The U.S. will designate Brazil’s two main organized crime groups as terrorist organizations, a move that will likely reignite tensions between Donald Trump and President Luiz Inácio Lula da Silva.

Secretary of State Marco Rubio announced Thursday that the U.S. will apply the label to the Primeiro Comando da Capital, or PCC, and the Comando Vermelho, or CV.

“The Trump administration will continue to use all available tools to protect our nation and our national security interests by keeping illicit drugs off our streets and disrupting the revenue streams funding violent narco-terrorists,” Rubio said in a statement.

The PCC is a money laundering powerhouse that has infiltrated fuel distribution networks and fintechs, while the CV is the Rio de Janeiro group that was at the center of Brazil’s deadliest ever police operation in October.

The move follows Trump’s prior designation of numerous criminal groups from Mexico and other nations as terrorist organizations. Lula visited the White House earlier this month, part of an effort to stave off what Brazil sees as a counterproductive move that will pose risks to both its financial system and its sovereignty.

The Brazilian president instead sought to convince Trump to deepen U.S. cooperation with his government’s efforts to fight groups like the PCC by targeting money laundering operations and smuggling networks.

The leftist leader has also seen the designation as a move that could pave the way for the U.S. to justify military action in its territory, especially amid rampant air strikes against alleged drug traffickers in the Caribbean, an operation that toppled Venezuelan leader Nicolas Maduro, and expanded armed forces activity across the region.

The decision will reverberate politically in Brazil ahead of an October election in which Lula is facing a tough challenge from Flavio Bolsonaro, the eldest son of former President Jair Bolsonaro, a Trump ally.

With crime top of mind for Brazilian voters, the younger Bolsonaro has promised to take an iron-fisted approach to public security. He met briefly with Trump at the White House this week, and said he urged the US leader to apply the designation to the groups.

The U.S. move will also spark uncertainty inside Brazil’s financial and economic system as banks and other businesses seek to understand the implications.

Last year, the U.S. targeted three Mexican banks for potentially laundering proceeds from drug trafficking, effectively choking them off from the U.S. financial system.

In recent years, Brazilian authorities have said they’ve uncovered evidence that the PCC is laundering money through fintechs. Last year, federal police carried out the country’s largest-ever organized crime sting, bringing down a money laundering operation worth nearly $10 billion.

Relations between Trump and Lula soured last year when the U.S. president leveled steep tariffs against Brazil in an unsuccessful bid to stop Jair Bolsonaro’s trial on coup attempt charges. They repaired ties following an impromptu meeting at the United Nations in September, and Trump emerged from their most recent encounter praising Lula as a “dynamic” leader.

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(With assistance from Daniel Carvalho, Matheus Piovesana and Martha Beck.)

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