How China’s $285M Export Hub in Brazil Will Cost U.S. Billions | WSJ Center Point | The Wall Street Journal | YouTubeToText
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- This export terminal is one
of the world's biggest outside China.
It is being built in Brazil just outside Sao Paulo
by the Chinese state agricultural giant Cofco.
At the cost of $285 million,
it could spell the loss of billions of dollars in revenue
for American farmers.
Here's why.
Beijing has spent hundreds of billions
of dollars on American agricultural products
over the last decade,
making China one of the top markets for American farmers.
- [Donald] We'll be discussing trade.
- In 2018, Washington introduced the first tranche
of tariffs on China
and Beijing retaliated with tariffs of its own.
But the dip in trade was short-lived, and China's demand
for American agriculture produce recovered
and even boomed in the following years.
But the fallout from the first trade war
left Beijing looking for other suppliers.
Rich in beef, raw materials and crops,
Brazil has become the number one food supplier to China,
overtaking the US.
Brazilian agricultural exports to China
reached a record high of around $60 billion in 2023,
but thanks to this port in southeastern Brazil,
that relationship is set to become even more lucrative.
In 2024, the Port of Santos
handled a record 180 million tons of cargo,
of which more than half was agricultural goods,
such as corn, sugar and Brazil's key export, soybeans.
Brazil's soybean exports are worth over $50 billion,
and about 30% of that trade passes through Santos,
mainly on its way to China,
but the port can hardly keep up.
Today, more than 90% of the port's capacity
for exporting agricultural bulk goods is in use,
according to logistics consulting firm, Macroinfra.
That's why Cofco is building this export terminal
here at the port.
The state agricultural giant hopes to expand its capacity
for exports from 4.5 million tons to 14 million tons,
bringing billions of dollars in revenue.
But in the US, farmers worry
that this increase could be achieved at their expense.
Trump's first trade war led to more than $27 billion
in losses of agricultural exports,
according to USDA research.
- [Donald] we have a trillion dollar trade deficit
with China.
Hundreds of billions of dollars a year we lose
with China, and unless we solve that problem,
I'm not gonna make a deal.
- Since Trump's return to office,
China has found itself under renewed pressure,
and American farmers are bearing the brunt.
Export data in April showed China
was already cutting back on US soybean purchases.
It has also reduced the amount of pork it plans
to import in 2025.
As Trump urges Beijing to quadruple its purchases
of American soybeans in a bid to reduce the trade deficit,
the expansion of the port will allow China
to buy even less from the US.
The Santos Port fits into Beijing's wider plan
to access South America's agricultural bounty
as China suffers
from a lack of water and arable land at home.
Chinese companies are laying hundreds of miles
of railroad across Brazil's agricultural heartland,
and they're even planning an ambitious rail project
to link those regions
to China's $3.5 billion megaport in Peru.
This nearly 3,000 mile long railway
could shorten export times from Brazil to Asia
by up to 10 days, according to China's state media.
Still in its early stages,
this would be an unprecedented endeavor for the continent.
But while this booming relationship
with China promises billions of dollars in revenue,
there is a threat for Brazil.
Brazil is now facing one of the fastest processes
of de-industrialization in the world.
Over recent years,
Brazil has increased its exports of raw materials to China,
while China has shipped manufactured goods to Brazil.
That's had a devastating impact on Brazilian factories
over recent years, leading to job losses
and a reduction in manufacturing as part
of the country's GDP.
The new terminal in Santos threatens to further contribute
to the country's growing de-industrialization.
For a while, it looked like Brazil
would be a rare winner in Trump's trade war.
It was going to export more agricultural goods
to the US and to China,
as both countries were locked
in a bitter dispute over trade.
But recently,
Trump imposed a 50% tariff on many Brazilian goods.
That's one of the highest in the world,
and it's partially linked to a criminal case here in Brazil
against the former right wing president Jair Bolsonaro.
He is on trial for allegedly plotting a coup
in the country in 2022.
He is one of Trump's closest allies,
and Trump has said the case is a witch hunt
against the right in Brazil.
The Brazilian government understands
that this increase in tariffs is a way
to pressure the government and the courts
to drop the case against Jair Bolsonaro,
but they've made it very clear
that that's not going to happen.
China is already Brazil's biggest trading partner,
but the increase in tariffs from the US
and Cofco's new terminal,
are likely to push them even closer together.
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