A Top Trading Partnership Of Power
The Investment Promotion Agency
Sometime in 2009, China overtook the United States as Brazil's top trading partner. In today's world with regards to Latin America, Brazil is the largest recipient of Chinese investment driven by spending on high tension electricity transmission lines in combination with oil extraction. Back in January, Officials from both Brazil and China made a preliminary agreement to stop their usage of the US Dollar, and continue trade directly exchanging yuan for reais, rather than converting their currencies for US Dollars. The Brazilian trade and Investment promotion Agency stated that the goal of this new arrangement would reduce costs, facilitate investment and promote bilateral trade. Even though in the wake of increasing interest rates Brazil may have a point but in my opinion, if that was the sole reason then a more reasonable approach would be to sell off a few dollars or conduct business with fewer dollars but to decide to stop using the US Dollar overall should raise eyebrows in Washington but it probably wont and I will tell you why.
A Shift In Power
A Strengthening Of Ties
The current President Luiz Da Silva sworn in on January, is showing a willingness to strengthen ties with Beijing. His Predecessor, Jair Bolsonaro adopted an ant-China rhetoric during his campaign trail and while an office. A simple shift in power happened so now may be a very good time for the United States to strengthen their ties and influence in Brazil or discredit the President and his entire Presidency to a level where his entire campaign ministry loses public trust. If one or the other does not transpire, we run the risk of the non usage of the US Dollar becoming a trending behavior an Latin America which will in turn weaken our economy.
Betz, Bradford. (2023). Brazil China Strike trade deal to ditch US Dollar. Fox Business.