Oil expected to remain Brazil's top export in 2025

Brazil posted a trade surplus in 2024 below the historic record achieved in 2023, while the year was marked by oil becoming the country’s main export.

For 2025, there is growing uncertainty regarding Donald Trump's administration in the United States, which could shake up the foundations of international trade with threats of widespread tariffs.

Welber Barral, a former Brazilian foreign trade secretary and founding partner of BMJ Consultores Associados, talks with BNamericas about the trends in Brazil's foreign trade, among other issues.

BNamericas: 2024 was a year when Brazil's foreign trade surplus was smaller [US$71.1bn as of December 23] than in 2023, when the country saw a record trade surplus of US$98.9bn. What can we expect for 2025?

Barral: We need to highlight that in 2024 there was a significant increase in vehicle imports, as well as an increase in imports of inputs and machinery, which led to a decline in the trade surplus.

This is not necessarily negative because it means there is investment in Brazilian industry.

At this moment, it’s difficult to make a forecast for this year because there isn’t much clarity about the behavior of imports [given the expectation of an economic slowdown].

BNamericas: In terms of exports, 2024 marked a record volume of oil derivatives, surpassing soybeans, traditionally Brazil’s most exported product. Do you see oil maintaining this leadership in exports in 2025?

Barral: Yes, oil has become Brazil's main exported product, including to traditional markets such as the United States. This is due to high prices, but also to the increase in production and efficiency of Brazilian production, especially in the pre-salt fields.

This trend is expected to continue in the coming years, and Brazil's challenge is precisely to increase the production of oil derivatives in the domestic market so that we don’t have to import as many oil derivatives.

BNamericas: What are the implications of the Trump administration for international trade?

Barral: Regarding the Trump administration, of course, much speculation and uncertainty will be generated about what measures will actually be announced and implemented by him, as he has threatened tariffs against several countries, including China. But we need to wait and see what the effective measures will be, as there is an expectation that he will negotiate many things.

He even mentioned Brazil as a country with high tariffs, but in reality, apart from ethanol and some equipment, like cars, most US products [sold to Brazil], such as machinery and electronics, have very low tariffs. 

However, there is a lot of unpredictability in the air.

BNamericas: We recently saw the announcement of a trade agreement between Mercosur and the European Union. Do you see a chance that these two blocs will actually conclude an agreement in 2025, or is there a risk of this initiative failing?

Barral: I think there is a good chance that the Mercosur-European Union agreement will progress after this latest announcement, but it won't be fast.

This is because the conclusion still depends on approval by the European parliament, as well as the approval by the national congresses of the Mercosur members. So, the idea is to make progress in 2025, but I don’t think it will come into effect in the next two or three years.

BNamericas: Still on Mercosur, how might the rapprochement between the current president of Argentina, Javier Milei, and Trump affect trade relations between Brazil and Argentina?

Barral: Milei’s rapprochement with Trump could greatly benefit Argentina, especially in negotiations with the IMF, which is Argentina’s largest creditor and where the United States has key voting power.

However, I would point out some limitations in this relationship.

BNamericas: What would these be?

Barral: For example, the mention of a free trade agreement [between Argentina and the US] is something very difficult to implement. 

For Argentina to reach an agreement with the United States, in addition to the Mercosur issue, it would need to overcome several very protectionist areas on the part of the United States. 

These include soybeans, corn, ethanol and wheat. These are highly protected sectors in the United States, and Argentina is very competitive in them. So, this will certainly make negotiations more difficult and very long.

[Editor’s note: As a Mercosur member country, Argentina must negotiate any agreements together with the whole bloc, which also includes Brazil, Paraguay and Uruguay]