The United States will impose 25 percent tariffs on most Brazilian goods starting July 22, concluding a yearlong investigation into what Washington calls unfair trade practices and reigniting tensions with Latin America’s largest economy. Brazil swiftly condemned the decision. President Luiz Inácio Lula da Silva’s office said the government repudiates the decision, denying it had engaged in unfair trade practices. The move matters because it marks the Trump administration’s latest effort to wield tariff power after the Supreme Court curtailed his authority this year, and a separate probe could add another 12.5 percent duty next week.
The tariffs, first proposed in early June, were announced under Section 301 of the Trade Act of 1974, which allows the US to investigate and penalize countries found to have engaged in unfair trade practices without additional congressional authorization. The office of the US trade representative said a year-long investigation identified a range of problematic practices by Brazil, including lax anti-corruption enforcement and unfair tariffs of its own. According to CNBC, the probe also targeted Brazilian practices such as orders directing American technology firms, including X, Meta, and Google, to remove certain political content and suspend accounts belonging to US residents. Other practices cited include preferential tariffs for Mexico and India, weak intellectual property enforcement, and ethanol market barriers. The office described these and other practices as unreasonable and unfair.
Exemptions and economic context
The order exempts certain goods not produced in the US or that officials worry would disrupt supply chains. Those exemptions include coffee, beef, oranges and orange juice, some oil and gas energy products, and aerospace parts and components. The 25 percent levy will apply to most other imports from Brazil. The US has maintained a goods trade surplus with Brazil for years.
US Trade Representative Jamieson Greer said 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,” he said. Secretary of State Marco Rubio was blunter. “Let there be no confusion about why: President Lula and his government have not negotiated with the US in good faith,” Rubio said. He added that Lula’s economic policies are bad for Americans and bad for Brazilians, and that the tariffs are the price of Lula putting his own ego ahead of making a deal.
Political fallout in both capitals
The dispute has spilled into Brazil’s upcoming presidential election in October. Lula accused Senator Flávio Bolsonaro, son of former president Jair Bolsonaro, of helping trigger the tariffs after a recent visit to Washington. The senator denied the accusation. He said he planned to persuade the Trump administration to delay the tariff imposition until after the election. The elder Bolsonaro is an ally of Donald Trump and is being prosecuted in Brazil for trying to overturn his loss in a 2022 election, a prosecution that Trump had previously protested with a 50 percent tariff on Brazilian goods.
That earlier 50 percent tariff was imposed under the International Emergency Economic Powers Act of 1977, a different legal authority. The Supreme Court struck it down in February, ruling that Trump had overstepped his authority under that act to impose sweeping tariffs on US trading partners, including Brazil. The court kept in place only a 10 percent global tariff. The administration has since turned to Section 301 probes to reinstate tariff power, a route that does not require additional congressional authorization.
Trump and Lula met at the White House in May. That thaw did not last. US officials warned in early June that they were proposing the tariffs, prompting indignation from Lula, who reportedly said last month that Brazil would not accept the treatment his country had received. Months of engagement followed, including several high-level meetings between Brazilian officials and USTR representatives in recent weeks, but the negotiations failed to resolve the issues.
A separate US probe into forced-labor enforcement could add another 12.5 percent duty on top of the 25 percent levy, with a decision expected next week. The Brazilian trade ministry did not immediately respond to CNBC’s request for comment. The outcome of that investigation remains pending.