Brazil and China Sign Nearly 40 New Deals

Brazil and China are taking their relationship to the next level. Last week, the two countries signed 37 deals on everything from agriculture and trade to investments, energy and mining, industry, tech cooperation, and a whole lot in between. 

The agricultural deetz: Brazil can now export its sorghum, grapes, sesame, and fish products to China. Sorghum is an especially big deal for Brazil. Last year China imported nearly $2B of sorghum, mainly from the U.S. While Brazil currently only holds a 0.29% share of the global sorghum market, the deal opens up future production possibilities.

What does this mean for the U.S.? If Brazil plans more sorghum, it’ll take acreage away from its second corn crop. With less Brazilian corn planted, the U.S. can keep its status as a top corn exporter. Meanwhile, if China takes more sorghum from Brazil, this could *potentially* free up more acres for corn, soybeans, and wheat in the U.S.

There are noticeably a lot of “ifs” here, and only time will tell. Keep in mind Trump has dropped hints he might impose a minimum tariff rate of 60% on Chinese imports. This would likely cause China to retaliate with tariffs against U.S. ag exports and purchase more from other countries like Brazil.

Peter Friedmann of the Agriculture Transportation Coalition warns that if the U.S. becomes more expensive due to retaliatory tariffs, “our foreign customers will find that alternative source, and we might not ever get them back as customers.” 

Brazil’s largest trading partner is China. Last year, their two-way commerce was greater than $160B.