Brazil’s rare earth exports to China tripled in the first half of 2025 just as Chinese imports surged to a record high, fuelling concerns that Beijing-Washington trade tensions may be quietlyreroutingg the world’s supply chains through emerging economies. The figures are part of a report released on Thursday by the China-Brazil Business Council (CBBC) that shows Brazil’s exports to China fell 7.5 per cent compared to the same period last year, reaching US$47.7 billion. Imports from China rose 22 per cent to US$35.7 billion. As a result, Brazil’s trade surplus with China narrowed to US$12 billion. It was the lowest since 2019 and half the total recorded in 2024. Rare earth compound exports reached US$6.7 million, a threefold increase over the first half of 2024. While small in absolute terms, analysts see the growth as a sign of China’s bid to diversify its access to strategic minerals. Tulio Cariello, research director at CBBC and the report’s author, said the shifting numbers reflected not only China’s evolving industrial policy but also the ripple effects of global trade tensions. “As the United States and China harden their trade barriers, Brazil ends up absorbing part of that shock,” he said. “It becomes a destination for Chinese goods, but also a potential supplier of what China no longer wants to depend on domestically.” Cariello said the trend may also reflect Beijing’s bid to reduce the environmental cost of domestic processing. “We’re seeing China apply the same logic it used in energy and food security to its access to critical minerals,” he noted. “That means looking outward, and Brazil has quietly entered that radar.” The report also found that Brazil’s exports of manufactured goods to China rose sharply. Items like taps, rubber tubing and gas-measuring devices posted gains of more than 1,000 per cent. The total value reached US$55 million, twelve times higher than in the same period last year. These gains, however, were dwarfed by the growing volume of Chinese goods entering Brazil. Imports of hybrid vehicles rose 52 per cent in units and 14 per cent in value, totalling US$1.38 billion. China now accounts for 84 per cent of Brazil’s hybrid vehicle imports. Cariello noted that the spike appears to reflect a strategy by importers to accelerate shipments before tariff increases took effect. Earlier this year, Brazil reinstated duties on electric and hybrid vehicles to protect local industry, but Chinese brands remain dominant. In February, Brazil registered a rare trade deficit with China. The shortfall was attributed to a US$2.6 billion offshore platform purchase and falling commodity prices, and officials framed it as an exception. But the new data suggest that the imbalance is becoming a pattern. Brazil’s top exports to China remain soy, iron ore and crude oil, but while they have maintained volume, they have lost value due to declining global prices. Meanwhile, Chinese goods are penetrating new areas of the Brazilian market, including those previously served by local industry. The automotive and steel sectors are among the most exposed. In January, Brazil’s carmakers association and 25 foreign manufacturers requested an anti-dumping investigation targeting Chinese carmakers BYD and Great Wall Motors, contending the companies were undercutting prices and benefiting from local tax regimes despite limited domestic production. Last year, Brazil also imposed anti-dumping tariffs on Chinese steel products after exporters were found to be altering specifications to evade existing duties. Yet in the first half of 2025, imports of flat-rolled steel wider than 600 millimetres rose 318 per cent. Imports of semi-manufactured steel grew by more than 2,000 per cent. Cariello warned that such numbers suggest traditional tariff tools might no longer be sufficient. He argued that China was likely to turn to markets like Brazil as access to the United States and Europe tightens. While trade disparities with China are widening, diplomatic stalemates with the United States in recent days have reduced Brazil’s hedging options. During the Brics leaders’ summit in Rio de Janeiro this month, US President Donald Trump threatened to impose a 10 per cent tariff on all bloc members that aligned themselves with what he called “anti-US policies”. Brazilian President Luiz Inácio Lula da Silva sharply criticised Trump, saying that the world did not “want an emperor”. A few days later, the White House announced a 50 per cent tariff on all Brazilian exports, citing what Trump described as a political “witch hunt” against Brazil’s former president Jair Bolsonaro. Bolsonaro is facing trial over his alleged role in a failed 2023 coup plot and the attempted assassination of then president-elect Lula and a Supreme Court justice. Asked about Lula’s remarks on Thursday, White House Press Secretary Karoline Leavitt defended Trump’s posture. “The president is certainly not trying to be the emperor of the world,” she said. “He is a strong president for the United States of America, and he’s also the leader of the free world.” Leavitt also confirmed that Trump had sent a letter to the Brazilian government and ordered the US Trade Representative to launch a Section 301 investigation into Brazil’s trade practices – including digital regulation, data governance, intellectual property enforcement, tariff preferences granted to countries like India and Mexico, and Brazil’s environmental standards. The letter accused Brazil of tolerating illegal deforestation and intellectual property violations, arguing that these practices give its exporters an unfair edge. Cariello said that Brazil’s position as both a supplier to China and a regional partner of the US is becoming more exposed to the consequences of global fragmentation. He warned that the country might soon face difficult choices in balancing political alignment with economic opportunity. He also noted that agriculture, long Brazil’s strongest link to China, may face new challenges. Beijing’s economic plan prioritises food security and reduced import dependency, something that could undermine Brazil’s dominance in soy, maize and beef exports. “China is not cutting us off, but it is clearly reducing overexposure to any single supplier,” he said. “If Brazil doesn’t diversify its buyers with the same urgency, it will end up more vulnerable than strategic.” He also believed the rise in rare earth exports and complex manufactured goods could open new opportunities, but only if backed by long-term policy. “These are promising signals, but they won’t amount to much unless Brazil builds capacity and resilience,” he said.