The United States confirmed on 15 July that it will impose an additional 25% tariff on a wide range of Brazilian products, a measure set to take effect on 22 July and affecting an estimated US$7.4 billion in exports—roughly 18% of Brazil’s total sales to the American market. The decision, announced by the Office of the United States Trade Representative (USTR), concludes a year-long investigation under Section 301 of the Trade Act of 1974. While a list of exceptions shields key commodities such as beef, coffee, and orange juice, the tariff will hit industrial goods including ethanol, machinery, footwear, paper, and chemicals, with São Paulo and Santa Catarina states bearing over half the projected impact.

The USTR’s investigation cited a broad set of Brazilian practices it deemed “unreasonable” and discriminatory, among them the Pix instant-payment system, barriers to American ethanol, digital trade regulations, and alleged failures to combat illegal deforestation and corruption. Viewed from Brasília, the justifications are baseless and politically motivated. The government of President Luiz Inácio Lula da Silva notes that the US runs a consistent bilateral trade surplus and that Brazilian negotiators held more than 30 meetings with American counterparts, offering to reduce tariffs on some 300 product lines and to discuss ethanol market access. However, Brazil refused to negotiate on Pix or on what it describes as a US request to limit Chinese investment in critical minerals and rare earths—a demand Brazilian officials called an unacceptable infringement on sovereignty.

The tariff has quickly become entangled in Brazil’s October presidential election. Lula’s camp accuses the family of former president Jair Bolsonaro of actively collaborating with Washington to damage the country for electoral gain, while the leading opposition candidate, Senator Flávio Bolsonaro, blames Lula’s confrontational diplomacy. A Quaest poll published on 16 July found that 51% of Brazilians agree with Lula’s version of events, against 30% who side with Flávio. The political temperature rose further after US Secretary of State Marco Rubio posted on social media that Lula had “not negotiated in good faith,” prompting Brazil’s foreign minister to call the remarks “unacceptable and offensive.” In Washington, the ethanol lobby Growth Energy and Agriculture Secretary Brooke Rollins publicly celebrated the tariff, citing Brazil’s 18% levy on American ethanol and what they describe as discriminatory treatment under the RenovaBio programme.

In response, the Brazilian government announced a R$130 million plan, to be detailed in August, to help affected firms diversify exports toward Europe, Southeast Asia, and Central Asia. The vice-president and finance minister have both stressed that the country will evaluate the use of its newly enacted Economic Reciprocity Law with caution, avoiding hasty retaliation that could trigger a further escalation. A separate USTR investigation into alleged forced labour in supply chains could add a further 12.5% tariff on Brazilian goods, with a final decision expected by 24 July. For now, Brasília says it will keep diplomatic channels open, though senior officials privately assess that Washington is unlikely to offer significant concessions before the Brazilian election.