By Dayanne Sousa, Mariana Durao and Beatriz Reis | Updated on Oct 06, 2026 at 06:10 PM
A surprising first round in Brazil’s presidential election is raising the prospect of a recalibration in trade policy, with a possible Flávio Bolsonaro government likely to deepen ties with Washington while preserving much of the country’s push to diversify markets.
Right-wing candidate Bolsonaro produced a strong showing against leftist President Luiz Inácio Lula da Silva in Sunday’s vote. An eventual victory could bring a more market-oriented approach and closer connection with US President Donald Trump, potentially opening the door to further gains in areas including beef, ethanol, steel and critical minerals.
But a new administration wouldn’t necessarily mean a wholesale change in direction for the commodities powerhouse. Brazil has already worked to improve trade with the US while also broadening its commercial relationships elsewhere — an effort that has gained urgency as China, its biggest trading partner, moves to protect some domestic industries.
Under Lula, a long-awaited Mercosur-European Union trade deal crossed the finish line, while negotiations with countries including Canada, Japan and the United Arab Emirates are ongoing.
Bolsonaro has similarly vowed to open more markets for Brazilian products, while signaling greater willingness to deepen connections with Washington. During the campaign, he said he would be open to trade agreements with the US, pointing to Javier Milei’s Argentina as an example.
“Flávio’s campaign has emphasized closer ties with the US, a pragmatic approach toward China and a market-oriented stance on international trade,” analysts at Citigroup led by Gabriel Barra wrote in a note following the first round of elections.
Such an approach could mean limits to measures for protecting Brazil’s domestic industry from imports, Citi said, highlighting the local steel industry as particularly exposed.
Local steelmakers have been pressing the government to revive a 2018 agreement that allowed the country to ship steel to the US tariff-free within set quotas. Brazil was the biggest supplier of steel slabs to the US before Washington scrapped the arrangement and imposed a 50% tariff.
Ethanol offers another test. Lula restored tariffs on US ethanol that predecessor Jair Bolsonaro temporarily eliminated in 2022, turning market access into a source of friction with Trump and part of a US investigation into Brazilian trade practices.
Brazilian ethanol producers say any move by a Bolsonaro government to remove the tariff should come with concessions from Washington, including greater access for Brazilian sugar.
“Reciprocity, not subservience,” said Tarcilo Rodrigues, director of ethanol brokerage Bioagencia.
Lula has resisted Washington’s push for a broader partnership on critical minerals, while Bolsonaro has pitched Brazil as an answer to US efforts to reduce its dependence on China. “Brazil is America’s solution for breaking dependence on China for critical minerals, especially rare earth elements,” he said in March.
Read More: US Snubbed by Lula Government at Critical Minerals Summit
Brazil has the world’s largest niobium reserves and the second-largest rare-earth reserves after China, yet produces less than 1% of global rare-earth supply. Both candidates want more of the processing and value chain to remain at home, though Bolsonaro has put greater emphasis on attracting foreign capital and technology.
His campaign says partnerships would be open to countries willing to cooperate “without prejudice or ideological bias” and has promised faster environmental licensing.
Brazil is currently being targeted with 25% tariffs on a series of goods following US allegations of unfair trade practices.
While some key export products like coffee, orange juice and beef are exempt from that particular duty, Brazil still lacks a country-specific beef import quota enjoyed by other exporters such as Argentina. A temporary tariff relief for ground beef is set to expire before the end of year.
Brazil is the world’s largest beef exporter, and roughly half of its shipments go to China. After the country moved to limit imports to protect domestic producers, the US has emerged as a key alternative.