Brazil Dumps US, Races to China Trade Deal After Trump's 25% Tariff War
Brazil has slammed the brakes on trade with the United States and is now speeding toward a deal with China, after Washington hit nearly half of its exports with new tariffs.
President Luiz Inacio Lula da Silva and Chinese President Xi Jinping agreed on Sunday to fast-track negotiations for a trade agreement between China and the Mercosur trade bloc—a sharp reversal for Brazil, which had long resisted such a deal [205176]. The shift comes after the United States imposed a 25% tariff on certain Brazilian goods, accusing the country of unfair trade practices and failing to enforce forced-labor standards [204731]. A new study shows that 48.7% of all Brazilian exports to the US—covering 4,060 different products—will now face a 12.5% tariff linked to forced-labor rules [204876].
The diplomatic rift is deepening. Brazil has denied visas to two senior U.S. officials sent by former President Donald Trump, accusing Washington of trying to interfere in the country’s upcoming presidential election [204087]. The election itself has become a proxy battle: incumbent Lula, who maintains close ties with Beijing, faces challenger Flavio Bolsonaro—son of former President Jair Bolsonaro—whose candidacy has won early endorsements from Argentine President Javier Milei and Israeli Prime Minister Benjamin Netanyahu [204089][205182]. A Lula win would likely deepen economic links with China, while a Bolsonaro victory could strengthen ties with the United States [205182].
China has condemned the U.S. tariffs as “a textbook act of unilateralism and protectionism” but signaled it will not retaliate immediately, leaving room for further negotiation [205197]. Meanwhile, Brazil’s ambassador to Argentina has been recalled and Argentina’s envoy summoned in the worst diplomatic crisis between the two South American giants in years, triggered by Milei’s public support for Bolsonaro’s candidacy [204869].
The new U.S. tariffs—part of a broader wave hitting 60 countries—are expected to cost Americans an estimated $100 billion per year in higher prices [203898].