The Trump administration designated Brazil's two largest drug gangs as terrorist organizations on Thursday, following months of lobbying by Jair Bolsonaro's sons. The First Capital Command and Red Command received the terrorist label, effective June 5, with the State Department citing operations across more than a dozen U.S. states and threats to public safety.

Flávio Bolsonaro, who plans to challenge President Lula in October, celebrated the designation and took credit for influencing the decision. The move comes days after his White House meeting with Trump, raising concerns among Brazilian officials about potential U.S. election interference. Lula opposes the designation, arguing it constitutes meddling in internal affairs.

The terrorist label enables broad economic sanctions that pose risks to Brazilian financial institutions. These gangs have infiltrated the formal economy through investments in gas distribution, real estate, commodities, and cryptocurrency, leaving banks vulnerable to potential penalties. While the groups export significant cocaine quantities to Europe, experts note limited involvement in U.S. drug trafficking.

This designation strains U.S.-Brazil relations just as they were recovering from earlier tensions over Bolsonaro's imprisonment. The banking sector faces major exposure as sanctions could target institutions with ties to these criminal networks operating across multiple economic sectors.