Executives in Brazil’s automotive industry and labor leaders are expressing concern over the influx of inexpensive electric vehicles (EVs) from China, which is severely impacting the country’s manufacturing sector. The consensus among industry insiders is that the only viable protection against this surge is to impose high tariffs on imports from China.
One significant issue is that Brazil has kept tariffs on Chinese EVs relatively low, while many of China’s other customers have raised theirs to double digits. For instance, in the past year, Europe has confronted the issue directly, raising tariffs on Chinese vehicles, with the U.S. set to impose a 100% tariff on these imports by April.
Until recently, tariffs on Brazilian EVs were non-existent from 2015 to 2024, only increasing modestly to 10%. This has made Brazil an appealing market for automotive giants like BYD, especially as they look to offload surplus stocks of government-subsidized vehicles produced with low labor costs.
Reports indicate that the volume of Chinese vehicles sold in Brazil is expected to rise by 40% this year, making up nearly 8% of light vehicle registrations. About 80% of electric vehicles in Brazil come from China, and some estimates suggest that figure could reach as high as 90%. Large freighter ships have been continually delivering these vehicles, and when the Brazilian government initiated a program to boost EV sales, BYD was poised to capitalize on that opportunity with a large inventory.
The Brazilian government hopes that by encouraging importers to establish local manufacturing, the situation might improve. BYD has indicated plans to refurbish an old Ford plant; however, in December, Brazil began halting work visas for Chinese workers, citing the poor treatment of these laborers as a major concern.
Delays in the development of a BYD EV factory are now projected to last at least 18 months, with officials worrying that broader issues of labor exploitation may be present in other Chinese initiatives within Brazil. Meanwhile, the flow of inexpensive imports from BYD and similar companies continues unabated.
“We’re dedicated to supporting new brands in Brazil, enhancing the component sector, and creating jobs. But when Brazilian production is facing such low import volumes, it raises concerns for us,” stated an industry representative.
The Brazilian government has rolled out plans to gradually increase tariffs on Chinese cars, with rates expected to reach 35% by 2026. However, both automotive executives and labor union leaders are advocating for a quicker implementation to provide immediate protections.
In the meantime, BYD is not standing idle. The company sent over 7,300 EVs to Brazil in May and is eager to increase shipments while tariffs remain low. Critics have questioned the efficacy of China’s policies in fostering growth in Brazil, suggesting they instead aim to bolster Chinese companies at the expense of local enterprises trying to gain traction.
Unfortunately, proposed tariff accelerations may also benefit Chinese firms, as Brazilian consumers flock to purchase these cars before tariffs go up. Sales of imported vehicles surged by nearly 19% in the first quarter of 2025, while domestic sales barely budged at 0.2%. In Latin America, EVs are generally seeing higher sales growth than in North America, predominantly driven by Chinese brands.
“Brazil stands at a pivotal moment, with the potential to become a key player in the clean energy supply chain, leading to innovation, job creation, and economic sovereignty. Or, it may miss out on critical opportunities in the new era of global industry,” noted Edgar Barasa, a researcher in electronics capacity.
