Brazil's Cerrado, Amazon may be next victims of US-China trade war

RIO DE JANEIRO - U.S. President Donald Trump's chaotic tariff war could boost appetite for Brazil's farm goods as China seeks to substitute U.S. agricultural imports, with potentially negative environmental consequences.

During Trump's first term, Brazil benefited from China's efforts to reduce its dependence on U.S. agricultural products amid a trade dispute between the world's two biggest economies.

Even though there has been a de-escalation of the most recent trade war, analysts expect the ongoing uncertainty to impact supply chains and benefit Latin America's largest economy.

Against this backdrop, Brazilian efforts to respond to growing Chinese demand for its agricultural products could fuel deforestation in a country that is home to over half of the Amazon rainforest and is already struggling with rapid deforestation, analysts said.

Scientists say deforestation is compounding the effects of climate change, threatening to turn large areas of the Amazon rainforest into drier, degraded ecosystems.

What is happening between the U.S. and China, and how does Brazil stand to benefit?

Trump's tariff decisions since he returned to power in January, from imposing sweeping duties to abruptly pausing some of them, have cast a shadow over international trade.

Although the U.S. and China agreed to temporarily reduce tariffs last week, the uncertainty around Trump's trade policy is expected to benefit Brazil as it has in the past.

China is the largest market for U.S. farm exports, having imported $29.25 billion worth of products in 2024, so any shift in trade flows can create opportunities for rival exporters.

During the trade war in Trump's first term, China reduced its dependence on U.S. soybeans in favour of Brazilian imports and U.S. farmers have not recovered that market share since, according to data from the Observatory of Economic Complexity, an online platform that gathers international trade information.

At a business forum in Beijing last week, Brazilian officials indicated Brazil would make the most of the current circumstances.

Agriculture Minister Carlos Fávaro said Brazil was looking to expand trade ties with China amid the "trade instability caused recently by the United States," while President Luiz Inácio Lula da Silva said, if it is up to his government, "our relationship with China will be indestructible."

With Lula's comments, the government is sending a signal to producers, financiers and traders that they need to "think about how to meet the demand that will come from China," said André Vasconcelos, global engagement lead at Trase, a platform that crosses data on commodity exports with deforestation.

What is the link between tariffs and deforestation?

Growing demand for Brazil's agricultural products could encourage farmers to clear more land to boost production, analysts said.

Against this backdrop, demand for land could rise, fueling land-grabbing, or the illegal seizure of land, said Vasconcelos.

Historically, the expansion of food production has been achieved partially through legal and illegal deforestation, according to data from the government and mapping consortium MapBiomas.

Authorities and researchers say land-grabbing is also a key driver of deforestation in Brazil as farmers and land-grabbers expand pastures not only for beef production but also for land speculation -- when they illegally take hold of public or communal land to eventually sell the land and turn a profit.

Soybeans and cattle are the two products most linked to deforestation in Brazil, according to MapBiomas.

Fluctuations in agricultural commodity prices were responsible for a third of the deforestation that took place in the tropics between 2001 and 2018, according to research published in the Journal of Environmental Economics and Management in 2023.

Which areas are particularly vulnerable?

The expansion of Brazil's production of soybean and other crops takes place primarily in the Cerrado tropical savannah, the area which has lost the most native vegetation in Brazil over the past two years, according to MapBiomas.

Meanwhile, farmers and land-grabbers are expanding pastures for cattle mostly in the Amazon rainforest, MapBiomas data showed.

China is Brazil's biggest export market, and the importer most exposed to deforestation in Brazil through its purchases of Brazilian soy and cattle, Trase data showed.

What is being done against deforestation fuelled by agricultural commodities?

Conservationists have praised Brazil's 2006 Soy Moratorium initiative, a voluntary ban by grain traders on soybean purchases from Amazon areas deforested after 2008, for slowing damage to the world's largest rainforest.

But the agreement is under growing pressure from farmers' lobbies in Brazil, the leading soybean producer globally.

The European Parliament approved in 2023 a landmark deforestation law which will ban the import of beef, soy and other goods linked to the destruction of forests, but the law has been delayed and will only take effect from December 2025.

(Reporting by Andre Cabette Fabio; Editing by Ana Nicolaci da Costa.)