China accelerates investment in Brazil while the US punishes it with tariffs

Brazilians who drive for Uber have become great informal ambassadors for China on the streets of São Paulo. They are full of praise for the shiny electric cars many of them are driving, made by BYD, which has been assembling automobiles in Brazil for a month. They emphasize the unbeatable price-performance ratio. The Asian superpower is taking advantage of the punishing tariffs of 50% that Trump has imposed on Brazil to gain ground in Latin America’s largest market. Chinese companies’ commitment to Brazil has accelerated, placing it as the second destination for direct investment in the first half of 2025, behind only Indonesia, according to the Brazilian media, citing the China Global Investment Tracker, a publication by the American Enterprise Institute think tank that compiles Chinese investments worldwide.

Over the past two decades, Brazil has ranked fourth among destinations for direct investment from the Asian giant. But the trade war unleashed by President Donald Trump has heightened China’s interest in emerging markets, with Brazil being a prominent one. And in these times of uncertainty in the global markets, the interest is mutual.

One of the first things Brazilian President Luiz Inácio Lula da Silva did after the tariff increase was call his counterpart Xi Jinping in Beijing. Brasilia has denounced Washington before the World Trade Organization and remains open to dialogue with the White House, but this Wednesday, Finance Minister Fernando Haddad floated the possibility of going to U.S. court.

Chinese companies invested $2.2 billion in Brazil in the first six months of 2025, according to China Global Investment Tracker. This represents a 5% increase compared to the same period a year earlier and a tenth of the total amount invested abroad in that six-month period.

One of the side effects of Trump’s tariff hike against Brazil — imposed as punishment for the legal proceedings against former President Jair Bolsonaro — is the damage to America’s reputation. Among Brazilians, animosity toward Washington has soared while Beijing’s popularity has grown, according to a Quaest survey this week. Unfavorable opinions about the U.S. have doubled to 48%, while favorable opinions toward China have increased 10 points, to 49%.

China surpassed the U.S. as Brazil’s top trading partner 15 years ago. Among the Chinese projects completed in recent months is a terminal being built in the port of Santos by the state-owned agricultural company Cofco. The port business is complemented by the thousand trains that another Chinese company will supply to transport grain from the interior of the country to the coast.

Mining is another sector attracting Chinese investors. Among the most significant recent transactions is China’s MMG acquisition of all the Brazilian nickel mines owned by Anglo American.

Once Trump implemented the tariff increase on Brazil, President Lula immediately contacted the leaders of the BRICS—the Global South bloc—while his government initiated contacts with countless countries in search of new markets and reactivated or accelerated multiple trade negotiations.

The new U.S. tariffs are already in place, and there is no sign that Washington will agree to open negotiations with Brasilia to resolve, or at least mitigate, the crisis. While Lula appeals to national sovereignty and defends the independence of the judges trying Bolsonaro, Vice President and Minister of Industry Geraldo Alckmin is visiting Mexico this Wednesday and Thursday in search of a market for exports that will no longer go to the U.S. Brazil and Canada have just resumed negotiations for a trade agreement, and they are in a hurry to definitively close the pact between the European Union and Mercosur, although Brussels continues to drag its feet.

Meanwhile, the entire Brazilian government is redoubling its efforts to open a communication channel with the Trump administration. Just before leaving for Mexico, Alckmin, Foreign Minister Mauro Vieira and other senior government officials on Tuesday participated in a forum with Brazilian and American business leaders organized by the São Paulo employers’ association Fiesp and the Council of the Americas.

All representatives of the executive branch encouraged the private sector to exercise its best mediation skills with Washington to restore a diplomatic relationship that is 201 years old and is strategic for Brazil. Latin America’s leading economy wants to gain allies without losing partners. The Foreign Minister asked business leaders to collaborate in “raising awareness among U.S. authorities about the damage [that the current crisis] causes on both sides.”

Vice President Alckmin noted that some 10,000 Brazilian companies export to the U.S., while nearly 4,000 U.S. companies are established in Brazil. “A relationship like this doesn’t fall apart due to temporary circumstances,” he emphasized. Both ministers underscores the unfairness of the tariffs— the U.S. has a trade surplus with Brazil—and note that pressuring judges is an intolerable interference. But none of this diminishes Brasilia’s willingness to engage in dialogue with Trump and his team.

But the foreign minister also made the red lines very clear: “We will continue to insist on the need to separate trade issues from political ones,” Vieira said. That is, an absolute willingness to negotiate on tariffs, but not to discuss the Bolsonaro case; this concerns only the Supreme Court justices.

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