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Trade war in the world: impacts for mining in Brazil

Belo Horizonte, 16 de Abril de 2025

as cabeças de Trump e Xi Jinping em frente a uma mina a céu aberto

The current trade war began on 1 February 2025, when US President Donald Trump signed an executive order imposing additional tariffs of 10% on a wide range of imports, affecting several countries, including China. The measure was justified as a response to the protection of strategic US sectors.

On 10 February, China was the first country to retaliate, imposing tariffs on US energy and agricultural products. In April, the US raised tariffs against China even further, to 145%, while easing restrictions against other allied countries - a move interpreted as a manoeuvre to isolate Beijing economically. China responded with equivalent measures, including blocking exports of rare metals and suspending purchases from Boeing. In a document published by the White House, the US indicates that China could face tariffs of up to 245 per cent depending on the product. This includes a reciprocal tariff of 125%, a 20% tariff to address the fentanyl crisis and Section 301 tariffs on specific goods of between 7.5% and 100%. In the second half of April, US tariffs on China reached 245%, with no concrete signs of a truce, while tensions put pressure on global production chains and deepen international economic uncertainty.

Trade war in the world: impacts for mining in Brazil

The effects of the so-called US tariffs and the subsequent trade disputes between two of the world's biggest economic powers are already being felt globally, causing strong volatility in the financial markets and a sharp drop in the value of shares on stock exchanges in various countries.

For Brazil, the consequences could be significant. The United States, Brazil's second largest trading partner, has applied an additional 10% tariff on most imports from the country, with even harsher rates - of up to 25% - for strategic sectors such as steel and aluminium. The production of ore to supply Brazil's steel industry could be negatively impacted by the US government's new tariff rules on steel and aluminium, which could lead to a reduction in the volume imported by the US from Brazil.

China, Brazil's biggest trading partner and the main destination for iron ore and soya exports, is likely to reduce its purchases of US products, which could create space for alternative suppliers. In this context, Brazil could benefit, at least in the short term, as a natural substitute, especially in the supply of agricultural and mineral commodities - as long as it can maintain competitiveness and legal certainty to attract Chinese demand.

However, in the long term, a prolonged and unresolved trade dispute could result in a slowdown in global trade, affecting economic activity across the board and reducing demand for industrial inputs - which would have a negative impact on the main products on the Brazilian export list.

Want to better understand how the new US tariff policy and the current China-US trade war could impact Brazilian mining? Check out the full text below.

Tela de computador com um gráfico

The first effects on the international scene

According to an article published by the BBC, the measures imposed by Trump in February this year had global repercussions, knocking down share prices, the dollar and oil prices. On 3 April, US stock markets plummeted: the S&P 500 index, which brings together the shares of the largest US companies, fell 4.1%.

In Asia, the Taiex benchmark index on the Taipei Stock Exchange, Taiwan's main stock market, recorded a daily drop of 9.7 per cent on 7 April, the biggest in history.

As for the European stock markets, after the imposition of the tariffs, considerable falls were recorded on the main indices. On Monday morning (07/04/2025), the pan-European STOXX 600 index fell by 5.8 per cent, accumulating the biggest percentage drop in a single day since the COVID-19 crisis. The fall took the index to its lowest level in 16 months.

Concerns that the US tariffs and its retaliations will cause a slowdown in the global economy, reducing demand for raw materials, led oil companies with shares listed on the Brazilian stock exchange to fall significantly in response to the drop in oil prices. Both Brent crude, the global benchmark, and WTI crude, the US benchmark, had accumulated losses of almost 7% as of 3 April.

Foto: Minério de Ferro. Fonte: Reuters

Iron ore prices in the context of the trade war

According to information provided by InfoMoney, on Wednesday 9 April iron ore futures fell to their lowest levels in more than six months. The drop reflects the change in demand for the commodity, given the current scenario marked by tariffs and the trade war between China and the United States.

The most traded iron ore September contract on China's Dalian Commodity Exchange (DCE) ended the day's trading down 2.68% at 689 yuan (US$93.74) a tonne.

The iron ore contract for May, traded on the Singapore Exchange, was down 1.16% at US$93.65 per tonne. Earlier in the day, it reached US$ 91.70 per tonne, its lowest level since 24 September.

In the short term, this downturn could have a negative impact on the mining sector, especially Brazil, one of the world's main iron ore producers. On the other hand, according to the Minas Gerais Iron Ore Industry Union (SINDIFER), there is a possibility that prices will recover in the medium and long term.

China, the world's largest consumer of iron ore, may adopt stimulus measures to reheat its economy, such as investments in infrastructure, which tends to further increase demand for the raw material.

In addition, Brazil could benefit, at least in the short term, as a natural substitute to supply part of the Chinese demand previously met by the United States - especially in the supply of agricultural and mineral commodities. For this opportunity to turn into effective and sustainable gains, however, it is essential that the country preserves its competitiveness, guarantees legal certainty for investments and promotes stability in international diplomatic and trade relations.

BRAZIL AND USA - Steel and aluminum exports

According to data from ComexStat/SECEX/MDIC (2025), in 2024 Brazilian iron ore exports to the United States totalled US$392,465,778 (FOB value). According to the same source, steel exports, also in FOB value, totalled approximately 4 billion dollars. Aluminium exports reached US$ 4,687,538.

In total, taking other products into account, Brazilian exports to the US totalled 10 billion dollars (ComexStat/SECEX/MDIC, 2025), which consolidates the country as Brazil's second largest trading partner, behind China.

According to Exame magazine, in the first three months of this year, the United States was responsible for buying almost half of Brazil's steel and aluminium production. Up until March, Brazil sold US$ 1.52 billion to the US, equivalent to 47% of exports worldwide (US$ 3.2 billion).

However, as of March 12, 2025, a 25% tariff on all steel and aluminium imports into the United States came into force.

As an effect of the measure implemented, it is possible that there will be a decrease in exports of both products to the US market. In the long term, this poses challenges for the mining and steel sectors, which may have to reduce their production, as André Catto said in an article for G1.

In this scenario, it may be necessary for Brazil to diversify its export destinations in order to reduce its external dependence on the US consumer market. In a context of uncertainty, Lia Valls, an associate researcher at FGV Ibre and a professor at UERJ, pointed out that China could absorb part of Brazil's exports, since the Asian country prefers to import semi-manufactured products, such as steel plates and aluminium sheets, for later transformation into the final product.

On the other hand, according to a report in G1 based on an analysis by Itaú BBA, Brazilian steelmakers such as Gerdau, Usiminas and CSN, which are also iron ore miners, should not be so badly affected by the tariffs. This is because, according to Daniel Sasson, the bank's analyst for the mining and steel sector, exports represent a less significant part of these companies' operations.

Um pedaço de ouro

Trade tensions and economic uncertainty push gold prices to unprecedented levels

The price of gold, traditionally seen as the safest asset in times of economic uncertainty, reached an all-time high of $3,167.57 per ounce in April 2025. This record high reflects a combination of factors: the intensification of the trade war between the United States and China, with high tariffs on both sides, increased risk aversion in the markets; the expectation of interest rate cuts by the Federal Reserve boosted demand for non-interest-bearing assets such as gold; and the devaluation of the US dollar made the metal more attractive to international investors. In addition, central banks, especially in emerging countries, have stepped up their purchases of gold as a way of diversifying reserves and protecting themselves against exchange rate volatility and uncertain economic policies. Analysts at Goldman Sachs and UBS project that, given current market conditions, gold could reach levels of up to US$ 3,500 per ounce by the end of the year, consolidating its position as one of the best performing assets in 2025

This scenario has benefited mining companies with operations in Brazil. Aura Minerals, for example, has seen its shares (AURA33) rise 173 per cent in the last 12 months, driven by record gold prices. The company reported a net profit of $24.6 million in the fourth quarter of 2024, a 24 per cent increase on the same period last year. Another mining company, AngloGold Ashanti, reported a 7.5% increase in gold production in Minas Gerais in 2024, totalling 271,000 ounces, which contributed to a 3.8% increase in the company's national production. These results reflect how the increase in the price of gold is having a positive impact on the performance of mining companies operating in Brazil.

Challenges and opportunities for Brazil and mining

In this new reality projected by Donald Trump's tariffs and the subsequent escalation of the global trade dispute, it is inevitable that Brazil will be impacted - especially the mining sector, whose exports are heavily dependent on international demand for commodities. In an environment marked by political and economic uncertainties, the medium to long-term trend is for a retraction in demand for raw materials, which could negatively affect exporting countries like Brazil.

On the other hand, the reconfiguration of trade routes caused by the confrontation between the United States and China opens up space for countries that remain neutral and stable to reposition themselves. In this context, Brazil can present itself as a reliable supplier to both sides, as long as it maintains its competitiveness, legal certainty and logistical response capacity. According to the director of Institutional Relations at the Brazilian Mining Institute (IBRAM), Rinaldo Mancin, "Brazil is considered a stable country in which to build and maintain trade and diplomatic relations, it doesn't get involved in conflicts with other nations, and it also has important attractions, such as energy mostly from clean sources". This reinforces the viability of diversifying Brazilian export destinations.

Although challenging, the scenario can also bring good opportunities for the Brazilian market, especially in the short term. Among these is the increase in exports of critical and strategic minerals. With its vast geological potential, Brazil is in a position to consolidate itself as a reliable alternative supplier of these minerals to countries such as the United States, Japan and the European Union.

There has also been a significant increase in gold projects in the licensing or development phase, especially in the North and Centre-West regions of the country. The favourable momentum of the international market has boosted the value of shares in established mining companies, while at the same time attracting investment for new initiatives. The consolidation of gold mining companies in Brazil reinforces the country's strategic role in supplying precious metals in times of global instability.

Another factor that could favour Brazilian industry in the midst of this geopolitical rearrangement is the possibility of accelerated negotiations on the trade agreement between Mercosur and the European Union. The current scenario could increase European interest in diversifying its suppliers away from the US and China, opening up space for Brazil to expand its presence in European markets, especially in industrialised and high value-added sectors.

Given all these elements, it is clear that the situation calls for caution, institutional coordination and diplomacy on the part of the Brazilian government. However, it also represents a window of opportunity to reposition the country in international trade and strengthen its strategic relevance in the global supply of natural resources and industrial products.

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