The 25% Tariff on Brazil Is Final
The Rate Fell, but the Legal Ground Got Firmer

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On July 15, the Office of the U.S. Trade Representative announced a 25% additional tariff on imports from Brazil under Section 301 of the Trade Act of 1974. It takes effect at 12:01 a.m. EDT on July 22, and the notice setting out the details appeared in the Federal Register on July 20. What we covered in June as a proposal is now a formal action.

What was decided: 25% and a long list of exceptions

The rate is a flat 25%, with no tiering. But the structure is worth stating precisely: it is not "25% on most goods" so much as "25% on imports from Brazil generally, minus an enumerated list of exemptions." Those exemptions, set out in the notice's annexes, include goods already covered by the Section 232 steel and aluminum measures, along with pharmaceuticals. Press reporting indicates that coffee, beef, oranges and orange juice, some oil and gas products, and aerospace components were also excluded. High-purity dissolving pulp, by contrast, was dropped from the exemptions proposed in June and remains dutiable.

USTR identified six categories of "unreasonable" practices: Brazilian court orders requiring U.S. technology companies to remove content and suspend accounts — which USTR characterizes as secret orders — together with electronic payment services; the asymmetry of preferential tariffs extended to Mexico and India; intellectual property protection; access to the ethanol market; anti-corruption enforcement; and illegal deforestation.

Why Section 301, and what came before

The key to this action is that the legal basis was swapped out. In July 2025, the United States imposed a 40% tariff on Brazil under the International Emergency Economic Powers Act (IEEPA), which stacked with an existing 10% for an effective 50%. That measure was heavily colored by U.S. objections to the prosecution of former president Jair Bolsonaro.

Then, on February 20, 2026, the Supreme Court rejected IEEPA as a basis for tariffs in Learning Resources, Inc. v. Trump. The 50% lapsed, leaving only the flat 10%. The Section 301 investigation had opened on July 15, 2025; a determination followed on June 1, 2026, then hearings on July 6–7. In other words, this 25% is the struck-down measure rebuilt on more orthodox trade-law procedure. The rate is half what it was, but having gone through the process, it is far harder to overturn in court. That is precisely why Brazilian industry is more alarmed, not less.

Reading the numbers: what "4,187 products, US$14.9bn" actually means

The National Confederation of Industry (CNI) submitted an estimate covering 4,187 products worth roughly US$14.9 billion in exports. But that figure does not describe the 25% alone. It models a worst case of 37.5% — a provisional 10%, the 25% under Section 301, and a further 12.5% tied to a separate forced-labor investigation. Against the measure actually adopted, with its exemptions, CNI itself puts the exposure at around US$11 billion.

More telling is CNI's observation that 62% of the affected items are intermediate goods. Much of what is hit is bought by U.S. manufacturers as inputs, so the cost travels downstream into American industry too. CNI reports that Brazilian exports to the U.S. already fell 13% (US$2.6 billion) in the first half of 2026, with 20 of 27 federal units recording declines. Paraná and Santa Catarina were each down 32.9%, and Acre down 62.8%.

Brazil's response, and the election variable

In a statement issued in the early hours of July 16, the Brazilian government called July 15 a "lamentable milestone." It said it would take the matter to the WTO dispute settlement mechanism and begin procedures to activate the Reciprocity Law passed unanimously by Congress. As of now, though, neither a filing nor any specific list of retaliatory products has materialized.

As for the October 4 election (with a runoff on October 25), the politics are running against intuition. A Quaest poll released July 15 put President Lula at 40% and Senator Flávio Bolsonaro of the opposition Liberal Party (PL) at 28%. Asked who bears responsibility for the tariffs, 51% pointed to Flávio's side against 30% for Lula's. Unemployment, at 5.6% for the March–May quarter, is the lowest for that period since the series began — hardly a liability for the incumbent. Candidate registration does not close until August 15, so everyone remains a pre-candidate for now (more on the race here).

My perspective

The easiest mistake here is to read a lower rate as relief. The drop from 50% to 25% is real, but what matters for investment decisions is predictability, not level. The 50% under IEEPA died in court. The 25% under Section 301, having gone through investigation, hearings, and Federal Register publication, will not die the same way. The number was halved, and in exchange the probability that it persists went up.

The same caution applies to the figures. "4,187 products, US$14.9 billion" is a textbook case of a number whose scenario assumptions fall away in transmission. Who produced it, under what assumptions, and when? In trade coverage, checking those three things changes the picture more often than not.

Seen across the region, Section 301 is becoming a general-purpose instrument of pressure. In June 2026 the same statute produced a proposal targeting 60 countries over forced labor, Mexico and Ecuador among them, and USMCA has entered an annual renewal review. Three things to watch: whether the August 4–5 Copom meeting prices in the tariffs (the Selic stands at 14.25% after a June 17 cut); whether IBGE's July 30 unemployment release shows a turn in the labor market; and whether, once registration fixes the electoral field on August 15, Brazil actually names retaliatory products under the Reciprocity Law.

Glossary

Section 301 = the provision of the U.S. Trade Act of 1974 authorizing unilateral action against unfair foreign trade practices. tarifaço = Brazilian colloquial term for a sweeping tariff hike, widely used for this series of measures. Lei da Reciprocidade = the Reciprocity Law, enacted in 2025, enabling Brazil to take countermeasures against unilateral trade actions. Selic = Brazil's benchmark policy interest rate.

The rate fell from 50% to 25%. But by swapping the legal basis, this tariff was rebuilt to last.

※ This article is the author’s commentary based on public information. Please confirm the latest figures, dates and procedures with governments and primary sources. Quotations are kept minimal and sources are cited.