New U.S. tariff may hit up to 45% of Brazil exports

Government spokespeople said they do not believe the proposal will effectively become tariffs, but experts noted that, unlike the duties imposed in 2025 by U.S. President Donald Trump, those that could result from the current measure are considered difficult to challenge. In addition, other ongoing investigations could lead to new tariffs.

The new tariff proposed by the Office of the U.S. Trade Representative (USTR) is based on Section 301, a 1974 law. The report, which concluded the investigation opened against Brazil in July 2025, argues that certain Brazilian policies and practices related to digital trade, such as Pix, intellectual property, anti-corruption efforts, and market access, among others, negatively affect the U.S.

The punitive tariff proposal was put up for public comment, meaning the 25% tariff does not take effect immediately and opens a period for interested parties to submit comments. A public hearing is scheduled for July 6 in Washington, D.C.

Brazilian products are already subject to a 10% duty, imposed globally by Trump after the country’s Supreme Court invalidated the sweeping tariff package. That measure is valid until the end of July.

Welber Barral, a partner at BMJ and at law firm Barral Parente Pinheiro, said the strategy now for affected companies and sectors is to file petitions and demonstrate the tariff’s impact on U.S. production and prices.

He said companies will have a better chance if they can mount their defense together with U.S. importers, who can describe the effect of the new tariff on their costs and the importance of Brazilian supply.

Legal challenges

Vera Kanas, a lawyer specialized in international trade and a partner at VK Law, noted that, in addition to the process that led to the 25% tariff, Brazil is, alongside 59 other countries, the target of another Section 301 investigation into imports from countries that allegedly fail to combat forced labor.

Kanas said the tariffs now proposed under Section 301 are harder to overturn than the 40%-50% sweeping tariff the U.S. imposed on Brazilian imports last year under the IEEPA, the law used in cases of international economic emergencies. Section 301, she said, is more consolidated legislation. “This time, unlike with the IEEPA, there should not be U.S. companies importing Brazilian products on the assumption that they will later be able to request a refund,” Kanas noted.

The USTR report says the new tariff should not apply to aircraft and parts, orange juice, some foods such as coffee and meat, pulp, certain minerals, fertilizers, and critical and strategic minerals.

Valor found 986 items on the exemption list, based on six-digit Harmonized System codes. Of those, Brazil exported 666 products to the U.S. in 2024, before the effects of the current Trump administration’s policies.

In terms of quantity, there are more items than the 433 that were exempted from last year’s so-called 40% to 50% tariff and that were effectively shipped in 2024. In terms of exempted values, however, the list now proposed is smaller because certain types of crude cast iron were not included in the exemptions.

According to Valor’s calculations, based on 2024 exports, before the impact of the current Trump administration’s tariff policy, the new measure could affect 45.8% of shipments to the U.S., worth $18.5 billion.

The Section 301 report does not affect products subject to sectoral tariffs applied on national security grounds under Section 232, another U.S. trade law, from 1962. That process is therefore running in parallel with the Section 301 investigations and includes items such as steel, aluminum, and derivatives.

Impact estimates

The American Chamber of Commerce says the new tariff could affect about $15 billion in exports to the U.S., or 35.5% of Brazilian shipments, in a calculation that used the U.S. 2024 database. The segments potentially most affected are basic industry, machinery and equipment, agribusiness, forest products, and processed foods. Pig iron could be the product most affected, with $1.54 billion in exports subject to the tariff.

Sergio Vale, chief economist at MB Associados, said the proposal should mainly affect the manufacturing industry, in line with Trump’s campaign to reindustrialize the country. Vale estimates that about 27% of what Brazil exported to the U.S. in 2025, or $10.1 billion, would be exposed to the new tariff.

He said the measure will result in an even greater decline in the U.S. share of Brazilian exports and an increasingly closer relationship between Brazil and China. In 2024, the U.S. absorbed 12% of Brazilian exports, a share that fell to 10.8% last year. Over the same period, China’s share rose to 28.7% from 28%.

Vale said it seems almost inevitable that the new tariff will materialize, even with the USTR process still open. “The U.S. government offered a menu of very subjective justifications, such as deforestation or intellectual property, or intangible ones, such as Pix. The instant-payment system is embedded in the Brazilian economy, made credit cheaper, brought a large number of people into the banking system, and there is no going back.”

More optimistically, Márcio Elias Rosa, minister of Development, Industry, Trade and Services, said the new measure could cover 21% of total sales to the U.S. The minister said 54% of exports to the U.S. are free from the sweeping tariff and 25% are under Section 232. He cited machinery and equipment among the sectors most affected, with “major losses” for employment, income, and industry. When citing the most affected segments, Rosa said the impact would occur if the proposal becomes tariffs, “which we believe will not happen.”