Projections point to closer ties with China, potential delays in investment
04/10/2025
The Trump administration’s surprise decision to impose new tariffs on Chinese imports has split Brazilian analysts over the potential fallout for Brazil’s economy. Experts interviewed by Valor expect continued headwinds for sectors like steel and aluminum—particularly if the 25% tariffs remain in place, well above the general 10% rate—while also anticipating a further deepening of Brazil’s commercial ties with China. At the same time, there are concerns that Brazilian products could lose ground to competitors in the U.S. market and that investment decisions may be postponed.
These measures add to global uncertainty and insecurity, said Welber Barral, partner at consultancy BMJ and former secretary of foreign trade. They’re likely to trigger a wave of negotiations with countries and blocs most affected by the U.S. trade policy. Mr. Barral warned that the move could open new markets for U.S. agricultural goods, posing risks to Brazil’s export sector. He believes blocs hit hardest by the new tariffs—such as the European Union, Japan, and South Korea—will likely receive priority in trade talks with Washington. Brazil, he says, could end up “at the back of the line” in negotiations for the 10% base tariff.
“In exchange for lower tariffs, the EU will offer the U.S. access to its agricultural market, which would be bad news for Brazil. Japan is expected to do the same, and South Korea may seek to negotiate around meat exports,” Mr. Barral added. According to Mr. Barral, the U.S. must secure new buyers for its agricultural output.
If the 25% sector-specific tariffs—which in Brazil’s case target steel and aluminum—remain, the executive believes the Trump administration will effectively be blending trade policy with commercial defense issues, heightening uncertainty. The 125% tariff on Chinese electric vehicles is also likely to raise concerns among U.S. Midwest farmers, who rely heavily on Chinese demand.
Sergio Vale, chief economist at MB Associados, sees a natural shift ahead: stronger Brazil-China relations. “If there was still any doubt that Trump would take a hard line against China, there’s none now,” he said. “This tariff will likely be reduced in time, but the broader consequence will be a faster decoupling between the U.S. and Chinese markets—and a growing alignment between Brazil and China.”
Trade between Brazil and China has surged in recent years and now amounts to twice the total volume of trade between Brazil and the U.S., Mr. Vale noted. Currently, trade between Brazil and China totals $160 billion, compared to $80 billion with the United States. “Within five years, Brazil-China trade could reach $200 billion—nearly three times the volume with the U.S., which may fall to $70 billion,” he said.
Still, Mr. Vale cautions that the short-term outlook remains volatile. “Even if Trump backtracks and returns to the negotiating table, this episode sends a clear message: the U.S. is no longer seen as the reliable trade partner it once was. And it’s making poor decisions on trade,” he said.
Luis Otávio Leal, chief economist at G5 Partners, sees a potential short-term window of opportunity during the 90-day suspension of reciprocal tariffs. “If all tariffs are in fact reduced to 10%—including those already levied on aluminum and steel—it could give U.S. companies a chance to rebuild inventories in preparation for a potential tariff hike once the suspension ends,” he said.
However, forecasting Brazil’s gains or losses is far from straightforward, said Carla Beni, economist and professor at the Getulio Vargas Foundation. “Companies need stability to make investment decisions and sign long-term contracts,” she said, adding that the prevailing uncertainty is likely to delay capital allocation—a negative outcome for all involved.
*By Marta Watanabe, Marsílea Gombata, Michael Esquer and Alex Jorge Braga — Brasília
Source: Valor International