Trump hits Brazil with new tariffs in sign of what’s ahead

Scope of the New Tariff Strategy

The 25% levy on Brazilian goods marks the initial deployment of a broader tariff strategy by the Trump administration that could eventually affect dozens of countries. The USTR office has opened close to 80 trade investigations, and a new wave of tariffs could be imposed on nations including China, the European Union, India, Japan, South Korea, and Mexico. The measure is being implemented under Section 301 of the Trade Act of 1974, a legal framework utilized after the U.S. Supreme Court earlier this year tore down the centrepiece of the administration’s previous tariff system, the International Emergency Economic Powers Act (IEEPA) of 1977. The court found the administration had overstepped its authority under the IEEPA to impose sweeping tariffs on trading partners, including a 50% tariff previously imposed on Brazil to protest its prosecution of Jair Bolsonaro.

While the tariff is broad, the USTR has provided a list of exemptions for goods deemed critical to supply chains or not produced in the U.S. These excluded items include beef, coffee, oranges, orange juice, aerospace parts and components, rare earths, and energy products. On Wednesday, the USTR expanded this list to include organic honey, pig iron, unflavoured instant coffee, and other items. The U.S. clarified it would exempt all products proposed in the June notice, except for high-purity dissolving pulp and non-pharmaceutical applications of certain products. The tariffs will apply to thousands of other Brazilian imports, including sugar, agricultural machinery, apparel, electrical machinery, paper, and steel.

Investigations and Diplomatic Friction

U.S. Trade Representative Jamieson Greer stated that the action was necessary to ensure American workers and companies compete on a level playing field. “Extensive negotiations with Brazil over the past year have not resolved these issues, but we remain open to continuing negotiations with Brazil to bring about long-needed changes to the problems identified in this investigation,” Greer said in a statement.

Relations between the two governments have grown increasingly strained. Secretary of State Marco Rubio criticized the Brazilian leadership in a post on X, stating: “Let there be no confusion about why: President Lula and his government have not negotiated with the US in good faith. His economic policies are bad for Americans and bad for Brazilians. For the past year, Lula has put his own ego ahead of making a deal for the welfare of the Brazilian people, and these tariffs are the price for that.”

President Lula da Silva characterized the U.S. decision as being without any justification. He attributed the move to political considerations, blaming his rival in the country’s October elections, Sen. Flávio Bolsonaro, who is the son of former President Jair Bolsonaro.

Legal Challenges and Future Trade Hurdles

The conflict is poised to move into international legal arenas. President Lula announced that Brazil would immediately begin proceedings to invoke instruments provided for under the “Reciprocity Law” and revisit the matter within the framework of the WTO dispute settlement mechanism. This diplomatic pushback occurs as Brazil faces further scrutiny from Washington. Beyond the current 25% tariff, a separate Section 301 investigation is currently examining potential connections to forced labor in the supply chains of dozens of countries, including Brazil. That probe is slated to conclude on July 24. It is expected to result in an additional 12.5% tariff, which would bring the total import tax burden for Brazilian products to 37.5%.

Find more reporting in our World section.