The return of Donald Trump to the presidency of USA and the imposition of tariffs up to 145% on Chinese products rekindled Commercial dispute with Beijing. But, unlike the shock observed in the first term of the Republican, the China It seems to face the new clash with greater preparation and firmness – opening a window of opportunity for Brazil.
In an interview with InfomoneyClaudia Trevisan, Director of the Brazil-China Business Council (CEBC), points out that the impasse has given the tone in the relationship between the two largest economies in the world. Both say they are open to negotiating, but none take the first step to that.
“Xi Jinping will not expose himself as other leaders who were in the White House and have been humiliated by an unpredictable leader. Definitely, he does not want to star in a scene like Zelenski.”
For Trevisan, China is prepared for the new cycle of commercial hostilities, especially because they had a similar situation in 2017 and 2020. “There was no surprise now. The tariff climbing had been announced since the presidential campaign,” he says.
More than a commercial dispute, the expert points out that the current tension puts the economic integration that has transformed the world in recent decades. “This arrangement has boosted a period of global prosperity and took millions out of poverty. Seeing this being undone is losing value to everyone. Even to the US.”
On the other hand, with American sanctions and Chinese retaliation, Brazil returns to the center of the board, especially in agribusiness. Trevisan recalls that after Trump’s first rates, Brazil began to export soy, cotton and meat in much larger volumes. Today, there is news that China suspended imports from American refrigerators and can do the same with the chicken.
It also highlights the advance of in Latin America, with Brazil in a privileged position. “China has already invested about $ 73 billion here, especially in energy and manufacturing. Here we have market, natural resources and relative stability,” he points out.
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See below the full interview with the Director of the Brazil-China Business Council (CEBC).
Infoomoney: What has been the perception of Chinese business and public opinion on US tariffs?
Claudia Trevisan: It is difficult to generalize in a country with more than 1.4 billion inhabitants, but of course the Chinese government has responded with retaliation from the beginning. Interestingly, many Chinese I’ve talked last year preferred a Trump victory instead of or Kamala Harris, because they saw an isolationist that would weaken US alliances. This makes more room for China, which is trying to use this moment to project the image of a country that advocates the rules of multilateralism and the WTO (World Trade Organization).
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IM: Was China prepared for this new rate of tariffs?
CT: In the first Trump administration, there was more Beijing surprise with import tariffs. Not now. During the presidential campaign, the Republican spoke of raising them to 60%-which were already considered absurd. It is now 145% and when you look at the statements of the Chinese spokespersons, they say the country will not retreat. And there is an impasse: on one side China says he wants to negotiate, but he will not do under pressure; On the other hand, the US says China wants an agreement, but it doesn’t know how to do it.
IM: Is this posture related to Chinese cultural values?
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CT: Yes, the culture of China is very marked by the principle of “saving the face”. This means that it is of value for leadership to avoid loss of respect in public situations. He will not expose himself as other leaders who were in the White House, and were humiliated by an unpredictable leader. Definitely, he does not want to star in a scene like Zelensky [o presidente da Ucrânia, que foi repreendido publicamente na Casa Branca]. Remember that we are talking about the two largest economies in the world, which over the last 40 years have built very deep economic ties. They are highly efficient production chains that boosted a period of global prosperity – even with their inequalities. Millions of people came out of poverty in this process of unprecedented integration. Seeing this arrangement being undone now, going into crisis, means losses to everyone. Including for the US itself.
IM: Given these tensions between US and China, new business opportunities for Brazil arise?
CT: I believe so, especially looking at Trump’s first term, when the First Trade War took place. He imposed rates on Chinese products, and China retaliated with tariffs on American products – especially agribusiness. This was a political choice: US producing states usually make up the republican party base. In 2017, the US was the main food supplier for China. Then Brazil surpassed the US, especially in soy. We also export products we didn’t export before, such as cotton. Today there is news that China suspended that of several American refrigerators, and studies doing the same with chicken – the US is the main supplier.
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IM: Is there a risk that Brazil is pressured to choose sides?
CT: So far, the trade war is not demanding that countries choose sides. There is no formal pressure from the US so that countries stop negotiating with China. I think the best posture for Brazil is to keep its focus on the national interest. We have strategic relationships with both countries. Vice President Geraldo Alckmin, for example, has played an important role in this dialogue with both sides. He had a call with China’s Minister of Commerce. I haven’t seen the official account yet, but certainly the trade war was one of the topics.
IM: Is there room for China to expand strategic investments in Latin America?
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CT: Everything indicates yes. With increasing global protectionism, Chinese companies are likely to expand their. China is already a relevant investor in Brazil, with about $ 73 billion in investment stock. The sectors that received the most resources were those of generation, distribution and power transmission (45%), followed by oil and gas (30%). If we look at the number of projects, the electricity sector leads, but secondly comes the manufacturing, which is a type of investment that Brazil would like to attract more. It’s hard to predict exactly what will happen, but Chinese interest in Brazil is growing.
IM: What makes Brazil attractive to China compared to other business partners?
CT: There are numerous factors. First, Brazil is a country with great opportunities for investment in infrastructure – and China has competitive companies in this sector. Second, it is a market with scale, so if you are looking at Latin America, Brazil is the main market. It is the country that has the highest GDP, largest population, the largest needs also in infrastructure. So, Brazil represents a relevant market, with relative political stability compared to other countries in the region. It also has strategic natural resources, such as ore, oil, and of course, agribusiness – which matters a lot to China. And there is an economic complementarity that is very important in this relationship. China needs food and energy. Brazil has this to offer.
IM: Can this ongoing trade war accelerate the formation of more defined geopolitical blocks? Do you see the BRICS getting strengthened in this scenario?
CT: I think it’s too early to nail any scenario. I do not risk making predictions about what kind of world will come out of this trade war. I do believe that we are moving towards a more fragmented scenario, but as this fragmentation will be structured, we still do not know. Everything is happening very quickly.
