Why Brazil's rare earths could become a bargaining chip in tariff negotiations with the US

Antonio Carlos Faustino
Jul 29
3 min read

Introduction: Far beyond the soil — the geopolitics of the Brazilian subsoil

Brazil is one of the few countries in the world with significant reserves of rare earths, a group of 17 chemical elements essential for the manufacture of cutting-edge technologies such as batteries, turbines, and military equipment. With growing tension between the United States and China—the latter responsible for over 80% of the global refining of these elements—Brazil's rare earths are emerging as a strategic asset. Amid tariff disputes and supply chain reorganizations, this resource could be used as a bargaining chip in trade negotiations with the United States.

The strategic importance of rare earths

Rare earths are not, in fact, that rare in quantity, but their extraction and refining are expensive and environmentally sensitive processes. They are critical inputs for:

Electronic devices (smartphones, notebooks, televisions);

Electric and hybrid cars (batteries, engines);

Missiles, radars and satellites (defense technology);

Renewable energy (permanent magnets in wind turbines).

In short, whoever controls the supply of rare earths controls a significant part of the world's technological and military economy.

Brazilian potential: reserves, quality and underutilization

According to the National Mining Agency (ANM), Brazil has approximately 20 million tons of rare earth oxides, primarily in the states of Goiás, Minas Gerais, and Amazonas (ANM, 2023). The problem? Less than 1% is actively mined. This underutilization is due to regulatory barriers, a lack of investment in refining technology, and the absence of industrial policies aimed at verticalizing the supply chain.

USA: Critical Dependence and the Search for Diversification

The United States' dependence on rare earth imports from China has been considered a national security risk. In 2022, the U.S. Department of Defense announced billions in investments to develop alternative suppliers. In this context, Brazil emerges as a natural partner, geographically close, diplomatically, and historically aligned.

Tariffs and Retaliation: The New Commercial Diplomacy

With the rise of protectionist governments in the US, such as those of Donald Trump and, to some extent, Joe Biden, US tariff policy has oscillated between protectionism and trade pressure. For Brazil, this translates into threats to its steel, aluminum, and even agricultural products. In contrast, offering exclusive or preferential access to Brazilian rare earths could be a bargaining chip.

Imagine the following scenario: the US maintains tariffs on Brazilian steel. In response, Brazil signals to companies like Lockheed Martin or Tesla that it will no longer be able to maintain neodymium or dysprosium supply agreements. The impact would be immediate on American production chains, creating a new diplomatic pressure point.

Brazil's role in Western value chains

If Brazil aligns its mining policy with the industrial strategies of the US and the European Union, it could become a key logistical hub. Binational cooperation initiatives are already underway, such as the Canadian company Appia Rare Earths' project operating in Ceará. The appreciation of Brazil's rare earths could even drive the creation of special economic zones with tax and technological incentives for Western players.

Internal challenges: from regulation to sustainability

However, the path to transforming Brazil into a global player faces challenges:

Review of environmental and mining legislation;

Technical training in refining technologies;

Monitoring of impacted indigenous and quilombola communities;

Monitoring against illegal exploitation and mineral trafficking.

It's not just about extracting, but extracting responsibly and with strategic returns.

Possible developments in Brazil-US negotiations

The bargaining chip has already begun to circulate. In 2024, during the Summit of the Americas, Brazilian and US diplomats discussed bilateral agreements involving rare earths. It is speculated that one of the US's conditions for reducing tariff barriers to Brazilian agribusiness is the guarantee of strategic supplies of these elements until 2035.

In addition, Brazil may demand technology transfer, infrastructure investments, and access to EXIM Bank credit lines in exchange for preferential supplies of rare earths.

Opportunities for investors and entrepreneurs

Brazilian companies that enter this chain will have unique competitive advantages. From startups focused on AI-powered geological exploration to private equity groups focused on logistics and exports, there's a vast ocean of opportunities. Courses, consultancies, and specialized platforms have been multiplying.

Recommended products and services:

Book " Geopolitics of Rare Earths " – Amazon;

Professional Metal Detector for Mining – Amazon;

Hotmart Course: How to Invest in Strategic Commodities.

Final considerations

Brazil's rare earths are not just natural resources—they are geopolitical assets with the power to shape the country's trade relations for decades to come. Using them as a bargaining chip can not only alleviate tariffs but also propel Brazil to the center of global technology chains. It is up to the country to transform this potential into sovereignty and sustainable progress.

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References:

NATIONAL MINING AGENCY. Data on rare earths in Brazil. Brasília: ANM, 2023.