The 25 per cent US tariff on a broad swath of Brazilian exports entered into force on Wednesday, immediately raising costs for American importers of industrial machinery, ethanol, sugar, footwear, wood and paper products. Brazilian government and industry estimates place the value of affected trade at between $7.2bn and $11bn, equivalent to roughly 18–26 per cent of the country’s exports to the United States. The measure, announced on 15 July, is the first to be finalised under a Section 301 investigation of the Trade Act of 1974, a legal pathway the Trump administration has turned to after the Supreme Court struck down its earlier use of emergency powers to impose sweeping tariffs.

The US Trade Representative’s investigation, launched a year ago, concluded that Brazilian policies in areas ranging from the PIX instant-payment system and digital platform regulation to ethanol market access and intellectual property enforcement constitute unfair practices that burden American commerce. Washington also cited what it called insufficient Brazilian action against corruption and illegal deforestation. Brazilian officials reject the charges as unfounded and note that the US runs a consistent bilateral trade surplus. Viewed from Brasília, the tariff is a politically motivated move aimed at President Luiz Inácio Lula da Silva ahead of October’s presidential election, a perception reinforced by the US assertion that Brazil failed to negotiate in good faith despite more than 30 high-level meetings.

In the days since the tariff was confirmed, the Brazilian government has sharply lowered its rhetoric. Vice-President Geraldo Alckmin, who also holds the development and trade portfolio, said the country would not retaliate, warning that “an eye for an eye” could leave both sides blind. Instead, Brasília is preparing credit lines for affected firms and accelerating efforts to open new export markets, while keeping the door open to further negotiations. Several business associations, including those representing machinery and footwear producers, have urged the government to avoid a tit-for-tat escalation. The US exempted key imports such as crude oil, coffee, beef, aircraft parts and orange juice, shielding its own consumers and supply chains from immediate price shocks.

The trade confrontation could deepen within days. A separate US investigation into alleged forced labour in the supply chains of 60 trading partners, including Brazil, is expected to yield a decision by Friday, when a temporary 10 per cent global tariff is also set to expire. US Trade Representative Jamieson Greer has signalled that the forced-labour duties, proposed at 12.5 per cent for Brazil, will cover a majority of American trade. If applied cumulatively, the combined rate on some Brazilian goods could reach 37.5 per cent. Brazilian officials say they are studying the potential impact, but the political calendar suggests that a negotiated resolution may remain elusive until after the October vote.