U.S. trade deals with Asia raise concerns over Brazil’s export competitiveness

Recent trade agreements announced by the United States with Japan, the Philippines, and Indonesia could hinder Brazil’s efforts to expand its exports to Asia, leaving the country with limited room to maneuver in international markets, according to trade observers interviewed by Valor Econômico.

There is concern that these Asian countries may offer preferential treatment to American products in exchange for reductions in the steep tariffs imposed under Donald Trump’s trade policy. This comes at a time when Brazilian exporters face a looming 50% U.S. tariff hike set to take effect on August 1, prompting the need to diversify markets.

Experts warn that favorable terms for U.S. goods in Asia could create new barriers for Brazilian manufactured products and enhance the competitiveness of American agriculture, both of which would harm Brazil.

“There seems to be a U.S. priority in negotiating with Asian countries. If this trend continues, it will negatively affect our trade balance,” said economist Sandra Rios, director of the Center for Integration and Development Studies (Cindes).

Brazil’s exports to Asia are largely concentrated in lower value-added goods and remain heavily dependent on China, despite the Brazilian government’s efforts to deepen ties with Southeast Asian nations.

In the first half of 2025, Asia accounted for 42.7% of Brazilian exports. However, excluding China, this figure drops to just 14%, according to Comex Stat data from the Ministry of Development, Industry, and Foreign Trade (MDIC).

Beyond China, Singapore is the only country in the region that ranks among Brazil’s top ten export destinations in 2025. India ranks 11th, South Korea 12th, and Japan 14th.

“Brazil used to avoid regional concentration, but over the past 15 years, that’s changed, and our dependence on China has increased,” Rios noted.

She added that while concentrating on China may be beneficial in the short term, it poses risks in the medium and long run. “Today the problem is with the U.S., but tomorrow it could be with China. So the more diversified we are, the better,” she said.

Unlike exports to the U.S.—which include a higher share of value-added goods—Brazil’s sales to Asia are dominated by commodities such as soy, iron ore, beef, and sugar. This limits Brazil’s competitiveness in the region compared to the U.S.

“Brazil’s exports to Asia are essentially commodities—either from agribusiness or the mining sector—which contribute to a trade surplus with those countries,” said José Augusto de Castro, president of the Brazilian Foreign Trade Association (AEB).

This heavy reliance on commodities also makes Brazil more vulnerable to price fluctuations. For example, exports to China in the first half of the year totaled US$47.68 billion—the lowest level in a decade.

Exports to other Asian countries also dropped, from US$32.7 billion in the first half of 2024 to US$23.1 billion in the same period of 2025. Analysts attribute the decline to weaker global demand, rather than any direct consequence of U.S. tariffs.

Several obstacles hinder the entry of Brazilian-manufactured goods into Asia, including long distances, high shipping costs, and fierce competition from local producers of electronics, machinery, and equipment.

“Exporting higher value-added manufactured goods isn’t something that happens overnight. It requires rethinking value chains and more investment,” said Lia Valls, an economist and research associate at FGV Ibre.

She also noted that Brazil’s industrial sector tends to resist trade agreements with Southeast Asian countries due to fears of increased imports. Still, she added, “It’s important to identify which sectors can benefit from negotiations, especially given the region’s economic dynamism—even in a darker global scenario.”

AEB president Castro emphasized that even once signed, trade agreements typically take three to four years to come into force and must be approved by Congress. “In the end, we have to do our homework,” he said.

He expressed concern over the growing ease of access for U.S. products in Asia, warning that it could further limit Brazil’s ability to export manufactured goods.

“We’re left with little room to compete in the manufacturing space because Southeast Asian countries will import from the U.S. tariff-free, while others—including Brazil—will still face duties,” Castro said.

He continued, “We’ll have to find a way to enter those markets not on equal footing, but with a more aggressive strategy.”

When announcing the trade deals with Indonesia and the Philippines, Trump stated that both countries agreed to eliminate tariffs and non-tariff barriers for U.S. products. The agreement with Japan includes reciprocal 15% tariffs and U.S. exports of commercial aircraft, as well as US$8 billion in agricultural goods, including soybeans, corn, and fertilizers.

“This could be a problem for Brazil, because we compete directly with the U.S. in those markets—especially in agribusiness. And if those deals do eliminate tariffs for the U.S., that would hurt our competitiveness,” said Rios.

Jorge Arbache, professor of economics at the University of Brasília and former VP of the Private Sector at the Development Bank of Latin America (CAF), added that redirecting Brazilian manufacturing to Asia will require concerted effort: “Entering into agreements in Asia is a good idea, but Brazil needs to learn how to play the game.”

He suggested focusing on sectors where Brazil has comparative advantages over the U.S. and other countries: “That includes the entire food processing chain, mining-related industries, bioeconomy sectors, energy-intensive industries, and critical minerals.”

Source: Valor Econômico

Sharing is caring!