Why the 2026 Election Matters So Much to Brazil

(Op-Ed Analysis) Brazil stands at a crucial juncture. Despite President Lula’s ambitions for a multipolar foreign policy and greater global influence, the country remains locked in a familiar dilemma.

It is still, above all, the world’s farm—an exporter of raw materials, especially to China. Yet, the United States remains Brazil’s most important partner for industrial goods, investment, and technological development.

As tensions rise between Washington and Beijing, Brazil faces mounting pressure to pick a side, while internal political battles threaten its prosperity and international standing.

Brazil’s Economic Structure: Still the World’s Farm

Commodity Dependence: Brazil’s economy is heavily reliant on the export of agricultural and mineral commodities. In 2024, Brazil exported $49 billion in agricultural goods to China, which now buys 73% of its soybeans, 49% of its cellulose, and nearly half of its beef.

Chinese companies are investing directly in Brazilian farmland, logistics, and processing, making Brazil’s countryside a critical extension of China’s food security strategy.

Manufacturing Reality: Manufactured goods represented just 23.2% of Brazil’s total merchandise exports in 2024, while agricultural and mineral commodities dominated trade flows. This concentration has only intensified despite decades of promises to industrialize.

Infrastructure and Logistics: China has invested $4.4 billion in Brazil’s mining sector from 2007 to 2022, with an additional $3.5 billion announced in 2024 specifically targeting three new mining plants in Bahia state.

China is also investing in Brazilian ports, railways, and highways, streamlining the export of soy, beef, and minerals to Asia. This reinforces Brazil’s role as a resource supplier, not a manufacturing hub.

China’s Strategy: Keeping Brazil as a Supplier

Manufacturing Powerhouse: China’s global model is to import raw materials and food from Brazil while keeping high-value manufacturing at home. Over 90% of Brazil’s exports to China are just ten products, mostly unprocessed commodities.

Trade Deficit Emergence: Brazil briefly recorded its first trade deficit with China in nearly a decade during early 2025, driven by a surge in Chinese imports including solar panels and petroleum drilling platforms, reflecting concerns about escalating US-China trade tensions.

Technology and Machinery: Even in agriculture, China exports machinery and technology to Brazil, embedding itself as the provider of tools and the buyer of outputs, rather than a partner in industrialization.

The US: Brazil’s Industrial and Strategic Partner

Industrial Exports: The United States is the main market for Brazil’s manufactured goods. In 2025, Brazilian exports to the US hit a record $16.7 billion in the first five months.

Of that total, 79% were industrial products such as aircraft, processed foods, chemicals, and machinery. The US is also Brazil’s largest source of foreign direct investment, exceeding $100 billion.

Trade Resilience: In the first quarter of 2025, Brazil-US trade reached a record $20 billion despite new tariffs imposed by the Trump administration. Key sectors showed strong growth, with orange juice exports rising 74.4% and fuel oils increasing 42.1%.

Diverse Trade: The US buys a much broader range of Brazilian goods than China, with the top ten items representing only 54% of exports compared to over 90% for China. This supports Brazil’s ambition to be more than just a supplier of raw materials.

Financial Ties: The US dollar dominates Brazilian trade and reserves, making Brazil highly sensitive to US monetary policy.

Brazil’s Industrial Ambitions vs. Reality

• Nova Industria Brasil Policy: Launched in 2024, this policy allocated 300 billion reais ($56.28 billion) over three years to stimulate industrial development across six sectors: agriculture, health, sustainable mobility, new technologies, energy transition, and defense.
• Manufacturing Progress: Manufacturing exports from Brazil reached their highest value since 1997 in 2024, totaling $181.9 billion, reflecting government efforts to strengthen national production.
• The Contradiction: Brazil aspires to move beyond being “the world’s farm,” yet its closest international partnership with China locks it precisely into that role, as China’s development model requires resource suppliers, not manufacturing competitors.

Mounting Geopolitical Pressure: The Squeeze Is On

Tariffs and Trade War: The Trump administration has imposed a 10% universal tariff on Brazilian goods, with even higher rates for steel and aluminum.

While Brazil’s exports to the US are still growing, these measures signal Washington’s readiness to escalate if Brazil drifts too close to China or maintains a left-leaning government after the 2026 elections.

China’s Leverage: China is offering investment and market access, but expects political alignment and continued access to cheap Brazilian resources.

Political and Judicial Tensions: The Social Media Clash

Brazil’s internal politics are adding to its external risks:

Censorship and Judiciary: Supreme Court Justice Alexandre de Moraes has ordered the suspension of platforms like Rumble and X (formerly Twitter) for failing to comply with court orders, sparking lawsuits from US companies such as Trump Media & Technology Group.

In May 2025, US Secretary of State Marco Rubio indicated that sanctions against Moraes under the Global Magnitsky Act were “a great possibility.”

Legal Confrontation: Trump Media & Technology Group, joined by video platform Rumble, filed a federal lawsuit against Moraes in Tampa, Florida, challenging his authority to restrict speech protected by the First Amendment.

Diplomatic Fallout: US lawmakers and media accuse Brazil’s judiciary of censorship and persecution of opposition voices, warning that these tactics resemble those of authoritarian regimes. This has soured relations and could provoke economic retaliation if Brazil’s political climate does not shift.

Recent Flashpoints and Security Challenges

Military Incident in Acre (May 2025): Tensions flared between US and Brazilian forces near the Amazon, reflecting Washington’s concern over organized crime (notably the PCC) and Chinese influence in the region.

Organized Crime Expansion: The Primeiro Comando da Capital (PCC) has expanded operations throughout the Amazon region, particularly near the Brazil-Venezuela-Guyana border, controlling illegal mining and logging.

The group’s activities resulted in 208 indigenous murders in 2023 alone, a 15% increase from the previous year.

Border Security: Brazil reinforced its northern border with 600 additional troops and armored vehicles due to ongoing tensions between Venezuela and Guyana over the Esequibo region.

The 2026 Electoral Landscape

• Current Polling: President Lula leads potential opponents, but the race remains competitive, particularly if São Paulo Governor Tarcísio de Freitas emerges as the center-right candidate.
• Bolsonaro’s Legal Troubles: Former President Bolsonaro faces indictment on coup-related charges that could lead to imprisonment, creating space for new center-right leadership.
• Political Realignment: Freitas has been positioning himself as a pragmatic alternative, recently stating his intention to help “a group reach the presidency” while focusing on governance rather than polarization.

Why This Matters for Brazil’s Future

Stuck as a Commodity Supplier: Siding with China means doubling down on being the world’s farm, with limited prospects for industrial development or high-value job creation, accepting permanent status as a commodity supplier vulnerable to price volatility.

US Market Is Key for Industrialization: Only the US provides the scale, diversity, and investment needed for Brazil to become more than a farm. The US market’s diversity, technological partnerships, and investment flows provide the foundation for moving beyond commodity dependence.

Political Risks: The current government’s confrontational stance toward the US and its own conservative opposition—especially through the activist Supreme Court—risks isolation.

If Brazil’s 2026 elections do not produce a government more aligned with US interests, expect Washington to double down on economic and diplomatic pressure.

Regional Implications: As Latin America’s largest economy, accounting for nearly 60% of South America’s GDP, Brazil’s choice will influence the entire region’s alignment and development path.

In Simple Terms: Why You Should Care

• If Brazil continues on its current path, it will remain a supplier of raw materials to China, with little hope of building a strong industrial base that creates quality jobs and technological advancement.
• The US is the only major partner interested in buying Brazil’s manufactured goods, investing in its industry, and supporting its technological development through partnerships that build capacity rather than extract resources.
• Political and legal battles—especially those involving censorship and the Supreme Court—are souring relations with the US, risking sanctions and loss of investment that could devastate Brazil’s economy.
• For Brazil to prosper, it needs to reform its politics, judiciary, and foreign policy—choosing partners and policies that support its goal of becoming more than just a farm for the world’s superpowers.
• The 2026 election represents a critical choice between permanent subordination as a commodity supplier or genuine partnership for industrial development.

Key Figures and Facts