier this year to strangle their finances. Resisting Washington’s move too loudly carries electoral risk for Lula, as it could make him look soft on crime. For now, he still leads Bolsonaro in polls. But a clumsy response to Trump could become a self-inflicted wound.
So far, Lula has tried to thread a needle: branding the U.S. move as an affront to Brazilian sovereignty while signaling a continued readiness to cooperate with the United States against organized crime. Celso Amorim, Lula’s foreign-policy advisor, welcomed U.S. help on money laundering and arms trafficking while warning Washington not to turn the designation into a lever against Brazilian sovereignty. Whether via tariffs or intervention in its justice system, the United States has repeatedly attacked Brazil since Trump returned to the White House last year.
On paper, the terrorism label gives Washington firmer legal footing against anyone whom it alleges is connected to the First Capital Command and the Red Command. The United States could impose asset freezes, material-support prosecutions, and expanded intelligence work once a transaction touches a U.S. bank or is cleared in dollars. In theory, the designation could even clear a path to U.S. action on Brazilian territory. Although few in Brazil expect U.S. strikes, the move is clearly another step in Washington’s quest for regional military hegemony.
In Venezuela, the foreign terrorist organization (FTO) label became a prelude to military intervention. As Robert Muggah of the Igarapé Institute noted in Americas Quarterly, the United States listed a group that it called the Cartel de los Soles as an FTO in late 2025. In January, U.S. forces seized Venezuelan President Nicolás Maduro to face trafficking charges in the United States. But days later, the U.S. Justice Department dropped the claim that the Cartel de los Soles was an actual group. To Latin American observers, the message was clear: The FTO designation served thinly disguised U.S. political purposes.
The sharpest near-term risk to Brazil, however, is economic and reputational. Brazilian banks will face greater scrutiny from the U.S. Treasury and a greater risk of sanctions if they are found to have dealt, even unknowingly, with individuals tied to criminal gangs. (U.S. regulators may decline to accept good faith as a defense.) This could undermine Brazil’s status as a geopolitical safe haven for foreign investors.
In Brazil, the scale of financial exposure to gangs is hard to wave away. As Muggah pointed out, Brazil’s revenue service has tied the First Capital Command alone to an estimated more than $10 billion, spread across funds and assets in real estate, logistics, construction, and agribusiness, key sectors in the Brazilian economy. Mexico, he writes, offers a preview: When Washington put six Mexican cartels on the terror list in early 2025, the heaviest blow fell not on traffickers but on banks’ compliance teams. A comparable retreat in Brazil would leave firms that operate across borders facing slower payments, costlier compliance, and deeper vetting.
Brazilian Finance Minister Dario Durigan has warned that the U.S. measure could reach even Pix, the central bank’s instant-payment system. Brazil’s banking sector has taken the threat seriously enough that lenders have not ruled out joining Lula’s government to press Washington for a reversal of the terrorist designation should capital flows begin to suffer. For now, the industry’s most practical request of Washington is narrow: a list of exactly who counts as a member of the First Capital Command and the Red Command, so institutions know whom they cannot serve.
Not every reading of these economic costs is bleak. Leandro Piquet Carneiro, who teaches at the University of São Paulo, has suggested that the threat of U.S. sanctions could harden compliance inside Brazil and leave the business climate safer.
But ultimately, the U.S. terrorist designations may not be about economics or national security. The Trump administration may simply be hunting for a quick hemispheric win after a bruising confrontation with Iran. In both Brazil and the United States—with their respective elections this fall—a military trophy is a cheap way to fire up a far-right base.
