Opportunities and Challenges of Brazil-China Trade under the Impact of US Tariffs

By Andy See on May 15, 2025

Authors | Andy See, José Moscati

In April 2025, US President Trump issued Executive Orders 14257 and 14259, announcing the imposition of a 10% reciprocal tariff on several countries and regions, including Brazil, effective 5 April. An additional 10% reciprocal tariff will be applied to certain countries and regions from 9 April (notably, the reciprocal tariffs imposed on China once reached as high as 125%).^[1]

As of 12 May 2025, according to the latest Joint Statement on U.S.-China Economic and Trade Meeting in Geneva, the US has committed to removing the tariffs imposed under Executive Orders 14257 and 14259 by 14 May 2025. The reciprocal tariffs on China will be temporarily adjusted to 10%, in line with those applied to other countries.

The highly volatile tariff adjustments in the United States have had a significant impact on cross-border trade in China, the European Union and other regions. Cross-border e-commerce companies in China, the US and Europe have been forced to adjust their supply chains or reconsider the proportion of their business tied to the US market. In contrast, Brazil-subject to a consistent 10% reciprocal tariff-has been much less affected by these US tariff changes.

This paper provides a brief overview of the challenges and opportunities for strengthening investment and economic ties between Brazil and China in the context of US tariffs. We have a long-standing focus on China-Brazil trade and have extensive experience advising on this issue throughout Latin America. If you have any questions regarding China-Brazil trade strategy or compliance, please feel free to contact us.

1. Strengthening China-Brazil Economic and Trade Relations Amid US Tariffs

Since 2010, the United States has been Brazil’s second largest trading partner.^[^2] In 2024, the US trade surplus with Brazil reached around $7 billion, with the total value of goods and services traded amounting to $28.6 billion. Given the relatively balanced trade relationship between Brazil and the US, the Trump administration has imposed a 10% reciprocal tariff on Brazil. It is impossible to predict how long this “beneficial” tariff of 10% will last.

However, the macroeconomic conditions between the US and Brazil that create the surplus in favor of the US are unlikely to change in the short and medium terms.

Although the tariffs between Brazil and the US have has limited direct impact on Brazil, they have indirectly strengthened economic and trade relations between Brazil and China. The Chinese and Brazilian governments have held numerous discussions on cooperation. Some orders that would have gone to the US have gradually been redirected to Brazil, while China’s demand for beef and soybeans is increasingly being met by Brazil:

On 11 April, Mr Alckmin, Brazil’s Vice President and Minister of Development, Industry, Trade and Services, held a video call with Mr Wang Wentao, China’s Minister of Commerce, to discuss strengthening economic and trade cooperation between China and Brazil in response to the tit-for-tat tariffs imposed by the US.

On 17 April, Zhang Zhili, Vice Minister of Agriculture and Rural Affairs of China, led a Chinese delegation to the BRICS Working Group meeting in Brazil. The meeting focused on the export of Brazilian agricultural products to China, such as soybeans and beef, and how to address the market gap created by the US tariff hike. On the same day, Brazilian Agriculture Minister Carlos Favero said that Brazil intends to become an alternative supplier of beef to China after nearly 400 US slaughterhouses were banned from exporting to China.

In early April, importers from China purchased at least 40 freighters carrying 2.4 million tonnes of soybeans from Brazil. Most of these soybeans are scheduled to be shipped between May and July, accounting for about a third of China’s monthly soybean imports. On 17 April, authorities in Guangzhou, China, received a cargo ship carrying 38,000 tonnes of Brazilian soybeans.

In July 2025, the 17th BRICS Summit will be held in Rio de Janeiro. By then, the suspension period for US reciprocal tariffs on certain countries and regions will have expired, and it is expected that there will be further discussions and adjustments regarding economic and trade exchanges.

2. China-Brazil Trade Policy and Strategic Cooperation

2.1 Strategic Cooperation and Trade Policy

Since the founding of the People’s Republic of China, political relations between China and Brazil have been friendly and steadily strengthened. As the largest developing countries in the Eastern and Western hemispheres, since the establishment of diplomatic relations, China and Brazil have gradually elevated their cooperation to the “China-Brazil Community of Shared Destiny for Building a More Just World and a Sustainable Planet”. The major milestones in the bilateral relationship are as follows:

In 1974, China established diplomatic relations with Brazil.

In 1993, the two countries established a strategic partnership.

In 2012, the relationship was upgraded to a comprehensive strategic partnership.

In 2024, the bilateral relationship was further elevated to the “China-Brazil Community of Shared Destiny for Building a More Just World and a More Sustainable Planet”.

Over the past two years, economic and trade cooperation between China and Brazil has entered a new phase. In March 2023, Brazil and China agreed to eliminate the US dollar as an intermediary currency and instead settle trade in their local currencies.

At the same time, within the framework of their strategic cooperative relationship as a community of shared destiny, China and Brazil have signed agreements or memorandums of cooperation in various sectors, including agriculture and livestock, agricultural products and technology, mineral energy, bio-economy, ecological transformation, green development, digital economy, artificial intelligence, and the photovoltaic industry.^[3]These developments have significantly advanced bilateral economic and trade relations, benefiting technology companies that provide innovative solutions for fundamental industries such as mining and agriculture, as well as for consumer electronics, represented by smart terminals and smart homes, and digital technologies, including new energy vehicles, artificial intelligence, and e-commerce.

Table 1: Key Bilateral Agreements and Memorandums Between China and Brazil

2.2. Current Status of China–Brazil Trade

China is Brazil’s largest trading partner, while Brazil is China’s ninth largest. It is also the first Latin American country whose trade volume with China exceeds USD 100 billion. Since overtaking the United States as Brazil’s top trading partner in 2009, China has invested more than USD 70 billion in Brazil. Meanwhile, Brazil’s cumulative investment in China has exceeded USD 100 billion since 2018.

Over the past decade, bilateral trade between China and Brazil has maintained an impressive average annual growth rate of 10%, despite the overall downturn in global trade. According to data from China’s General Administration of Customs, trade between the two countries reached approximately RMB 1.34 trillion (USD 188.17 billion) in the first 12 months, up 4.6% year-on-year.

Overall, Brazil is one of the few countries with an apparent trade surplus with China, with a surplus of RMB 313.02 billion^[4] (USD 44,018.5 million)^[5].

The main aspects of China-Brazil bilateral trade in 2024 are outlined below:

Table 2: Comparison of China-Brazil Economic and Trade Advantages

2.2.1. Brazil’s Core Exports to China: Soybeans, Oil, Meat, and Ore

According to China’s General Administration of Customs, China’s total imports from Brazil in 2024 amounted to RMB 825.84 billion (USD 116.09 billion), down 4.4% from the previous year.^[6] However, in 2025, driven by changes in the international environment, Brazil’s exports of soybeans, oil and meat to China began to rise again.

Soybeans: According to ComexVis, the Brazilian government’s official foreign trade data platform, Brazil’s soybean exports reached $8.7 billion in the first three months of 2025, with a total volume of about 22.18 million tonnes. Of this, about 16.99 million tonnes were exported to China, accounting for 76.6% of Brazil’s total soybean exports during this period..

Oil: China is the largest destination for Brazil’s oil exports. According to data from the Brazilian government, China accounted for 44% of Brazil’s oil exports in 2024, followed by the United States (13%) and Spain (11%). From January to March 2025, China received approximately 40% of Brazil’s quarterly oil exports. Over the past decade, the value of Brazil’s crude oil exports to China has increased nearly fivefold.

Meat: (i) Beef: On 17 April, the BRICS Working Group meeting advanced the process of qualifying Brazilian slaughterhouses to export beef to China. Following the disqualification of nearly 400 US slaughterhouses from exporting to China, Brazil aims to become a key alternative supplier to meet China’s beef demand. Previously, the Chinese government had rejected export applications from 28 Brazilian plants due to technical and health concerns. (ii) Pork: The United States is the third-largest supplier of pork to the Chinese market, after Spain and Brazil. Amid the US-China trade war, Brazil, as a major commodity exporter, is positioned to potentially replace the US as the leading supplier to the Chinese market.

Ore: According to official Brazilian data released on April 16th, China imported $331 million worth of copper products from Brazil in the first three months of this year, marking a sharp 180% increase compared to the same period last year. The Chinese market now accounts for 35% of Brazil’s total copper exports, making it the top destination for Brazilian copper.

2.2.2. China’s Core Exports to Brazil: Technology Products, Fertilizers, Heavy Machinery, Light Industry, and Consumer Goods

According to statistics from the China General Administration of Customs, in 2024, China’s total exports to Brazil reached RMB 512.82 billion (USD 72.08 billion), representing a 23.3% increase compared to the same period last year.^[7] In recent years, Chinese exports have had a significant impact on Brazil’s science and technology sector, agriculture, as well as both heavy and light industries.

Technology Industry: China exports a wide range of technology products to Brazil, including mobile phones, telecommunications equipment, transformers, and integrated circuits. These products have played a vital role in supporting the development of Brazil’s high-tech industries.

Agriculture, Fertilizers, and Organic Chemicals: China’s imports of phosphorus-, nitrogen-based fertilizers from Brazil surged by 625% to 265,000 tons, setting a new quarterly record. Meanwhile, organic chemicals exported from China to Brazil are extensively used in the pharmaceutical, agrochemical, and manufacturing sectors, serving as essential raw materials for Brazilian industry.

Heavy Industry, Automobiles, Machinery, and Energy: In the first half of 2024, new energy vehicles (NEVs) manufactured in China accounted for 91% of all NEVs imported into Brazil—meaning 9 out of every 10 NEVs sold in Brazil were made in China. From January to March 2025, Brazil’s imports of solar panels from China increased by 13%, marking a new record for that period. Additionally, in February 2025, Brazil purchased an oil drilling platform from China to support its infrastructure development.

Light Industry and Consumer Goods: China’s market share in Brazil’s light industry and consumer goods sector continues to expand. Products such as plastic goods, electrical appliances, luggage, toys, sporting goods, clothing, hats, wigs, scarves, ornaments, and other small commodities are increasingly popular among Brazilian consumers.

2.3 Brazil’s Tariff Policy Toward China

The Brazilian government’s trade policy towards imports changes according to its national interest (such as employment and inflation rates and also the lobby of local and international player). In recent years, the tariffs on specific products have changed and many tariff concessions and conveniences have been cancelled. Instead, Brazil has introduced or strengthened various import barriers, such as increased tariffs, anti-dumping duties, automobile import taxes, and the reduction or elimination of tax exemptions for small parcels, as outlined below:

Table 3: Brazil’s Tariff policies Toward China

3. Opportunities and Challenges in China–Brazil Trade

China-Brazil economic, trade and investment cooperation continues to deepen, industrial endowments are mostly complementary (a notable exception is the area of steel where both countries competes). Whilst Brazil competes with the US agricultural and mineral exports, and the degree of development strategy is constantly rising, which has laid a solid foundation for bilateral industrial cooperation. However, Brazil is a large, multicultural, complex country with unique challenges and opportunities. Some of which we will describe below.

3.1 Opportunities: Favorable Policies and Complementary Strengths

Against the background of favorable policies, China has been Brazil’s largest trading partner for 15 years in a row, and Brazil is also the first Latin American country whose exports to China have exceeded 100 billion US dollars. The two sides have a large space for industrial cooperation and complementary advantages, do not compete in the international market on their exports, nor have conflicting interests in the geopolitical agenda, and this is unlikely to change in the next several decades

3.1.1. Policy Advantages

With the integration of the Belt and Road Initiative and Brazil’s development strategy, China and Brazil have signed a series of cooperation memoranda in areas such as economy, trade, finance, science and technology, infrastructure and environmental protection, providing policy support for the expansion of bilateral trade. Promoting local currency settlement further reduces transaction costs and exchange rate risks, enhances trade efficiency and strengthens enterprises’ willingness to engage in cross-border trade.

3.1.2. Complementary Strengths

Currently, oil, soybeans and meat are Brazil’s core export products to China, and China has a high import demand for these commodities. Brazil is also a leading player on bioeconomy (most of the cars produced in Brazil in the last 30 years run on both, gasoline or biofuel, 49,1% of the energy consumed in Brazil comes from renewable sources). However, ineffective and scarce infrastructure in a country that has the size of a continent creates challenges and costs on the movement of goods, distribution, and treatment of water and energy. On one hand, these deficiencies create difficulties in the implementation of productive hubs, but on the other hand, they create investment opportunities to build and explore the highly necessary infrastructure.

3.2. Challenges

Under the US tariff policy, strengthening economic and trade ties between China and Brazil presents both opportunities and challenges. For Chinese enterprises, investing in Brazil or engaging in economic and trade activities involves navigating various obstacles, including shifts in the international landscape (particularly China-Brazil relations), changes in local Brazilian policies, and other external conditions.

3.2.1. Shifting Global Trade Environment

At present, the United States regards Latin America as a “backyard” at the global strategic level, a term that was considered offensive by the Brazilian diplomacy with the aggravation that during the 60´s the US government, under the “backyard” policy, sponsored a right-wing military coup that lasted 20 years in Brazil costing some lives and ruined the country economy. Facing the deepening cooperation between China and Brazil and other countries in the region, the United States has taken more and more targeted measures against China, which may interfere with China-Brazil and China-Latin America cooperation for a long time.

At the same time, external factors such as the global economic slowdown, rising trade protectionism, and geopolitical conflicts may have negative impacts-disrupting global supply chains and increasing trade barriers-thereby affecting the stability of China-Brazil relations. For instance, China-Brazil shipping relies heavily on the Panama Canal, with 90% of soybean product shipments passing through this route. The United States’ influence over the Panama Canal also introduces a degree of uncertainty into China-Brazil trade.

3.2.2. Brazil’s Industrial Policy

Brazilian economy has strong state influence, which balances the private sector interests, the political and social agendas. It has a tradition of protecting local production and restricting its markets; the degree of protection varies with the time, political force in power and economic conditions. The government has tools to impose restrictions and incentives on trade through regulatory taxes and incentives. This may be perceived as lack coherence but considering and understanding the forces behind the policies it is possible to navigate through the different scenarios successfully and many foreign companies flourished in Brazil.

Examples of these protective measure are in January 2023, Brazil resumed the automobile import tax by 10% and plans to gradually increase it to 35% by mid-2026. The goal of such policy is twofold, protect the industry that is already established (composed by multinational players organized in individual or collective lobbying groups such as ANFAVEA) and create incentives for the industries to establish local assembly facilities, the regulations related to incentives and taxes on the automative industries (such as Decree. Nº 12.435, DE 15 DE ABRIL DE 2025 and the Gecex-Camex decision to increase the taxes on electric cars) does not single out Chinese products and it applies to all equally, regardless the nationality. Companies reacted with different strategies, for example, FORD motors closed its local automotive assembly facilities (which were later bought by Chinese and Korean car manufacturers) and moved the production to Argentina. Similarly, to protect the development of textile industries, Brazil has also imposed higher tariffs on products that China competes with. For example, in October 2024, Brazil implemented a new tax policy, canceled the original favorable policies, and imposed tariffs and anti-dumping duties on many goods from China.

As per the examples above, the Brazilian economic model has similarities to the European and Chinese models, where the government has tools and uses them to regulate the market. It is highly advisable to understand these tools and policies and lobbies behind the scenes to work in the Brazilian market. So what is the difference between what the US is doing now and what Brazil have been doing for decades? The difference is the speed and radical shift of policies that we are seeing in the US. China, Brazil and Europe took decades to build and negotiate their programs under the scrutiny of international organizations such as World Trade Organization – WTO, and the industries had time to understand and adapt to it, whilst the US is adopting extremely high tariffs, disregarding previous arrangements, on a radical shift, creating uncertainty. Important to mention also that, the US economy, after the second world war -WWII, under a liberal approach on imports, grew much faster and much stronger than the Brazilian economy. The Brazilian economy grew less with the trade barriers, and it did not develop the local industry as planned (there are exceptions, such as the commercial airplane manufacturer Embraer that relied).

Whether it is due to regime change or the demand that Brazil’s domestic industrial development excludes foreign competition, it may bring about policy changes, which will require the ability and know-how to navigate through and may restrict the sustainable development of the booming China-Brazil economic cooperation.

3.2.3. Brazil’s Structural Constraints

At present, Brazil’s local industry development foundation is the strongest in Latin America, but weak when compared to China, US and Europe,　the production and export structure are highly dependent on the export of agricultural and mineral products, and the industrial base and transportation infrastructure to undertake China’s industry are insufficient. For example:

Brazil’s ports and canals and other logistics infrastructure are not strong enough to effectively support the logistics needs of cross-border trade. At present, major ports in Brazil have started expansion plans, such as Porto do Acu in Rio de Janeiro and in the Santo´s Port, but ports are known bottlenecks to Brazilian trade．

Another example is Brazil’s current production and export structure. Since the agricultural and mineral products are highly developed, the technical development level and scale of high-tech industries and technical talents still need to be improved. Although the Brazilian government has formulated a series of policies to develop emerging industries and “re-industrialization”, there is an obvious gap between its industrial base, policy support ability and policy objectives, and its financing ability is limited, or it affects the cooperation between China and Brazil in science and technology industry in terms of setting restrictive cooperation conditions.

Additionally, Brazil has structural problems that needs to be considered too:

Complex Legal and Tax Scenarios: Taxes in Brazil are highly complex, rules overlap between and within the three levels of public administration (Federal, State and Municipal). Companies have large accounting, legal and tax departments to handle the bureaucracy and litigation generated by the complexity. Nevertheless, the Brazilian congress approved a tax reform (EC 132/2023) that will simplify the taxes related to consumption (an IVA will replace and aggregate taxes related to services and goods), but the transition period will be long, from 2026 to 2033, and other taxes are still to be simplified.

Labor Regulations and Shortage of Skilled Manpower: Brazilian labor regulations are less restrictive than European regulations but more restrictive than US and Chinese regulations. Litigation between employees and employers has reduced drastically in the past 10 years due to legal reform but it still not rare. Taxes and mandatory contributions raise labor costs, while inefficient education make it difficult to find skilled workers.

Public Security: Brazil ranks 132 on the Global Peace Index (GPI) among 163 countries. Brazil is among the 25% worst countries in terms of violence. Nevertheless, this figure represents a national average for a country that is larger than continental Europe; some regions are relatively safe, while others are not. Organized crime operates in some areas but most activities simply do not cross paths with them.

Corruption: Brazil holds an intermediate position in terms of corruption perception index (CPI), 104 among 180 countries, but again, it is a country average, and it is perfectly possible and advisable to operate within the boundaries of the law, but caution is advisable when dealing with unknown parties.

Contractual and Commercial Law: Brazilian courts and the rule of law is present when enforcing contracts in Brazil and judiciary system is reliable, however, the decision making process is relatively slow, it is not uncommon for a court decision, considering appeals, to take 7 years, nevertheless, the cost to litigate in Brazil is much cheaper than the US or European countries, arbitration can be considered on more complex contracts where speed in the decision is necessary.

Summary

The strategy to protect and foster local industry and jobs used to justify the current US tariff policy have precedents in other countries, however, no one has ever seen these sorts of policies done in such a short timeframe, unilaterally, without the support of solid academic studies and proof to be working well in the economy. The fact that the reciprocal tariffs on China will be temporarily adjusted to 10% is a reflection of rationality and sound economic judgement.

In fact, the original intention of the Trump administration was to bring the value chain back to the US. However, due to high labour costs, an underdeveloped supply chain and an uncertain political environment in the US, most companies have not considered moving production there. Instead, they have sought to shift capacity to other countries that offer greater economic value.

The deepening cooperation between China and Brazil reflects the inherent dynamics of global trade. This growing partnership not only strengthens bilateral ties, but also promotes broader economic cooperation among developing countries. It enables more emerging economies to participate in the international division of labour and share the benefits of globalisation.

For companies involved in China-Brazil trade, we recommend closely monitoring international developments and policy changes between the two countries. Companies should proactively adapt to Brazil’s investment and trade environment, assess both the opportunities and challenges of entering specific industry sectors, and prepare risk management strategies in advance. Where necessary, companies should also consult professional institutions to help design and analyse their overall structure, business models and trade strategies.

We have long been concerned about the trade between China and Brazil and have rich experience in consulting Latin America, the opinions in this article reflect the points of view of the authors with first-hand experience in the topic. If you have any questions regarding strategy or compliance in China–Brazil trade, please feel free to contact us.

Explanatory note：

[1] Certain countries and regions may re-impose tariffs in excess of 10% after a 90-day moratorium.

[2] The United States was Brazil’s largest trading partner until 2010, when China overtook the US to become Brazil’s largest trading partner.

[3] See Relations between China and Brazil, from the Official website of the Ministry of Foreign Affairs of China：https://www.fmprc.gov.cn/web/gjhdq_676201/gj_676203/nmz_680924/1206_680974/sbgx_680978/

[4] See Table of the total value of import and export commodities by major countries (regions) in December 2024 (RMB) , from the official website of China General Administration of Customs:http://www.customs.gov.cn/customs/302249/zfxxgk/2799825/302274/302275/6312779/index.html

[5] See Table of the total value of import and export commodities by major countries (regions) in December 2024 (US dollars), from the official website of China General Administration of Customs: http://www.customs.gov.cn/customs/302249/zfxxgk/2799825/302274/302275/6312783/index.html

[6] See Table of the total value of import and export commodities by major countries (regions) in December 2024 (RMB), from the official website of China General Administration of Customs: http://www.customs.gov.cn/customs/302249/zfxxgk/2799825/302274/302275/6312779/index.html

[7] See Table of main countries (regions) in import and export commodities in December 2024 (RMB), from the official website of China General Administration of Customs: http://www.customs.gov.cn/customs/302249/zfxxgk/2799825/302274/302275/6312779/index.html

[8] The policy of increasing automobile import tax prompted Brazilian importers to “grab” imported cars in a short period of time, and Chinese manufacturers rushed to ship cars to Brazil before the tax increase. This led to the special phenomenon that more than 70,000 unsold Chinese electric vehicles piled up at Brazilian ports in December 2024. Meanwhile, it’s worth mentioning that the tariffs apply to all imported cars, not only to Chinese vehicles, and it is in line with the Brazilian policy to create incentives for the automotive industry to produce and assemble vehicles in Brazil. This policy is several decades old. Chinese manufacturers, such as BYD and GWM, are establishing local facilities to avoid such taxes, creating further opportunities for their supply chains to develop locally. US, European, Japanese, and Korean companies, such as General Motors, FIAT, VW, Renault, Nissan, Honda, Mitsubishi, and Hyundai, have produced cars in Brazil under this regime for decades.