When water rises on one side, the company moves to another to breathe
In a move meant to curtail Chinese corporate influence, the Pentagon added BYD, Alibaba, and Baidu to a blacklist now totaling 188 firms — but seasoned Brazilian economists warn that economic pressure rarely extinguishes ambition; it merely redirects it. When powerful enterprises are shut out of one market, they do not retreat — they migrate, carrying capital and strategy to more welcoming shores. Brazil, already deepening its ties with Beijing and home to Latin America's largest electric vehicle factory, may find itself the unintended beneficiary of Washington's containment strategy.
- The Pentagon's blacklisting of BYD, Alibaba, and Baidu signals an escalating US effort to sever Chinese corporate access to American government contracts and credibility.
- Two former Brazilian finance ministers — Henrique Meirelles and Luiz Fernando Furlan — are sounding the alarm that these sanctions will generate friction without achieving their intended strategic goals.
- Furlan invokes the metaphor of connected vessels: block one channel and the current simply finds another, warning that Chinese firms will pivot swiftly toward Latin America and other receptive markets.
- BYD, already operating a $5 billion EV factory in Bahia, is now expected to accelerate its regional expansion as the US market grows increasingly hostile.
- The sanctions may be deepening Washington's anxiety about Brazil-China trade ties — a dynamic that could explain recent US tariffs targeting Brazilian economic sectors as well.
On a Tuesday morning, the Pentagon announced the addition of three of China's most powerful corporations — BYD, Alibaba, and Baidu — to its restricted list of companies suspected of military ties, bringing the total to 188 sanctioned firms. The measure would block these companies from US government contracts and expose them to reputational damage in American markets.
But two economists who once steered Brazil's economy from its highest offices read the announcement differently. Former finance minister Henrique Meirelles and former development minister Luiz Fernando Furlan both argued the sanctions would backfire — not by weakening the targeted firms, but by redirecting their energy toward more receptive markets, including Brazil and Latin America.
Furlan, drawing on decades of watching global capital flow, put it plainly: 'International commerce works like connected vessels. When water rises on one side, the company moves to another side to breathe.' Meirelles echoed the concern, calling the blacklist a measure that would 'increase tensions' and 'cause more friction' — without delivering strategic results.
Meirelles also suggested a broader pattern at work: US tariffs recently imposed on Brazilian sectors may reflect Washington's growing unease with Brazil's expanding trade relationship with China — a relationship the blacklist is unlikely to cool.
Furlan went further, predicting a concrete consequence. BYD, already the operator of Latin America's largest electric vehicle factory in Camaçari, Bahia — backed by $5 billion in announced investment — would likely use the US restrictions as a catalyst to deepen its regional footprint. What Washington designed as punishment, these economists concluded, may function instead as an accelerant — pushing Chinese industrial ambition deeper into the hemisphere and closer to Brazil.
On Tuesday morning, the Pentagon announced it was adding three of China's largest corporations to its blacklist of companies suspected of ties to the Chinese military. The move targeted BYD, the electric vehicle manufacturer; Alibaba, the e-commerce giant; and Baidu, the search platform. With this action, the total number of Chinese firms on the Pentagon's restricted list climbed to 188. The sanctions would bar these companies from doing business with the U.S. government and expose them to reputational damage in American markets.
But two seasoned Brazilian economists who once held the country's highest economic posts saw something different in the announcement. Henrique Meirelles, who served as finance minister, and Luiz Fernando Furlan, who led the development ministry during Lula's first term, both warned that the Pentagon's move would likely backfire. Rather than weakening these Chinese firms, they argued, the sanctions would simply redirect their energy and investment elsewhere—potentially toward Brazil and Latin America.
Furlan, a veteran industrialist, explained the logic with the clarity of someone who had spent decades watching global capital move. "International commerce works like connected vessels," he said in an interview in São Paulo. "When water rises on one side, the company moves to another side to breathe." The point was simple: businesses are nimble. When they encounter a hostile environment, they search for a friendlier one. It is not complicated. Meirelles struck a similar note, calling the Pentagon's action a measure that would "increase tensions, which is never positive." He framed it as a decision that would "cause more friction."
Meirelles also connected the blacklist to a broader pattern. The recent tariffs the United States had imposed on Brazilian economic sectors, he suggested, might be rooted partly in American anxiety about Brazil's growing trade relationship with China. The two nations' commercial ties had been expanding steadily, and Washington appeared to view this with concern.
Furlan went further, predicting a concrete outcome. BYD, facing restrictions in the American market, would likely evaluate whether to increase its production and business operations in Brazil and other countries. The company had already demonstrated its commitment to the region. In September of the previous year, it had opened what is now Latin America's largest electric vehicle factory in Camaçari, in the state of Bahia, with announced investments of $5 billion. The blacklist, in this reading, would only accelerate the company's pivot toward the hemisphere.
What the Pentagon intended as punishment, these economists suggested, would become an incentive. The sanctions might tighten the screws on American-Chinese relations, but they would loosen them elsewhere—and Brazil, with its growing economic ties to Beijing and its hunger for industrial investment, stood to benefit.
Citações Notáveis
International commerce works like connected vessels. When water rises on one side, the company moves to another side to breathe.— Luiz Fernando Furlan, former Brazilian development minister
This is a measure that increases tensions, which is never positive. It is a decision that causes more friction.— Henrique Meirelles, former Brazilian finance minister
A Conversa do Hearth Outra perspectiva sobre a história
Why would the Pentagon think blacklisting these companies would work if economists say it will just push them elsewhere?
Because the Pentagon's goal isn't purely economic—it's about restricting what it sees as military-adjacent companies from accessing American resources and contracts. But that assumes these firms have no alternatives. They do.
So the economists are saying the U.S. is essentially forcing China's hand toward other markets?
Exactly. Furlan's metaphor is precise: when one channel closes, capital finds another. BYD doesn't disappear. It just invests more heavily in Brazil, Mexico, Southeast Asia—places where it's welcome.
Is there a political dimension here beyond economics?
Yes. Meirelles hints at it directly: American anxiety about Brazil-China trade. The tariffs on Brazilian goods aren't random. They're part of a larger effort to contain Chinese economic influence in the hemisphere.
But if that's the goal, wouldn't the Pentagon know that blacklisting will backfire?
They might know and accept it as a cost. Containment isn't always rational in economic terms. It's about signaling, about drawing lines. The question is whether the signal is worth the blowback.
What does BYD's $5 billion factory in Brazil tell us?
That the company is already hedging. It's not waiting for sanctions to diversify. It's already building its future outside the United States. The blacklist just confirms that choice was wise.