Brazil's presidential election on October 4 is becoming harder to distinguish from the broader US geopolitical struggle to keep Latin America within its zone of influence. The current points of contention involve tariffs and trade, digital payment systems, judiciary and critical minerals, all as Washington ramps up its criticism of Brasília. But beneath these issues lies a more fundamental question: is the United States aiming merely to protect its economic interests in Brazil, or is it pushing to reestablish a privileged area of influence in Latin America?
That distinction matters for investors and companies too, since the fallout will not stay confined to politics. The conflict is already reshaping risk across trade and supply chains - and increasingly mining, technology, payments and defence.
From bilateral dispute to hemispheric strategy
Since taking office in January 2025, the Trump administration has made it clear that the Western Hemisphere is, once more, of strategic importance for the US. After the US intervention in Venezuela in January 2026, President Donald Trump clearly stated that "American dominance in the Western Hemisphere will never be questioned again". This administration's policy has since been referred to as the "Donroe Doctrine", a twist on the Monroe Doctrine from 1823, which warned then-colonial Europe to stay out of “America’s backyard.” It is now intended at restricting the influence of adversarial foreign powers in the region, especially China, Russia and Iran.
Brazil holds a rather pivotal position in this strategy. As the largest economy in Latin America, home to half of South America’s population and economy, it is a major producer of food, energy and minerals, one of the founding members of BRICS and an important economic partner of China, which is the top destination of Brazilian exports and the main foreign investor in Brazil. According to data from the Brazilian Ministry of Development, Industry and Commerce (MDIC), in the first seven months of 2026, China made up 31.6% of Brazil's exports as against 9.6% from the United States; Brazilian exports to China increased by almost 20% compared to the previous year while those to the United States decreased by 12.2%.
To Washington, however, Brazil is not merely another trading partner; it is a nation whose strategic independence may allow China and other non-US-aligned powers to gain a greater foothold in the hemisphere.
And the political aspect resulting from this calculation can no longer be ignored. Brazilian President Luiz Inácio Lula da Silva has repeatedly warned that the United States might attempt to interfere in the upcoming election; Washington has not denied this claim. The dispute has been further inflamed by Brazil's decision to refuse visas to two officials from the US State Department who were planning to visit the country during the campaign.
According to Reuters, the officials, Riley M. Barnes and Samuel Samson, intended to talk about electoral integrity and other matters, as well as arrange a meeting with right-wing presidential candidate Flávio Bolsonaro, who is a close ally of Trump and the son of convicted former president Jair Bolsonaro. The Brazilian authorities’ reaction stemmed from their assessment that the trip could possibly damage confidence in Brazil's electronic voting system, potentially undermining the democratic electoral process. In turn, the US State Department retaliated by cancelling the multiple-entry visa of Brazil’s ambassador to Washington.
The situation is especially delicate since Flávio Bolsonaro has long sought to involve Washington in his international campaign. When he met Trump at the White House in May, the topics covered included rare earths, tariffs and organised crime. In July, he asked the Trump administration to postpone the proposed tariffs until after the Brazilian election, worried that the levies could help Lula’s bid for a fourth term in office by emboldening his own sovereignty push. Brazilian analysts widely believe that Bolsonaro, if elected, would give a free pass to rare earths to please Trump and gain the full support of his administration.
In a way, this shows that Washington is not directly meddling in Brazil's election. Yet the buildup of US pressure measures – mostly lobbied for by Bolsonaro’s clan – including sanctions to a Supreme Court Justice and the public prosecutor who condemned Bolsonaro for attempting a coup d’état following his 2022 election defeat, has caused Brazilian sovereignty to become a hot topic in the electoral debate.
Flávio Bolsonaro's camp favours an open-door approach to US investment in Brazil's strategic resources, with no demands for local processing, technology transfer or other reciprocal benefits. Lula's government, by contrast, wants to add value to raw materials and secure reciprocal benefits while privileging Chinese interests. This dichotomy is what gives the election its geopolitical stakes.
Tariffs become an instrument of statecraft
The level of economic pressure building on the simmering diplomatic row, meanwhile, is considerable. On June 1, the US Trade Representative (USTR) determined under Section 301 that certain Brazilian acts, policies and practices relating to digital trade and electronic payments, preferential tariffs, anti-corruption enforcement, intellectual property protection, ethanol market access and illegal deforestation were “unreasonable” and actionable under Section 301(b).
On July 15, the USTR introduced an extra 25 % tariff on certain Brazilian products and a further tariff of 12.5% has raised the possible duties on some items to as high as 37.5%.
The United States views the punitive levies as a reaction to unfair practices on the part of Brazil, although it has had a positive trade balance with Brazil every single year on record. But Brasília believes there is a more political dimension to the matter, since Trump's proposed tariff measures in 2025 directly linked the economic sanctions to the perceived way, which Trump dubbed a “witch hunt,” Brazil treated former president Jair Bolsonaro and his supporters for the organisation and attempt of a coup d’état.
The business effects are at once evident. Although the United States is still an important market for Brazil, China has become since 2009 by far Brazil’s largest destination for exports. This situation gives Brazil more scope to reorient its trade, but at the same time Trump’s tariffs impose substantial costs on 6,000 American companies that are in an integrated supply chain with Brazil, ranging from raw material, meat, food and agriculture produces to technology, such as avionics.
There is therefore a clear contradiction in the dispute, since using tariffs to bend Brasília to Washington’s will might just encourage the very diversification the US wishes to prevent.
Brazil has launched procedures at the WTO and swiftly activated the Brazilian Economic Reciprocity Law, but Lula has not given up on diplomacy just yet, having held a phone conversation with Trump on August 21. The Brazilian Foreign Affairs Ministry described the call as cordial, pointing out that Trump suggested the technical teams should resume negotiations. However, Brasília does not realistically expect the tariff dispute to vanish before the election.
Pix: when digital infrastructure becomes geopolitics
Another key aspect of the disagreement is Pix, Brazil's homegrown instant payment system.
Brazil’s Central Bank introduced Pix in 2020, a digital tool that has now grown to become a pivotal element of the country's financial system by enabling instant transfers 24 hours a day at zero cost to consumers and with minimal fees for the merchants. Pix accounts for about 40% of payment transactions in terms of volume, chiefly at the detriment of US-based Visa and Mastercard.
It is no surprise, then, that the United States incorporated Brazil's digital payment practices into its Section 301 investigation, on the grounds that government support grants Pix an unfair competitive edge. Brazilian analysts whom I interviewed see the conflict as an instance of economic statecraft: economic infrastructure being treated as part of national security and geopolitical competition.
The matter around Pix is aggravated by other forms and financial experiments being floated under the BRICS framework. Rodrigo Fagundes Cezar, a professor at Fundação Getúlio Vargas, emphasises that despite recurring talks of “dedollarisation,” alternative payment systems are not likely to replace the dollar in the short or medium term. Their importance, he argues, lies rather in the political aspect, since they provide countries with an extra tool to counter their dependence on financial infrastructures controlled by the US.
The Lula government sees Pix and other potential future BRICS payment arrangements as part of a wider global move towards sovereign digital infrastructure. Needless to say, this is causing further friction with Washington.
Rare earths: the strategic prize
Critical minerals give an even clearer illustration of the escalating geopolitical battle.
Brazil has the world's second-largest estimated reserves of rare earth elements, after China. Their significance goes well beyond mining, since rare earth elements are essential for the high-performance magnets used in electric vehicles, wind turbines, advanced electronics and especially defence systems, which appear to be Trump’s main preoccupation.
As the US scrambles to reduce its reliance on China, Brazil becomes a strategically attractive option – needless to say, on Washington’s terms.
The United States' involvement in mining already stretches far beyond diplomatic talks. USA Rare Earth is acquiring the Brazilian producer Serra Verde, the mine known as Pela Ema in Goiás being the only one in the country that is currently operating. The American government has pledged $750mn for the transaction and the related supply agreements and the total capitalisation thus amounts to about $1.55bn, as recently reported by open sources.
The agreement is economically attractive for Brazil since it provides capital and can speed up production. However it also poses a much more difficult strategic question: who is going to capture the more valuable stages of the rare-earth supply chain?
In this regard, Lula’s proposed National Policy for Critical and Strategic Minerals is of political importance. The legislation, which has been approved by the Chamber of Deputies and is currently before the Senate, sets out a policy framework for critical minerals and creates a special committee tasked with overseeing the industry. The discussion focuses on domestic processing, technological development and national control rather than just exporting raw materials.
This creates a basic conflict between two approaches: Washington is acting quickly to ensure access to non-Chinese supplies while Brasília aims to use its mineral resources to achieve industrialisation rather than continuing to act as a mere supplier of raw materials.
That difference will be important to those companies which are pondering whether to invest just in extraction or in refining, processing, technology transfer and downstream manufacturing.
Brazil looks for strategic alternatives
Brasília is well aware of great power politics, and its response has not been to break ties with Washington, as shown by Lula’s last outreach to Trump; it has been to diversify.
That approach was on full display in August when Nikolai Patrushev, a senior adviser to Russian President Vladimir Putin and head of Russia's Maritime Collegium, travelled to Brazil. During his trip, he reportedly dealt with issues relating to maritime security, naval cooperation, shipbuilding, ports, logistics, fishing and scientific research as well as defence. Russian officials talked about working together in the field of shipbuilding, including the construction of grain carriers, fishing vessels, ship repairs and the localisation of civilian vessel production.
Patrushev also went to Brazilian naval facilities and visited the NAM Atlântico, and it is reported that the talks touched upon Brazilian coastal maritime monitoring and nuclear technology.
Yet it is important to underline that Brazil, unlike Cuba or until recently Venezuela, has no intention to become a military ally of Russia. By reaching out to different partners, including Moscow, for defence cooperation, Brasília is simply showing that its technological possibilities are not limited to the United States.
On August 24, Lula and Turkish President Recep Tayyip Erdoğan talked about bilateral and global issues, with Erdoğan particularly stressing the need for greater cooperation in the areas of investment, trade and the defence industry.
For Brazil, Turkey and Russia just perpetuate China's leading economic role in different ways; the aim is not necessarily to align with any one country but to keep room for manoeuvre.
What businesses should watch
The main lesson for investors watching the upcoming election is that geopolitical risk in Brazil is becoming more multidimensional.
At the outset, supply chains should be evaluated not just on the basis of their tariff exposure but also in relation to political exposure; companies that place great reliance on the US market or on infrastructure under US control might experience higher levels of uncertainty should the bilateral confrontation continue.
Second, critical minerals are turning into strategic assets; the Serra Verde transaction shows that mining projects can soon become issues of national security and that future investments are likely to come under greater examination regarding ownership, processing, technology transfer and export destinations.
Third, digital infrastructure must be considered as part of geopolitical infrastructure. The case of Pix shows how a payment system, designed mainly for improving domestic efficiency, can suddenly find itself embroiled in an international trade dispute.
Fourthly, multipolar diversification has become a strategic policy of Brazil. Brazil's partnerships with China, Russia and Turkey - and possibly also with the EU, India, Mercosur and other economies from the Global South - are not necessarily in place of its relationship with the United States; rather, they are means of reducing dependence on any one external power.
Investors certainly ought to keep an eye on the political aftermath of the October election, whose domestic dynamics I will cover in my next article. But two competing geopolitical approaches are already crystal clear: Flavio Bolsonaro privileging closer ties with Washington and looser control on US interests in Brazilian resources, and Lula seeking closer ties with Beijing and the Global South within a national development project framework.
Brazil's institutional tradition has seen it pursue a path of strategic autonomy, maintaining a wide-ranging number of partnerships, including with the US. However, the Trump administration’s newfound pressure to align the whole Latin America to its hegemonic strategy changes the rule of the game. As a rightward shift sweeps the region, now governed mostly by conservative leaders, Secretary of State Marco Rubio has made the White House's priorities clear, warning of consequences over Bolsonaro's conviction and taking a notably hard line with Lula's government.
Brazil will serve as the ultimate barometer of whether the Western Hemisphere completely reverts to a hierarchical pattern of US influence. Washington regards Brazil as strategically important because of its size, its natural resources, its outsized regional political influence, its role in BRICS and its growing connections with China. In turn, Brazil views these same features as justifications for doubling down on strategic autonomy.
Ricardo Martins is based in Utrecht, the Netherlands, and has a PhD in Sociology specialising in European politics, geopolitics and international relations.
