Lula rewrites Brazil’s geopolitical playbook

In mid-May, Brazilian President Luiz Inácio Lula da Silva embarked on a trip to China to attend the China-CELAC (Community of Latin American and Caribbean States) Forum and hold talks with Chinese leaders — his second visit to China since the start of his current term. Since the beginning of the year, Lula has moved swiftly to establish strategic alliances in response to shifting global dynamics.

On 18 February, Brazil announced its accession to OPEC+, comprising members of the Organization of the Petroleum Exporting Countries (OPEC) and non-member oil-producing nations. This marked a strategic step forward for Brazil, a global energy powerhouse, as it explores new directions amid the global energy transition.

In the second half of March, Lula visited Japan and Vietnam. On the 130th anniversary of relations, Brazil and Japan — which established diplomatic ties in 1895 — signed the Action Plan for the Brazil-Japan Strategic and Global Partnership (2025-2030) to deepen cooperation.

In Vietnam, meanwhile, the two countries decided during the G20 summit in Rio last November to upgrade their bilateral relationship to a strategic partnership. Vietnam has expressed interest in joining the BRICS grouping, and with Brazil serving as chair in 2025, Lula invited Vietnam to participate in this year’s BRICS summit, scheduled for July in Brazil.

Against the backdrop of global geopolitical restructuring, Lula’s visit to China serves two key purposes. The first is to demonstrate Brazil’s resolve in resisting US President Donald Trump’s tariff bullying. In late March, Foreign Policy published an article, “Brazil Pivots to Asia”, expressing hope that Lula’s Asia tour would become a model for the global south in countering Trump’s hegemony.

On 1 April, Brazil’s Senate Economic Affairs Committee passed the Trade Reciprocity Law, which establishes reciprocal countermeasures in response to trade barriers imposed on Brazilian goods by other countries. Aimed specifically at shielding Brazilian exports like agricultural products from punitive foreign tariffs, the legislation is seen as a key strategic tool for Brazil to confront international trade friction, especially under the threat of renewed protectionist measures from the Trump administration. The law officially came into effect on 14 April.

The second objective is to showcase Lula’s leadership over South America. The most economically successful trade arrangement in Latin America in recent years has been the United States-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) after renegotiations between 2017 and 2018. That agreement included an “either-or” poison pill clause, stipulating that if any of the three parties signs a free trade agreement with a “non-market economy”, the others have the right to withdraw within six months and replace the trilateral pact with a bilateral one. The clause’s primary aim was to prevent Mexico from signing a free trade deal with China.

On 4 March this year, Trump followed through on his plan to impose a 25% tariff on goods imported from Mexico. China is concerned that sustained US pressure might eventually compel Mexico to close its market to Chinese goods. Keith Bradsher, Beijing bureau chief of The New York Times, warned that China should be wary of an obscure loophole that was baked into the World Trade Organization’s rules when it was created in 1995, which potentially allows Mexico and low-income and middle-income countries to legally raise tariffs steeply and suddenly on Chinese goods.

However, the USMCA is now seen as increasingly fragile. Canada has already announced counter-tariffs of 25% on about US$20.6 billion worth of goods from US exporters. More importantly, Trump has grown increasingly dissatisfied with an agreement he once championed, and renegotiation talks scheduled for next year may collapse altogether. To solidify Brazil’s leadership position in Latin America, Lula must take a clear stance against Trump’s tariff bullying.

On 27 March 2009, a week before the G20 summit in the UK that year, Lula complained to visiting British Prime Minister Gordon Brown, “This (financial) crisis was caused by the irrational behaviour of white people with blue eyes, who thought they knew everything and now show they know nothing,” adding it was unfair that poor people, black people and indigenous people were paying for the mistakes of white people.

At the G20 summit in November last year, Brazil’s First Lady Rosângela (Janja) Lula da Silva was speaking on the need to regulate social media to stem the spread of misinformation when a ship’s horn sounded in the background. She jokingly quipped, “I think it’s (X platform owner) Elon Musk,” before adding, “I’m not afraid of you, [expletive] you, Elon Musk.”

Before setting off on this year’s Asia tour, Lula criticised Trump’s tariff policy in a media interview: “Everyone who was talking about free trade is now practising protectionism. I think this protectionism is absurd.”

Brazil is not only the largest economy in Latin America, but also a founding member of the BRICS bloc. Lula’s visit to China is poised to become a model for the global south in resisting Trump. Arguably the most meaningful gesture China could offer in return is to cooperate in building the South American transcontinental railway.

Back in January 2018, during the Second Ministerial Meeting of the China-CELAC Forum, China proposed integrated land-sea connectivity as a key project for deepening cooperation between China and Latin America. China pledged active participation in the development of transportation, infrastructure, and energy projects across Latin America, aiming to establish more ocean routes and direct air links between the two regions. The key to advancing this long-term plan, China argued, lies in what it calls “patient capital”.

In light of the prolonged global economic downturn following the 2008 financial crisis, in 2017, Professor Justin Yifu Lin of Peking University’s Institute of New Structural Economics, along with former World Bank senior economist Wang Yan, published an article in the Journal of Infrastructure, Policy and Development titled “The New Structural Economics: Patient Capital As a Comparative Advantage”.

From the perspective of new structural economics, the article argues that through patient capital, long-term investment can eliminate infrastructure bottlenecks to growth. In the short term, such investments stimulate demand to counter economic slowdowns; in the long term, they raise the quality and potential of economic development. This kind of investment is a win-win: it stabilises the economy and employment in the short term while fostering high-quality growth in the long run.

In June 2024, Lin and Wang further noted that patient capital pursues long-term returns and usually involves start-ups, infrastructure projects or projects that take a longer time to generate benefits. Compared to other countries, China has a high savings rate, a cultural tradition of long-term thinking and abundant sources of patient capital. It will become one of China’s comparative advantages to make good use of it.

This article was first published in Lianhe Zaobao as “卢拉访华 全球南方反特朗普典范”.

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