Brazil has limited room to gain in U.S.-China trade war

Of the 1,832 products that both Brazil and the United States export to China, only 17—or 0.9%—involve significant overlap and direct competition between the two countries. In a trade portfolio dominated by commodities, eight of those 17 items are related to food.

Among the 20 countries that exported the most to China in 2024, Japan tops the list for the number of products that compete directly with U.S. exports, with 391 items. Germany follows with 373, and South Korea with 222. Brazil ranks 15th, behind countries such as France, Malaysia, Thailand, Switzerland, Russia, and Canada. Among South American countries, only Brazil and Chile (ranked 17th) appear on the list.

The data, according to economists, suggests that due to Brazil’s current export mix, the country’s potential to gain market share in China amid heightened tensions between the world’s two largest economies is limited, especially when compared with other nations.

The Valor analysis began by identifying all products that the 20 largest exporters to China have in common with the United States. From that pool, the study filtered for goods with at least $100 million in Chinese imports in 2024, accounting for 96.5% of China’s total imports last year. Within this filtered group, a product was considered as in “competition with the U.S.” if both countries held at least 5% of China’s import market share for that item.

For Brazil, 1,832 exported items overlapped with U.S. exports to China in 2024. Of these, 730 had Chinese imports above $100 million, but only 17 had Brazil and the U.S. each holding at least 5% of China’s import market.

The classification used was at the eight-digit level, providing high specificity. For reference, Brazil’s Foreign Trade Secretariat (SECEX/MDIC) allows import searches by two, four, six, or eight digits—the higher the digits, the more detailed the classification.

Japan had 4,943 products in common with the U.S., of which 1,131 surpassed the $100 million import threshold. Of those, 391 products had both countries holding at least 5% market share in China, meaning 34.6% of qualifying Japanese products competed with the U.S. The rate was 33% for Germany, 20.6% for South Korea, and just 2.3% for Brazil.

“These numbers show that while Brazil may have some opportunities, they are far more limited compared to other suppliers that compete directly with the U.S.,” said Livio Ribeiro, a partner at BRCG and a researcher at FGV Ibre. “What the data reveals is that this is mostly a case of intra-industry trade—parts, intermediate goods, and capital goods moving among countries with complex supply chains,” he added.

Brazil’s trade with the U.S. also involves some intra-industry elements, especially in sectors like steel. “But with China, we’re positioned differently in the value chain as we are primarily sellers of basic products. So, any argument that Brazil could gain market share in a U.S.-China decoupling scenario seems much more likely to apply to commodities than to manufactured or processed goods. In those areas, competition is fiercer, and many larger players are ahead of Brazil,” Mr. Ribeiro said.

Luis Otávio Leal, chief economist at G5 Partners, noted that the Germany-China trade relationship is strongly tied to the auto sector, with companies like BMW, Mercedes-Benz, and Audi operating plants in China. “That gives German exports higher added value, unlike Brazil, where export competition with the U.S. is mainly in agribusiness,” he said.

Japan and Germany, Mr. Ribeiro added, have a far more diversified export base. “That gives them more targets, which makes it easier to find export niches, even if that doesn’t guarantee success.” He warned, however, that in high-value manufactured segments, long and complex supply chains dominate.

“If you only look at final exports, you miss all the components involved in that product. Take the iPhone, for example: its microprocessor comes from one country, the screen from another, the casing, the gyroscope, and the accelerometer from yet others. That kind of global assembly process links countries like Germany, Italy, Japan, South Korea, China, and the U.S. in ways that raw trade numbers don’t reflect,” Mr. Ribeiro noted.

Mr. Leal added that Southeast Asia is tightly integrated into China’s economy. Malaysia, Thailand, and Singapore rank sixth, seventh, and eighth in the competition index. Vietnam and Indonesia follow further down the list, at 12th and 14th. “This is natural given the geographic and cultural proximity, and it also reflects the shift in production from China to lower-cost nations,” he said.

Vietnam, he added, stands out. “It was among the countries hit hardest by Trump’s tariffs due to its third-largest trade surplus with the U.S., after China and Mexico.” Vietnam has become a hub for U.S.-bound exports of products whose supply chains start in China. Donald Trump imposed a 46% tariff on Vietnamese imports.

According to Mr. Ribeiro, a more intense U.S.-China trade war would likely push China to deepen ties not only within the Pacific but also across the so-called Belt and Road Initiative, extending into Central Asia and generating ripple effects in Europe and Africa. “The U.S. is trying to isolate China,” he said. “But in some markets, especially Southeast Asia, that’s unlikely to succeed. The same goes for Africa and, to a certain extent, Central Asia. The U.S. is unlikely to effectively displace China, which already dominates those markets.”

Mr. Ribeiro also recalled that at the end of last year, China announced zero import tariffs for goods from countries it recognizes as Least Developed Countries (LDCs) with which it maintains diplomatic ties. Following the UN definition, these are nations with a gross national income per capita of $1,088 or less. Of the 44 LDCs, 32 are in Africa.

“The potential reallocation of U.S. export markets to China would largely play out in the Pacific, among advanced economies like Japan, South Korea, Taiwan, and Singapore,” Mr. Ribeiro said. “To a lesser extent, it may also involve Canada, Mexico, parts of Europe, and Latin America.”

Among the 17 products where Brazil and the U.S. directly compete in China, soy tops the list. Soybeans are currently Brazil’s leading export to China. Other key items include frozen boneless beef and cotton. According to China’s customs data, Brazil accounted for 70% of soybean imports in 2024, compared to 23% from the U.S. For Mr. Leal, Brazil may still gain a bit more share, “but most of what we could gain already happened during Trump’s first term.”

In 2016, before Mr. Trump’s first administration, Brazil was already China’s main soybean supplier, with a 45.8% share, while the U.S. held 40.5%. Market shifts since 2019 have significantly boosted Brazil’s production. According to SECEX/MDIC, Brazil exported $14.4 billion in soy to China in 2016. That number rose to $31.5 billion last year.

Here is a historical overview of Brazilian beef exports to China over the past four years. The data is from DataLiner:

Brazilian Beef Exports to China | Jan 2022 – Mar 2025 | TEUs

Source: DataLiner (click here to request a demo)

This soybean boom has also increased Brazil’s dependence on China. In 2016, China accounted for 19.6% of Brazil’s exports. By 2019, the figure had reached 28.7%. It peaked at 30.7% in 2023 and dropped slightly to 28% in 2024.

Brazil also has a strong position in frozen boneless beef, holding a 53% market share in China. The U.S. lags with just 8%. In cotton, Brazil has 42% while the U.S. holds 35%, suggesting more room for gains. Corn is fourth on the list, and Brazil has been expanding in this category as well, with 51% of China’s corn imports compared to 15% from the U.S.

Mr. Ribeiro noted that Brazil’s gains in corn exports are also linked to Mr. Trump’s trade policies. “Most of the agricultural gains have already occurred. The next opportunity might come from new crops,” he said, citing sorghum as a rising export prospect not yet in the 17-item shared export list.

Mr. Barral believes Brazil could find further opportunities in products where the U.S. still dominates. One example is kaolin, where Brazil holds 9% of China’s market and the U.S. 62%. However, kaolin imports to China totaled just $150.5 million in 2024, far less than soy’s $52.2 billion.

Mr. Leal noted that any gains from U.S. export displacement must also factor in China’s domestic demand. “Ultimately, what matters more is whether consumption in China grows. Otherwise, we risk gaining a bigger share of a shrinking pie, and not moving forward at all.”

Last year, Mr. Leal noted, 30% of China’s economic growth came from exports. The U.S.-China trade war is expected to accelerate Beijing’s plans to stimulate domestic consumption. “China can’t continue relying so heavily on exports or the U.S. market. Everyone is watching this closely,” he added.

Source: Valor International

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