Following a two-week committee review, the United States Trade Representative (USTR) has concluded its investigation and imposed a 25% tariff on Brazilian products. The proceedings, conducted under Section 301 of the Trade Act of 1974, investigated unreasonable digital trade practices, unfair electronic payment services (such as PIX), preferential tariffs for ethanol production, and market protectionism. The report also cited anti-corruption interference and illegal deforestation. The new tariffs will take effect on July 22, 2026.

As stated by U.S. Ambassador Greer in the official statement issued by the Office of the United States Trade Representative:

“Safeguarding American economic interests against unfair trade practices is the bedrock of President Trump’s America First policies. Whether it is punishing U.S. technology companies for refusing to censor political speech, backsliding on anti-corruption enforcement, or allowing Brazilian farmers to exploit illegally logged land to gain an advantage over American farmers, Brazil’s unfair trading practices have prevented U.S. workers and producers from accessing this important market of over 210 million consumers.”

A June 4, 2026, Federal Register Notice (FRN) invited public comments on the proposed actions. As reported by G1, Brazilian business representatives from various sectors traveled to Washington, D.C., to provide input regarding the scope of the tariff coverage. These 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.

See also: US considers 25% tariff on Brazilian goods over PIX and tech taxes: What you need to know

The primary stakeholders involved were groups representing Brazil’s agribusiness and industrial sectors, which stand to lose the most from the tariffs. Key organizations included 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).

The delegation aimed to convince the US government that the proposed surcharge would harm not only Brazilian exporters but also US companies, consumers, and supply chains. Representatives from FIESP argued that the 25% tariff lacks both technical and economic justification.

What is Exempt and What is Taxed?

The framework applies a blanket 25% tax to Brazilian exports but establishes specific criteria and product exemptions. Broadly, exemptions are granted for:

  • Raw materials that, if subject to the proposed additional tariffs, could lead to a shortage in domestic US supply.
  • Products that could cause economy-wide disruptions.
  • Certain products that cannot be grown, produced in sufficient quantities in the US, or sourced elsewhere.
  • Articles for which additional tariffs may not substantially contribute to the elimination of Brazil’s actionable practices.

Under these criteria, the primary products exempt from taxation include precious metals, rare earth compounds, pig iron, military and commercial aircraft parts, chemical products, tropical goods (such as açaí, orange juice, and coffee), and energy commodities like crude oil and gas.

Additionally, some categories like machinery and beef products remain exempt, while poultry and pork products will be subject to the full tariff.

Other high-value products will also be impacted, such as electrical motors, arms, ammunition, vehicles, and vehicle parts, which together contributed more than $1 billion in exports to the US in 2025.

In the view of Brazilian Finance, the impacts are heavily concentrated on highly competitive supply chains, such as agribusiness commodities like soy, corn, sugar, and tobacco. These measures create a significant barrier preventing highly competitive Brazilian agribusiness products from entering the US market.

Categories Subject to the 25% Tariff

The non-exempt export categories represent some of Brazil’s most relevant and commercially significant trade sectors with the US. The targeted categories facing the new import taxes include:

  • Iron and steel
  • Vehicles
  • Wood and wood products
  • Sugars and sugar confectionery
  • Electrical and electronic equipment
  • Footwear
  • Tobacco
  • Arms and ammunition
  • Ceramic products
  • Wood pulp
  • Tools and base metal cutlery
  • Meat and edible meat offal (excluding beef)
  • Ships, boats, and floating structures
  • Food industry residues and animal fodder
  • Photographic and cinematographic goods
  • Printed books, newspapers, and pictures
  • Leather articles, Apparel,saddlery, and travel goods
  • Railway and tramway equipment

The Brazilian Trade Balance with the US

A major point of contention regarding the tariffs is the bilateral trade balance. Notably, Brazil is one of the few countries with which the US maintains a consistent trade surplus. In 2025, Brazil exported $38 billion to the US while importing $48 billion in American goods. Significantly, $21.84 billion of this trade comprises high-value products such as machinery, pharmaceuticals, electronics, and vehicles.

This dynamic was highlighted during a US Senate hearing on July 16. When Daniel Perez, the nominee for US Ambassador to Brazil, was questioned by Democratic Senator Tim Kaine about whether the US stands to lose more than it gains if Brazil retaliates, Perez responded that they were still evaluating the situation.

Perez also noted that, despite the tariffs, the US still has significant room to expand its exports to Brazil, specifically highlighting opportunities in the ethanol and energy sectors.

Brazil’s Most Impacted Export Products

According to Brazilian Minister of Development, Industry, and Trade, Márcio Elias Rosa, the tariffs will affect at least 18% of Brazilian exports to the US, amounting to roughly $7.4 billion annually. He highlighted that some impacted products were already subject to prior tariffs, and 24% of these goods could see cumulative tariffs reaching up to 50%, particularly steel, aluminum, and certain automotive manufacturing components.

The Brazilian government reacted by stating that the measure lacks economic justification and is politically motivated. (Source: G1)

Political Repercussions in Brazil

The decision was met with confusion in Brasília, with government officials describing it as unreasonable and “lacking technical justification.”

Another heavily politicized point was the targeting of PIX. As previously covered, PIX is an instant payment system created by the Brazilian Central Bank that offers zero-fee transactions for individuals. The system is widely accepted and fiercely defended by the Brazilian public, boasting an adoption rate of over 82% and an approval rating of 92%.

Regarding PIX, President Luiz Inácio Lula da Silva posted:

“PIX is the heritage of our people and an international benchmark for digital public infrastructure. In Brazil, we will not abdicate protecting our families and our children against the greed of a handful of techno-oligarchs. Freedom of speech is not a blank check for criminality.”

The President also highlighted the current tax asymmetry regarding US imports:

“In 2025, 76% of imports originating from the US entered the country without paying import duties, and the average effective rate applied to American products was only 3.1%.”

Brazil Considers Retaliatory Tariffs

In response to the US measures, Brazil is preparing to impose retaliatory tariffs. Brasília maintains a policy of diplomatic negotiation and does not recognize unilateral investigations, pointing out that they lack the backing of multilateral institutions.

Regarding the unilateral nature of the tariffs, President Lula stated:

“Brazil does not recognize the legitimacy of investigations that lack the support of multilateral trade rules. Despite this, we have never left the negotiating table when defending our national interests.”

The President also noted in an official statement that during the USTR public hearings, the vast majority of the private sector argued against the imposition of the tariffs:

“In the public hearings promoted by the USTR last week, 63 of the 78 interventions made by Brazilian and American private sector representatives were against the tariff hike.”

He further pointed out that Brazil already possesses the legal framework to respond to such actions under the Economic Reciprocity Law (Law No. 15,122/2025). Approved in 2025, this legislation allows Brazil to apply proportional countermeasures, such as tariffs, fees, or restrictions, against countries that impose unjustified trade barriers on Brazilian products.

Concluding his remarks, President Lula stated:

“Brazil will immediately initiate procedures to trigger the instruments provided for in the Reciprocity Law, unanimously approved by the National Congress, and will resume the issue within the framework of the WTO dispute settlement mechanism.”