For years, Brazil blocked any Mercosur-China trade deal to protect domestic factories. Then in July 2025, Trump imposed a cumulative 50% tariff on Brazilian imports — the highest on any country — citing the prosecution of Bolsonaro, BRICS membership, and alleged censorship of U.S. platforms. Senior officials told Reuters on February 6 that a partial Mercosur-China deal is now seen as plausible.
The numbers explain why. Brazil-China trade hit $171 billion in 2025 — more than double the $83 billion with the U.S., which runs a surplus against Brazil. China has been Brazil’s top partner for 15 years, buying 79% of its soybeans, 44% of its oil, and absorbing a 50% beef import surge last year.
Since 2007, Beijing invested $79 billion: BYD converted a shuttered Ford plant into an EV factory, COFCO is building its largest overseas grain terminal in Santos, and 10,000 km of Chinese power lines cross the country. Over 30% of trade invoices now settle in yuan and reais, bypassing the dollar.
This week, Uruguay’s Yamandú Orsi visited Xi Jinping in Beijing — the first Latin American leader received in 2026 — and issued a joint statement calling for Mercosur-China free trade talks “as soon as possible.” China already has deals with Chile, Peru, Costa Rica, and Ecuador.
Brazil weighs deeper China trade ties
Mercosur is the missing piece. But consensus is required. Paraguay recognizes Taiwan, not Beijing. Argentina under Milei has aligned with Washington via a $20 billion currency swap. Both could block talks.
The political divide is sharp. Brazil’s left frames this as overdue diversification: Trump punished Brazil for its courts, BRICS role, and digital sovereignty — proving U.S. dependence is a vulnerability.
Combined with the Mercosur-EU deal signed in January covering 718 million people, a China deal gives Brazil leverage across three blocs. The right sees catastrophe. Fourteen industry groups warned a full China deal would cancel R$500 billion in investment.
Chinese auto imports surged 800%, steel 25%, textiles at ten times domestic output. Industry’s GDP share fell from 34% in 1984 to 10% — critics say a China pact locks in a colonial trade pattern.
Brazil is not choosing between Washington and Beijing — it is hedging against both. But the risk is real: replacing one dependency with another. Whether this protects Brazilian industry or finishes it will shape trade across the Western Hemisphere.
