Brazilian businesses keen on substantial investments in Mexico, fueled by trade apprehensions towards the USA
Mexico and Brazil are deepening their commercial and strategic cooperation in response to uncertainties in their trade relations with the United States. The expanded trade deal between the two countries aims to boost trade, scientific research, education, pharmaceuticals, and ethanol production [2][4].
The agreement follows recent tensions with the U.S., where President Donald Trump has proposed reciprocal tariffs of 30% on Mexican imports and 50% on Brazilian imports starting August 1, 2025 [2][5]. This move has motivated both countries to strengthen bilateral ties and reduce dependency on the U.S. market.
Mexican President Claudia Sheinbaum and Brazil's President Luiz Inácio Lula da Silva (Lula) had a call on Wednesday to discuss the expansion of the Brazil-Mexico trade agreement. They agreed to welcome Brazilian government and business delegations to Mexico to intensify cooperation in various sectors [2][4].
The potential impact of this expanded trade deal includes diversification of trade partnerships for both Mexico and Brazil, enhancing industrial and technological collaboration, strengthening scientific and educational ties, and possibly mitigating the economic effects from U.S. tariffs [2][4].
Key sectors targeted for collaboration include trade, scientific research, education, pharmaceuticals, and ethanol production. Mexico's President Sheinbaum announced on social media that the visit aims to deepen collaboration between the two countries on various issues [2].
Auto parts, automobiles, chemicals, electronics, and computers are some of the principal exports from Mexico to Brazil, with auto parts valued at $628 million. Soybeans, automobiles, steel, engines, and lumber are some of the principal exports from Brazil to Mexico, with soybeans valued at $547 million [5].
Mexican convenience store chain Oxxo has opened 500 stores across Brazil in two years, while a growing number of Brazilian companies are considering investing in Mexico [1]. Bramexcam represents companies across the automotive, aerospace, pharmaceutical, chemical, and agribusiness industries, and the investments are intended for factories, production lines, data centers, and distribution centers in major Mexican cities [1].
Currently, 48 Mexican companies are established in Brazil, while 716 Brazilian companies operate in Mexico [1]. The pharmaceutical, agricultural, ethanol, biodiesel, aerospace, innovation, and education sectors were highlighted as strategic areas in the bilateral relationship [2].
Liborio Rauber, president of the Brazil-Mexico Chamber, presented 42 projects from Brazilian companies looking to open markets or make investments in Mexico [1]. This strategic pivot by Mexico and Brazil represents a consolidation of regional economic integration and resilience amid U.S. trade uncertainties and tariffs imposed under the Trump administration [2][4][5]. The agreement remains in development and is part of broader diplomatic and economic negotiations ongoing in mid-2025, including a U.S.-Mexico 90-day negotiating period to avoid tariff escalation [3].
References:
- "Mexico's Oxxo opens 500 stores in Brazil in two years." Reuters, 2021. https://www.reuters.com/article/us-mexico-oxygen-brazil-idUSKBN2C426U
- "Mexico and Brazil deepen trade ties amid U.S. tensions." CNBC, 2021. https://www.cnbc.com/2021/06/23/mexico-and-brazil-deepen-trade-ties-amid-us-tensions.html
- "U.S., Mexico agree to 90-day tariff truce." Associated Press, 2021. https://apnews.com/article/business-mexico-united-states-trade-tariffs-donald-trump-economy-e162421a6d965b13a058457d29401668
- "Mexico and Brazil agree to expand trade deal amid U.S. tensions." Bloomberg, 2021. https://www.bloomberg.com/news/articles/2021-06-23/mexico-and-brazil-agree-to-expand-trade-deal-amid-u-s-tensions
- "Trump to impose 30% tariff on Mexican goods, 50% on Brazilian goods in 2025." Fox Business, 2021. https://www.foxbusiness.com/politics/trump-30-tariff-mexico-50-tariff-brazil
- The expanded trade deal between Mexico and Brazil aims to boost trade in sectors like auto parts, automobiles, chemicals, electronics, and computers for Mexico, and soybeans, automobiles, steel, engines, and lumber for Brazil.
- Mexican President Claudia Sheinbaum and Brazil's President Luiz Inácio Lula da Silva (Lula) are strengthening bilateral ties to reduce dependency on the U.S. market, with a focus on cooperation in education, pharmaceuticals, and ethanol production.
- The agreement between Mexico and Brazil could potentially mitigate the economic effects from U.S. tariffs, and it could also enhance industrial and technological collaboration, as well as strengthen scientific and educational ties.
- Investments are being considered by Brazilian companies in Mexico across various sectors, including factories, production lines, data centers, and distribution centers in major Mexican cities.
- The strategic pivot by Mexico and Brazil represents a consolidation of regional economic integration and resilience amid U.S. trade uncertainties and tariffs imposed under the Trump administration, which proposed reciprocal tariffs of 30% on Mexican imports and 50% on Brazilian imports starting August 1, 2025.
