China Already Ranks First on Brazil’s Import List
Even before taking office for a second term as president of the United States, Donald Trump is doubling down on his trade war with Beijing. The Republican has pledged to impose an additional 10% tariff on Chinese products on his first day in office, a measure that could have repercussions in Brazil. Experts argue that China is currently navigating an economic scenario with limited room to scale back its industrial production. If barriers to accessing one of the world’s largest markets are indeed implemented, Chinese products in Brazil will likely be redirected to countries capable of absorbing this supply.
China’s Economic Struggles and Overproduction
Brazilian industries are already assessing the risks of an influx of Chinese products in Brazil following Trump’s election, anticipating discussions about tariffs and trade defense measures. China already holds the top position on Brazil’s list of import partners. According to data from the Ministry of Development, Industry, Commerce, and Services (Mdic), Brazil purchased $52 billion worth of Chinese products in Brazil between January and October, accounting for 24% of all imports.
The reasoning behind the risk of a massive influx into Brazil’s domestic market begins with China’s internal challenges. André Saconatto, an economist and consultant at FecomercioSP, points out that Beijing has been experiencing relatively weak economic activity. A 5% growth target for the Gross Domestic Product (GDP)—considered a “blessing” in Brazil—is considered modest in China.
In recent years, Xi Jinping’s regime has shifted the economy’s focus toward technology, reducing the influence of real estate sectors, contributing approximately 25% of China’s GDP. The real estate crisis has had cascading effects on the world’s second-largest economy, impacting consumption and investment.
“People feel poorer because their savings have diminished,” says Saconatto, noting that much of Chinese household savings is tied to the real estate sector. “This has led Chinese citizens to increase their savings from current incomes, which means consuming less.” On the supply side, the Chinese regime continues to stimulate national industry, even when demand fails to keep pace. “Recent data show that industrial production is growing much faster than consumption. There’s an oversupply of goods in China,” the economist explains.
China’s Potential Shift to Developing Markets
With China producing a surplus, Trump imposing trade barriers, and Europe pursuing its protectionist agenda, Saconatto predicts that China will direct its production to developing countries like Brazil. “This is the scenario: the Chinese will try to place all these products somewhere in the world,” he states. “From fans to cutting-edge computers.”
Thiago de Aragão, director of strategy at Arko Advice, offers a similar assessment. He argues that the risk of an influx is a matter of logic, not merely circumstances. “This production will go elsewhere; it won’t stop. And it has to go to markets prepared to absorb it. In this, Brazil is a prime candidate,” he says.
The Impact on Specific Sectors in Brazil
Aragão highlights that, unlike other nations, China depends on economic growth to ensure social cohesion, which reinforces the stability of the Chinese Communist Party. In other words, Beijing will likely maintain industrial production at a certain level, even without a major buyer like the U.S.
According to him, the items likely to enter the Brazilian market en masse are “the usual ones,” ranging from steel—which already has a significant presence in Brazil’s economy—to goods popular in developing economies, such as cars, televisions, computers, cell phones, and electronics in general. “These are precisely the sectors where China has a strong capacity to dominate because they are also symbols of individual economic progress in China. If local absorption diminishes, it must occur elsewhere, and that place will likely be Brazil.”
Preparing for the Influx of Chinese Products in Brazil
Saconatto notes that Fecomercio has already warned retailers to prepare for this possibility. “We advise them: if you’re a reseller of Chinese products in Brazil, take advantage—your bargaining power is strong. If you’re a competitor, be cautious.”
However, this assessment is not unanimous in the trade sector. Felipe Tavares, chief economist at the National Confederation of Commerce of Goods, Services, and Tourism (CNC), downplays the risk of a massive influx, arguing that Brazil lacks the income and consumer market to absorb Chinese products in Brazil redirected from the U.S.
“The extent of our exposure is unlikely to change significantly,” he says. “It’s not because the U.S. stops buying electric cars that the volume in Brazil will quadruple. We don’t have the income or market capacity for that.” He believes Brazil could benefit from Trump’s policies that reinforce the importance of the Western world. “Historically, Brazil has benefited greatly from Republican policies. A more centralized trade flow within the West benefits Brazil significantly.”
Trade Defense Measures and Strategic Adaptation
According to Folha de São Paulo, the Federation of Industries of São Paulo State (Fiesp) is conducting a detailed analysis of the risks associated with this issue, considering the diverse range of industrial sectors. Rafael Lucchesi, director of industrial development and economics at the National Confederation of Industry (CNI), acknowledges that a Republican victory raises concerns about an influx of Chinese products in Brazil. Still, he emphasizes that Brazil has institutions, government mechanisms, and the ability to adapt to such scenarios.
“I think Brazil must remain vigilant to these developments and, of course, safeguard its interests. If Trump has his ‘America First’ slogan, we need to think pragmatically about ‘Brazil First,'” he says. He notes that specific sectors in Brazil have already seen increased imports of Chinese products in Brazil. Recently, the government raised import taxes on solar panels—an industry dominated by Chinese suppliers—to 25%.
Lucchesi concurs that potential barriers in the U.S. will drive China to seek alternative markets for its surplus. Therefore, he believes Brazil must accelerate its trade defense mechanisms, adding that the industrial sector will respond to perceived threats. “It’s crucial for Brazil to establish a proactive strategy, ensuring its industrial structure is safeguarded from significant impacts before addressing them retroactively.”
Proactive Strategy for Trade Defense
The Ministry of Development, Industry, Commerce, and Services stated that it is closely monitoring the international context and working internally on scenarios for foreign trade in the coming years. “The Ministry will adopt all necessary measures to promote competitiveness in the domestic market without guiding its actions and decisions by other criteria.”
Saconatto from Fecomercio predicts that Brazil will eventually impose tariffs on certain goods, starting with Chinese products in Brazil, such as cars.
“Industrial lobbying is powerful, and Brazil will end up protecting itself,” he states. “By 2025, we will likely see tariffs increase to curb this trend slightly.” He suggests Brazil take a strategic approach to absorb these Chinese products in Brazil and benefit from lower prices.
“There’s potential to align a long-term plan with selectively reducing import tariffs, focusing on machinery, energy, technology, and infrastructure. If Xi Jinping wants to subsidize us, we should thank him.”