On October 4, Luiz Inácio Lula da Silva finished the first round of Brazil’s presidential election behind his main rival, Senator Flavio Bolsonaro, the eldest son of former president Jair Bolsonaro and an open ally of U.S. President Donald Trump. Flavio Bolsonaro had taken 47 percent of valid votes against Lula’s 45 percent. Because no one topped 50 percent of votes, however, the race went to a second-round runoff.
The first post-election poll gave Bolsonaro a six-point lead in the head-to-head contest. Three weeks later, Lula won with 51.76 percent, a margin of roughly 4.3 million ballots, securing an unprecedented fourth term. His victory came after intense popular demonstrations in leading cities such as Sao Paulo, Rio de Janeiro, and Belo Horizonte, as well as a new social media strategy boosted by political allies.
Lula’s comeback matters well beyond Brasília. Since late 2025, Latin America has seen a regional shift toward right-wing regimes. Bolivia, Chile, Honduras, Costa Rica, Colombia, and Peru all elected conservative governments, most of them endorsed by Washington.
Brazil was meant to be the crowning piece of Trump’s foreign policy, seeing as it is the largest market in the region and one of the only ones who did not agree on Trump’s Shield for the Americas initiative. Instead, Brazil has opted for a pragmatic foreign economic policy, trying to negotiate with both China and the United States.
The Donroe Doctrine Meets Its Limits
Washington’s strategy has been referred to as the “Donroe Doctrine,” claiming the United States’ right to assert its interests in the region in security terms. In practice that has meant rewarding ideological allies and treating Chinese influence as a central opposing force.
A series of electoral victories seemed to confirm the effectiveness of Trump’s approach to the region. Rodrigo Paz ended two decades of Movimiento al Socialismo (MAS) rule in Bolivia in October 2025. José Antonio Kast won Chile in December. Nasry Asfura took office in Honduras after Trump threatened to cut aid if he lost. In June 2026, Colombia elected the Trump-endorsed outsider Abelardo de la Espriella, and Keiko Fujimori finally won Peru on her fourth attempt. Moreover, Argentina’s right-wing President Javier Milei continues to be an ally.
Tensions between Brazil and the United States have been accumulating in Trump’s second term. In July 2025, the U.S. president imposed tariffs of up to 50 percent on Brazilian goods over the prosecution and later incarceration of Jair Bolsonaro and sanctioned the Supreme Court judge overseeing the case.
On May 26, 2026, Trump received Flavio in the Oval Office, and on June 2, a day after his administration proposed a fresh 25 percent tariff on Brazilian goods, Trump praised him publicly. Flavio asked Washington to postpone the tariffs until after the voting period, but it was too late: a Datafolha poll found that 52 percent of Brazilians saw the tariffs as an effort to help his campaign, but ultimately hurting the Brazilian economy.
Until 2030, Brazil and Mexico, the two largest economies in Latin America, will be governed by center-left leaders, both of whom refuse to pick a clear side between Washington and Beijing. For a doctrine premised on sorting the hemisphere into aligned and unaligned camps, this is a strategic setback for Trump, precisely at a moment where the leader faces low approval rates at home.
Beijing’s Geoeconomic Influence in the Region Is Growing
For China, Brazil is now a strategic partner. In 2025 it was the single largest destination for Chinese outbound investment worldwide, absorbing 10.9 percent of the total, according to the China-Brazil Business Council (CEBC). Chinese investment in China reached $6.1 billion, up 45 percent, far outpacing both Brazil’s overall foreign direct investment (FDI) growth of 4.8 percent and China’s global outbound growth of 1.3 percent.
Overall Brazil accounts for almost two thirds of China’s FDI in South America, with a total stock of $85.5 billion, distributed across 355 projects, between 2007-2025.
China continues to invest heavily in Brazil’s electricity sector, spanning renewable generation and transmission. Automotive investment rose 66 percent to $965 million as BYD began production at the former Ford complex in Camaçari, Bahia (Northeastern Brazil), and Great Wall Motors at the former Mercedes-Benz plant in Iracemápolis, São Paulo. Geely has sealed an alliance with Renault do Brasil and plans local production in Paraná (Southern Brazil) this year.
Beyond investment, bilateral trade hit a record $171 billion in 2025. China bought nearly 80 percent of Brazil’s soybean exports. These ties survived even Jair Bolsonaro’s hostile rhetoric. But a Flavio government that owed its political capital to Washington would have faced intense pressure to slow Chinese investment, and it would have inherited brand-new legal tools to do so (more on this below).
After his loss, Flavio Bolsonaro immediately fled Brazil, heading secretly to the United States via Argentina, amid fears of being convicted of ties to money laundering schemes.
Brazil and the Race for Technology and Critical Minerals
Lula signed Law 15.506/2026 on September 16, creating Brazil’s first National Policy on Critical and Strategic Minerals (PNMCE) and a council, the CIMCE, attached to the presidency. The stakes for investors are considerable: Brazil holds the world’s second-largest rare earth reserves and leads global niobium production, with newly found lithium and nickel reserves.
China still controls roughly 90 percent of rare earth processing and magnet manufacturing and the United States was seeking to secure privileged access to exploration of this sector in the Brazilian market.
The new law has two main aspects: promotion and regulation. The first key is promotion in an industrial policy style. Brazil’s government will provide up to 7 billion Brazilian real in support for firms aiming to raise production and processing of critical minerals, as well as tax credits of up to 1 billion real a year between 2030 and 2034, tied to value-adding and processing on Brazilian soil.
The second aspect is regulation. The newly formed council, led by the president, must approve direct or indirect changes of control in companies holding rights to critical minerals, as well as international supply agreements that could affect Brazil’s economic or geopolitical security.
On paper, this created a screening mechanism that can be used as a hurdle for Chinese state capital, depending on the elected administration. A senior official at the Ministry of Mines and Energy said in October that scrutiny would concentrate on business groups or financing backed by foreign governments, while purely domestic deals may be exempt.
Today, the most visible foreign investors in Brazilian rare earths are American. In April 2026, USA Rare Earth acquired the Serra Verde Mining Complex, Brazil’s only commercial producer of rare earths, for $2.8 billion, in a deal backed by the U.S. government, including $565 million in direct funding from the U.S. International Development Finance Corporation.
Meanwhile, between 2024-2025 three Chinese state-owned enterprises invested more than $1.2 billion in acquisitions of copper, nickel, niobium and lithium mines in Brazil. BYD has held lithium rights in Minas Gerais region since 2023.
Under Lula, the CIMCE is likely to wield screening as an industrial policy filter, asking how much value stays in Brazil. The new law rewards precisely what Chinese firms can offer and Washington struggles to: refining know-how, battery materials capacity, and captive demand from EV plants already operating in Brazil. Under a Flavio government, however, the same powers could easily have been aligned with Washington’s geoeconomic de-risking agenda.
Beijing’s position in Latin America rests less on ideological affinity than on economic gravity. Even the leaders that are sympathetic to U.S. regional influence, from Kast in Chile to Fujimori in Peru, still count China as their largest trading partner, and the Chinese-built port of Chancay now anchors Peru’s Pacific trade, for example. Brazil, on the other hand, remains a non-aligned political actor and a market where Chinese firms already have an established presence in EVs and energy.
The new critical minerals law suggests that there will be ample competition in the future, as long as investors can also earn their place by processing locally, even as the dispute for geoeconomic influence in the region continues to grow in different sectors and areas.
