On July 6, 2026, the US International Trade Commission (USITC) is holding hearings to debate the US government’s proposal to apply a 25% surcharge on Brazilian products. Based on the controversial Section 301 of US trade law, the measure places Pix, digital commerce, and environmental issues at the center of its accusations against Brazil. A final decision could be reached by July 15.

The hearings are a critical part of the Section 301 process, allowing companies, associations, governments, and other interested parties to present their arguments before the United States issues a final ruling.

What the US is Accusing Brazil Of

The United States Trade Representative (USTR) accuses Brazilian regulatory authorities of unfairly favoring Pix over competing payment services offered by American companies by mandating free transactions for individuals, capping the transaction fees that can be charged to businesses, and requiring mandatory visual prominence for the Pix system within banking applications.

The issue of Pix has been a central focal point in Brazilian life and politics (as covered in Brazilians Reject U.S. Pressure to Alter PIX Amid Threat of 25% Tariffs. Launched in 2020, Pix caused a major shift in Brazilian financial markets. By 2026, it had achieved over 82% adoption and was approved by 92% of Brazilians, towering over other payment methods with transaction values 8.2 times higher in the first quarter of the year than those of credit and debit cards. Because Pix is a free and instant payment system, it has heavily impacted companies like Visa and Mastercard, which depend on transaction volume to collect percentage-based fees.

The committee is also investigating other trade frictions, such as the ethanol import taxes imposed by Brazil in 2023, and the proposed taxation of US Big Tech companies, which includes:

  • 2023 Tax Reform (Constitutional Amendment 132/2023): This reform imposes the Dual VAT (federal CBS and state/municipal IBS), making Big Tech companies taxpayers like any other digital service provider. This causes their tax rate to jump from a specific maximum of 8.65% to up to 28%.
  • Taxation of Streaming Services and Big Techs: Bills currently moving through the Brazilian Congress discuss levying taxes on the gross revenue of streaming platforms and tech giants to finance national audiovisual production and expand digital connectivity.
  • Digital Social Contribution (PLP 157/2025): A proposal to institute taxes on large platforms to fund national technological initiatives, and potentially create an income transfer mechanism for Brazilian users.

The Brazilian Delegation

As reported by G1, a large delegation of industry and agriculture representatives has traveled to the US. Participants include the National Confederation of Industry (CNI), the Federation of Industries of the State of São Paulo (Fiesp), the Brazilian Machinery and Equipment Industry Association (Abimaq), and the Brazilian Confederation of Agriculture and Livestock (CNA). They are joined by representatives from sectors including coffee, rice, sugar, corn ethanol, pig iron, ornamental rocks, wood, paper, footwear, honey, and intellectual property.

The delegation aims to convince the US government that the proposed surcharge would harm not only Brazilian exporters but also US companies, consumers, and supply chains.

Fiesp, representing industries in São Paulo, will argue that the 25% tariff lacks both technical and economic justification. In São Paulo, the most exposed segments are precisely those with the highest added value: machinery and equipment, auto parts, industrialized foods, wood, furniture, and other manufactured products.

Impacts if the Tariffs Are Approved

According to Jackson Campos, a specialist in Foreign Trade, the industrial sector will bear the brunt of the fallout:

“If the additional 25% tariff is approved, Brazilian foreign trade will enter an environment of higher costs and lower predictability when selling to the United States. The most sensitive impact tends to fall on industrial and higher-value-added products because these items are highly dependent on the US market and harder to quickly redirect to other destinations. Exporters may face margin losses, contract revisions, price renegotiations, and the pressing need to seek alternative markets.”

According to CNI estimates, if the measure is adopted:

  • 31.6% of Brazilian exports to the US will be forced to pay a total tariff of 37.5% (the 25% from this trade investigation added to an existing 12.5% penalty related to US accusations of a “failure to combat forced labor”).
  • 35.2% of the entire Brazilian export portfolio to the US market will be hit by the new surcharge.
  • 54.1% of all Brazilian exports to the US will be subject to some type of additional tariff when factoring in pre-existing Section 232 tariffs.

What to Expect from the Committee

It is important to understand the mechanics of Section 301, as it is not the only legal basis the US uses to impose tariffs. It differs significantly from mechanisms like Section 232, which is based on national security arguments.

Section 232 has been widely applied, for instance, placing a 200% tax on Russian and Chinese aluminum following the outbreak of the war in Ukraine. In the case of Brazil, Australia, Argentina, and South Korea, Section 232 has already been applied to products like steel, aluminum, and automotive parts, which remain taxed to this day.

For Section 232 applications, the US argues that reliance on foreign imports could weaken local industry and compromise national security. Its application usually requires a government-led investigation, making it a slower process than invoking emergency powers.

Section 301, however, focuses strictly on trade practices deemed unfair and functions as a retaliatory instrument requiring a formal investigation.

How Section 301 Works

  1. Investigation Initiation: The USTR opens an investigation, typically motivated by complaints from companies, economic sectors, or a political directive from the Executive branch.
  2. Analysis and Dialogue: A phase of technical analysis and direct dialogue with the investigated country occurs.
  3. Report and Consultation: Once completed, the agency publishes a report detailing its conclusions and opens a public consultation period where companies, governments, and entities can submit their arguments.
  4. Final Decision: Only after this process does the US government decide whether to apply retaliatory measures and define exactly what they will be.

According to Jackson Campos, the current phase is critical:

“In practice, the hearing should not be seen merely as a formality. It can influence the final tariff, expand product exceptions, reduce rates, or even delay the decision. For Brazil, the most important thing right now is to measure exposure to the US market, review contracts, and prepare commercial alternatives should the harshest scenario unfold.”

Jackson Campos has been working in foreign trade and government relations for years, which places him in a prominent position to address any developments related to imports, exports, international logistics, and foreign trade. Campos is also an ambassador for Logcomex, as well as an international logistics professor and a content producer for the foreign trade market.