Lula and Xi to ink new deals as Brazil shrugs off Trump’s trade threats

Brazil’s Luiz Inácio Lula da Silva insists he doesn’t want to pick between the US and China as his two largest trading partners wage a trade war. But it’s increasingly clear which side he’d choose if forced.

Lula and China’s Xi Jinping are set to ink new trade-related agreements in Beijing on Tuesday, with eyes on opening new markets for Brazilian agricultural goods and expanding Chinese investments into infrastructure projects meant to speed up the delivery of those products across the Pacific. 

The deals will mark the latest step in Lula’s efforts to transform Brazil’s commodities-heavy economy with Chinese assistance, while sending one of the strongest signals yet that Donald Trump’s protectionist threats have done little to dissuade the leader of Latin America’s largest economy from betting even bigger on Beijing.

“If it depends on my government and my willingness, Brazil and China will be unavoidable partners and our relationship will be indestructible,” Lula said at a forum of Brazilian and Chinese businesses Monday, ahead of his meeting with Xi. “China needs Brazil, and Brazil needs China.”

The state visit will be the third between Xi and Lula since 2023. Add global summits and events they’ve both attended, and there are few world leaders with whom the Brazilian has spent more time during his third term in office.

The agreements will build on deals struck during Xi’s trip to Brasília in November, when they cinched accords for China to boost financing of Brazilian infrastructure projects and open new markets to the South American nation’s agricultural goods.

Brazil’s trade with China has grown steadily over the last decade, with total flows reaching US$158 billion last year, nearly double its amount with the United States. Lula has sought to further deepen the ties, betting on Chinese investment and support for a development strategy meant to move his nation up the global value chain.

Colombian President Gustavo Petro, who will also meet Xi while in Beijing for a forum between China and the Community of Latin American and Caribbean States, said Monday that he plans to sign onto China’s Belt and Road Initiative, potentially denting his already shaky relations with the United States.

Lula has bucked calls to join, instead seeking to benefit from its aims without formally signing on. He recently organised a ministerial task force to maintain regular talks with Beijing on new business opportunities, including ambitious projects like a transoceanic railroad that would connect Brazil’s Atlantic coast to the Pacific in Peru, where the new Chinese-owned Chancay port opened last year. 

Most of Brazil’s new transport infrastructure will ultimately lead to Chancay, with products destined for China and other Asian markets Brazil is eager to explore.

The interest is mutual, as China seeks to expand its presence throughout a region the United States has long considered its own. It is eager to build on the successful revival of Brazil’s automotive industry, which Chinese companies like BYD Co Ltd and Great Wall Motor Co Ltd fuelled.

Nationwide sales of electrified vehicles surged nearly 90 percent to more than 177,000 in 2024 from a year prior, according to Brazil’s electric vehicle association. Of that total, 61 percent were from Chinese brands, nearly all of which came from BYD and GWM.

On the eve of Lula’s meeting with Xi, a group of Chinese businesses announced investments of 27 billion reais (US$4.7 billion) in the South American nation over the coming years. Along with GWM, the list includes new semiconductor factories from Shenzhen Longsys Electronics Co Ltd and the arrival of both the world’s largest fast food chain, Mixue Group, and a delivery app called Keeta.

“China has emerged as a major buyer from Brazil and what we want is to diversify the investment and partnership agenda,” Eduardo Saboia, the secretary for Asia and the Pacific at Brazil’s Foreign Ministry, said. “Our partnership is ambitious and the work is complex, dense and promising.”

Lula has also joined China in using global multilateral institutions to push back against Trump’s trade policies, spearheading an agreement among the BRICS bloc of emerging market nations that criticised US protectionism last month.

Without naming Trump, the group of 10 countries founded by Brazil, Russia, India, China and South Africa raised “serious concerns about the rise of unjustified unilateral protectionist measures,” including reciprocal tariffs, in a statement that followed a meeting of BRICS foreign ministers in Rio de Janeiro.

So far, that has generated little response from Washington, which has engaged in a diplomatic blitz in other corners of Latin America but largely avoided Brazil.

That could change, however, as Lula’s government continues to embrace China while also seeking to capitalise on the trade war by moving into markets Trump’s tariffs have made more expensive for US agricultural goods. 

Brazil plans to take more than 150 representatives of its agribusiness sector to China later this month for meetings, events and Asia’s largest food trade fair in Shanghai. It’s aiming for talks to expand trade for a long list of products that includes corn, ethanol, sorghum, sesame and coffee, said Luis Rua, the Agriculture Ministry’s secretary of commerce and international relations. 

New approvals of Brazilian beef, pork and chicken plants for export to China will also be on the agenda. Brazil wants to discuss measures to start sorghum exports to China after it authorised purchases of the product late last year. And it’s seeking to open the Chinese market to Brazilian DDG, a byproduct of corn ethanol, and expand its exports of the biofuel.

“In this time of trade war, Brazilian businessmen and the Brazilian government are making themselves available,” Rua said. “Showing our faces at this moment is important so the trade partner can see Brazil is there, including the decision-makers.”