Highlights
- A 25% additional U.S. tariff on a range of Brazilian goods took effect on July 22, 2026, under Section 301 of the Trade Act of 1974.
- Estimates from the Brazilian government and the National Confederation of Industry (CNI) put the exports at risk between $7 billion and $11 billion.
- Brazil’s exports to the U.S. fell 13% in the first half of 2026, about $2.6 billion, according to Brazilian industry data.
- Beef, orange juice, aircraft and aircraft parts, and energy products are excluded from the 25% tariff.
- Brazil asked for World Trade Organization consultations with the U.S. on July 27, 2026.
Brazilian exporters are reassessing how they serve the American market after a new 25% U.S. tariff on a broad range of Brazilian products took effect on July 22, 2026. The Office of the U.S. Trade Representative (USTR) confirmed the duty on July 15, following a Section 301 investigation into Brazilian trade practices that began in July 2025. The tariff raises the cost of shipping from Brazil to the United States at a time when, according to a report from the consultancy EY, tariff instability has become a structural part of the business environment.
What the tariff covers
The measure applies to goods of Brazilian origin unless an exemption applies. Reuters reported that it reaches farm machinery, wood products, ethanol, and apparel, among other items. A survey by the International Business Center of the Minas Gerais industry federation (CIN/Fiemg) lists inedible tallow, wood products, protein peptides, raw tobacco, ornamental stone, ethanol, and leather footwear among the main affected groups.
The USTR excluded all products already subject to Section 232 tariffs. The U.S. Embassy in Brazil said the tariff also leaves out certain imports, including beef, orange juice, aircraft and aircraft parts, and energy products. DHL Express advises that other items, such as raw materials and products that cannot be obtained in sufficient quantities in the United States, are exempt as well.
Estimates of the exposure differ. Reuters, citing the Brazilian government and the CNI, reported that between $7 billion and $11 billion in exports are threatened, roughly 18% to 26% of Brazil’s exports to the U.S. Brazil’s Ministry of Development, Industry, Trade and Services (MDIC) published a broader figure on July 24. It estimated that the combined U.S. measures, which include Section 232 tariffs and two Section 301 surtaxes, reach 23.1% of Brazilian exports to the U.S. By the same ministry’s count, 52.7% of those exports face no additional sectoral or country-specific tariff. Those figures are based on 2024 trade flows.
Stacked duties add uncertainty
A second Section 301 action, tied to a forced-labor investigation, adds a 12.5% tariff on some products. EY’s tax alert from June 2026 warned of a risk of tariff stacking, which could make total duty costs materially higher. AgroLatam reported that total duties on some products could reach 37.5% if both measures apply. The MDIC breakdown shows that most affected products fall under only one of the two surtaxes. Among them, 1.9% of Brazilian exports to the U.S. face only the 25% duty, and 4.7% face only the 12.5% duty.
Early effects on trade
Brazilian industry data show that shipments to the U.S. fell 13% in the first half of 2026, about $2.6 billion. Steel products, petroleum derivatives, and pulp accounted for most of the decline, according to AgroLatam. The Martinelli law firm, citing the same trend, reported declines in 20 of Brazil’s 27 states.
Footwear illustrates the exposure. The Brazilian Footwear Industries Association (Abicalçados) says the U.S. buys one in five pairs of shoes Brazil exports. The association lowered its 2026 export projection by 7.1% after the tariff decision. It said the duty makes many operations unviable that had been resuming since a 40% additional tariff ended in February.
Production in Brazil versus production in the U.S.
Whether production could move to the United States was a point of contention in the USTR proceeding. The agency’s final notice summarizes public comments, including some arguing that tariffs would not shift production to the U.S. Commenters on construction machinery said the tariffs would not move that production, and others said some products could not easily be made in the U.S. The notice also records comments that tariffs would apply to U.S. or multinational companies importing from their own Brazilian manufacturing operations. These are positions put forward by commenters, not USTR findings.
For companies that already sell into the U.S., Banco Safra published sector estimates that illustrate the differences in exposure. The bank estimated that the effective tariff on WEG’s exports from Brazil to the U.S. is about 20.5%, equal to roughly 1.1% of the company’s consolidated revenue. With the new 25% duty, that impact could rise to about 1.4% of revenue. The bank noted that WEG has a history of passing costs through to the U.S. market. It also said Embraer remains exempt, while Frasle is affected.
Strategic reassessment under way
EY said the tariff instability requires companies to undertake a deeper reassessment of their international market-access strategies. AgroLatam reported that companies are increasingly reconsidering investment plans and evaluating whether future supply chains should remain oriented toward the U.S. market. The footwear sector, by contrast, says there is virtually no alternative market able to replace American demand.
The public sources reviewed do not describe specific company-level feasibility studies on relocating production to the United States, so the financial balance between producing locally and exporting from Brazil remains undocumented in them.
Legal and diplomatic response
Brazil’s government has contested the measures. Time reported that Lula’s office said Brazil had worked with the USTR to end the investigation and had presented evidence refuting each allegation. On July 27, 2026, the federal government formally requested WTO consultations with the United States. The request targets both the 25% Section 301 tariff and the 12.5% tariff from the forced-labor investigations. Brazil argues that the measures are inconsistent with the 1994 General Agreement on Tariffs and Trade and that the U.S. did not extend to Brazil advantages given to other WTO members.
Reuters noted that Brazil is the first country hit by a tariff following a Section 301 investigation under the Trump administration’s revised approach. That approach followed a U.S. Supreme Court ruling earlier in 2026 that invalidated tariffs imposed under emergency powers. Reuters also reported that the U.S. has consistently run a trade surplus with Brazil.
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