The Brazilian and Chinese governments inked a raft of new trade and development deals on Wednesday covering industries ranging from the tourism sector to energy, science, education, culture, technology and agriculture – including several agreements to allow Brazilian sorghum, grapes and sesame exports to the country.
Chinese President Xi Jinping and Brazilian President Luiz Inácio Lula da Silva announced nearly 40 new deals during Xi’s state visit. The deeper trade ties are part of an effort by Beijing to “elevate” the Brazil-China relationship and “connect the Belt and Road Initiative with Brazil’s development strategies,” according to a statement from China’s Ministry of Foreign Affairs.
Among the list of deals published Wednesday are several designed to boost agriculture trade. The two countries published protocols for exporting sesame, grapes, sorghum and several fish products, paving the way for Brazilian producers to send their products to China.
Brazil's Agriculture Minister Carlos Favaro had teased agreements on beef and pork exports earlier in the week, but they were not among the final deals announced.
Brazil is only a minor exporter of sorghum, but produces around 5 million metric tons annually, or 8% of all global production, according to the U.S. Agriculture Department. Meanwhile, the U.S. produces more than 8 million metric tons, the bulk of which is exported to China.
“China is hedging its bets against trade actions by the U.S.,” Vincent Smith, director of agricultural policy studies at the American Enterprise Institute, told Agri-Pulse.
Trump has suggested he could impose a minimum tariff rate of 60% on all Chinese imports in a second term. If he proceeds with the plan, Smith said, Beijing will “essentially do what it did before" – retaliate with tariffs against U.S. agriculture exports and divert purchases to alternate suppliers like Brazil.
Peter Friedmann, executive director at the Agriculture Transportation Coalition, said the announcements of deeper China-Brazil trade ties in commodities like sorghum reinforce the notion that “there's nothing we produce in agriculture or forest products in the U.S. that cannot be sourced somewhere else.”
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Accordingly, Friedmann argued that if U.S. exports become less affordable because of retaliatory tariffs, “our foreign customers will find that alternative source, and we might not ever get them back as customers.”
U.S. corn and soy exports recovered following the negotiation of the Trump administration's phase one deal in early 2020, which brought an end to tariff hikes and saw China pledge to increase purchases of U.S. agriculture exports. However, in 2023 they still lagged their pre-2017 level, according to research from the University of Illinois.
“That's why we've got to be cautious –cautious about doing anything that will encourage our customer countries to do anything that increases the cost of sourcing from the U.S.,” Friedmann said.
In addition to facilitating trade in the sorghum, grape and sesame industries, both Smith and Friedmann argued that the deals could facilitate trade in other sectors.
“You can't treat them as completely unrelated to markets,” Smith said. “If there are closer formal country-to-country ties on trade issues in general – the non-use of the U.S. dollar as a vehicle for negotiating contracts, for example – then that has implications for the relative ease with which contracts can be made on other agriculture commodities.”
“This would look like China saying, ‘We want better relationships with Brazil with a view to a broad spectrum of commodities that we import that we may choose, or need, to source from somewhere else than the United States,'” Smith added.
The Chinese embassy in Washington did not respond to a request for comment on whether the new agreements were in preparation for a Trump presidency.
China has also made a string of infrastructure investments in Brazil and across the region, which Friedmann argues could be leveraged to further facilitate exports of agricultural commodities. Chinese state-owned companies have been involved in the first phase of construction on a new rail line to connect the interior to the Atlantic coast. State-owned companies have also invested in the Port of Paranaguá, a hub for agriculture exports.
“It's not just sorghum that can use it. It's anybody else. It's cotton, soybeans, any other product can use those to great advantage,” Friedmann said. “The investment and these special arrangements, if you will – the benefits will spread, no question about it.”
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