Brazil and Mexico bond over animosity towards Trump

MXPE Weekly Essentials ft. port boom, obscure minerals controlled by obscure companies, and other highlights in Mexican politics, policy, and markets from the past week.

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MXPE Weekly Essentials. Only the most important news in Mexican politics, policy, and markets from the past week.

Brazil is in a major commercial and diplomatic conflict with the US—which is threatening to slap sanctions on officials and 50% tariffs on all Brazilian imports. Geopolitics has pushed Mexico and Brazil together, something their governments have paid lip service to but never quite acted on. Now necessity is driving a bit more integration between Latin America’s two largest economies.

The US is still a crucial presence as both country’s firms talk. There are 21 times more Brazilian companies wanting to expand to Mexico than vice versa—a factor closely linked to Mexican integration to the US market.

Despite not having a trade agreement, the Mexican and Brazilian economies are quite complimentary. Brazilian manufacturing is interested in plugging into Mexico’s industrial base. Mexico buys a lot of Brazilian beef.

Yet, there does seem to be an increased amount of good will. Last week, a trade deal was signed to allow Mexican avocados to flow south to Brazil, as a smaller but growing avo producing country. Brazilian tech has particularly thrived in the Mexican market, with Nu being the country’s main neo-bank and databases being a core investment target for Brazilian companies in Mexico.

Mexico’s trade deficit with Brazil shot up since the pandemic, though only about 0.6% of its exports go to Brazil while 1.75% its imports come from there.

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