Today Brazil remains the Miami Customs District’s (Port St. Lucie through the Keys) top trade partner with over $2.2 billion in two way trade during the first two months of 2011, a 12.7% increase over the same period in 2010 (http://www.miamitodaynews.com/news/110505/story3.shtml). Colombia is in 2nd place and also reflected a 7% increase over the same period.
In 2009 China surpassed the United States as Brazil’s top trade partner. Although Brazil enjoys a trade surplus with China, about 84% of its exports to China are raw materials and about 75% of that figure is iron, soy and crude oil. In contrast 98% of Chinese exports to Brazil are high end manufactured goods with television sets, LCD screens and telephones heading the list. The gap is widening year to year and is one of the main irritants in the relationship (http://www.reuters.com/article/2011/02/03/us-brazil-china-fb-idUSTRE7121RF20110203).
These challenges were addressed at the recent BRICs (a term coined to describe te emerging economies of Brazil, Russia, India and China with South Africa a recent addition) summit in China with one practical result an being an agreement by China to purchase 35 Embraer E190 commercial jets from Brazil (http://brazilportal.wordpress.com/2011/04/12/brazils-rousseff-wants-new-phase-in-china-trade-ties). There were additional promises to invest in Brazilian infrastructure and manufacturing, otherwise deal with the imbalance and also to address the ongoing problems related to the grossly undervalued Chinese currency, the Yuan (also called the Renmimbi) that is a complaint echoed around the world, including by the U.S. in its bilateral dealings with China.
While acknowledging the need to diversify trade between the nations, Chinese Trade Minister Chen Deming also alluded to the high labor costs, taxes and mind numbing bureaucracy that continues to act as a deterrent to investment in Brazil (http://www.reuters.com/article/2011/05/16/brazil-china-idUSN1629271720110516). There are ongoing discussions relating to a major Chinese company, San Heavy Equipment International, investing about $200 million investment in local production. Taiwan based Foxconn is considering up to $12 billion to dramatically increase its Brazilian production of Apple Inc. products.
Trade between the two emerging economies will continue to increase and may form one the most important relationships in trade in coming years. It is unlikely this will occur without many challenges and that the relationship between Brazil and the U.S. being affected. The question is what those impacts will be and how the U.S. leadership will approach them and develop its reltions with its growing neighbor to the South.