Analysis: Impact of Trump’s victory on Brazil-China deal talks
Nov, 06, 2024 Posted by Sylvia SchandertWeek 202442
The return of Donald Trump to the U.S. presidency arises amidst a sensitive diplomatic issue on Brazilian soil: Chinese President Xi Jinping is set to arrive in Brasília on November 20, right after the G20 summit, for an official visit to Brazil. On the agenda is the increased pressure for Brazil to join Belt and Road Initiative, China’s trillion-dollar infrastructure investment project.
Could Mr. Trump’s victory in the U.S. election create turbulence in Brazil’s negotiations with China? This question arises because the Republican favors a more protectionist foreign trade policy, especially regarding China. During his campaign, he pledged to impose a linear increase of at least 10% on import tariffs and 60% on Chinese goods.
The potential Brazilian adherence to the Belt and Road Initiative was addressed by Congressman Eduardo Bolsonaro, a known ally of Mr. Trump, last week. He successfully pushed for a public hearing in the Foreign Relations and National Defense Committee to discuss a possible investment agreement between Brazil and China. “This project also reflects the expansion of China’s global power and influence, which, due to its dictatorial political regime, it exercises more assertively,” he said.
However, this criticism is not exclusive to Republicans. The discomfort with this agenda was also expressed by the State Department under Democrat Joe Biden a few weeks ago, through statements by the U.S. trade representative, Katherine Tai.
Despite the controversy, sources from Brazil’s Ministry of Foreign Affairs and political and economic sectors within the government indicate that Brazil will adopt a pragmatic stance on the issue, without siding with any particular party. The prevailing perception is that the geopolitical power struggle between the U.S. and China extends beyond the presidencies of Mr. Biden or Mr. Trump, as it is a contest between states rather than governments.
In this context, the draft of the trade and investment agreement currently under negotiation between Brazil and China, anticipated to be signed during Xi Jinping’s official visit, does not imply Brazil’s adherence to the Belt and Road Initiative. According to a diplomatic source, the negotiations involve a package tailored to fit “the size and economic and social demands of Brazil.” This situation calls for a different negotiation, considering Brazil’s needs rather than “simply adhering to a general package.”
Sources connected to Vice President Geraldo Alckmin note that discussions with China encompass concerns about safeguarding Brazilian industry. Brazil demands commitments from China regarding technology transfer, setting up factories in the country, and strengthening the production chain to avoid limiting Brazil to a consumer market.
Lula and Amorim
In August, during an event at the National Confederation of Industry (CNI), President Lula expressed his intention to sign an investment agreement with China. “The Chinese want to discuss the Belt and Road with us, and we will discuss it. We will not close our eyes,” he said. However, he sought to reassure the national productive sector: “We will ask: ‘What’s in it for us? What do I gain?’ That’s the discussion,” he said.
In a September interview with Valor, Celso Amorim, the special advisor for international affairs to the Presidency, confirmed the government’s intention to sign an agreement with China. He emphasized that the government would not get “attached to names.” This means the negotiations do not necessarily entail joining the Belt and Road Initiative. “Both sides have to see if there’s a possibility to open new fields of cooperation with significant commitments to development and investment.”
Mr. Amorim also downplayed U.S. discomfort with Brazil-China negotiations. “I think they [the U.S.] will understand that it is natural. We will indeed want an important agreement with China. We already have a strategic partnership. I think now the Brazil-China agreement would be a third-generation thing: more support, more agreements in technology, just as we do not refuse good agreements with the U.S.”
Brazilian exports
China is Brazil’s largest trading partner. In 2023, Brazil’s exports to China surpassed $104 billion, primarily driven by iron ore, soybeans, and meat. However, although the United States lost its position as the main importer of Brazilian products to China in 2009, the U.S. market remains the largest destination for Brazil’s industrialized goods exports, including high-tech products.
The chart below reveals the progress of container imports incoming from China at Brazilian ports between January 2021 and September 2024. The data is from DataLiner.
Container Imports Incoming from China | Jan 2021 – Sep 2024 | TEUs
In 2023, Brazilian manufactured exports to the U.S. totaled $29.9 billion, surpassing the European bloc ($23.5 billion) and Mercosur ($19.4 billion), according to the study “Brazil-United States: A Highlight in Foreign Trade,” produced by the Secretariat of Foreign Trade of the MDIC and AmCham Brazil.
Source: Valor Internacional
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