USTR Announces New 25% Tariffs on Brazilian Imports Following Section 301 Investigation

On July 20, 2026, the Office of the U.S. Trade Representative (USTR) announced the formal imposition of an additional 25% ad valorem duty on a substantial volume of imports from Brazil (see also the fact sheet accompanying the announcement). The measure, which became effective at 12:01 a.m. eastern time on July 22, 2026, concludes a year-long investigation under Section 301 of the Trade Act of 1974 (for prior coverage, see the trade alert, USTR Announces Major Section 301 Developments Involving Brazil, Vietnam and Forced Labor Enforcement, dated June 5, 2026). 

This regulatory action is the result of USTR’s Section 301 investigation into Brazil’s acts, policies, and practices related to digital trade and electronic payment services; preferential tariffs; ethanol market access; anti-corruption enforcement; intellectual property protection; and illegal deforestation. The investigation determined that several of Brazil’s acts, policies, and practices are unreasonable or discriminatory and constitute a substantial burden on U.S. commerce.

The implementation of the new tariff marks a significant shift in the U.S.-Brazil trade relationship and underscores the Trump administration's increasing reliance on trade remedy authorities to address issues spanning industrial policy, market access, environmental standards, and digital economy governance. Importers, manufacturers, and supply chain managers must now navigate immediate tariff exposure while monitoring a separate, concurrent Section 301 investigation into Brazil’s forced-labor policies, which may result in additional duties shortly after the expiration of the Section 122 tariffs on July 24, 2026. 

Scope of Section 301 Actions and Tariff Coverage

The main remedy to counter Brazil’s acts, policies and procedures is a 25% duty on Brazilian products classified under the new Harmonized Tariff Schedule of the United States (HSTUS) subheading 9903.05.01. While broad in scope, USTR has structured the tariff regime to balance trade policy objectives with domestic economic considerations. As a result, a significant portion of bilateral trade has been exempted or carved out based on industrial necessity and consumer impact, as indicated in the following table:

USTR’s decision to exempt approximately 44% of Brazil’s exports from the new tariffs reflects a strategic effort to mitigate inflationary pressures on U.S. consumers and manufacturers and avoid supply chain disruptions. Notably, the exclusion of pig iron followed intensive feedback from U.S. foundries and steelmakers, who emphasized that more than half of the domestic supply for non-integrated producers depends on Brazilian imports.

In-Transit Relief and Compliance Timelines

To ease the burden on goods already in the logistical pipeline, USTR and U.S. Customs and Border Protection (CBP) established a limited in-transit exemption: 

• Goods that were loaded onto a vessel and in transit to a U.S. port before July 22 may qualify for relief from the 25% duty; and
• To benefit from the relief, shipments must be formally entered for consumption or withdrawn from warehouse for consumption before July 29, 2026. 

This narrow window requires immediate coordination between importers and customs brokers to ensure all qualifying shipments are processed before the deadline.

Future Outlook: Stacked Duties and Regulatory Convergence

The current 25% tariff may represent only the first layer of a broader, more aggressive U.S. trade policy strategy. As noted above, a separate Section 301 investigation into Brazil’s failure to enact import policies and laws preventing the importation of goods made with forced labor is expected to conclude shortly after July 24 (when the 10% Section 122 duties expire). USTR has proposed an additional 12.5% duty on imports from Brazil and 10% on other countries that already have laws on the books but that are not being enforced. If implemented, these "stacked" duties could raise the total trade barrier on certain Brazilian goods to 37.5%, approaching levels seen during earlier temporary 50% tariffs.

USTR’s findings also highlight concerns regarding Brazil’s preferential trade agreements with India and Mexico, which the U.S. views as providing non-reciprocal advantages that disadvantage U.S. exporters. This signals that future trade negotiations may increasingly focus on reciprocal market access, regional trade alignment, and challenging existing South American trade bloc obligations that the U.S. views as discriminatory.

Practical Considerations for Affected Businesses

The new 25% tariff will increase the landed cost for affected Brazilian products. Companies with exposure to Brazilian sourcing should prioritize the following actions to mitigate financial and regulatory risks:

• Detailed Classification Review - Conduct a line-by-line review of HTSUS classifications against the USTR Annex to confirm tariff applicability or  exemption;
• Logistics Coordination - Verify "in-transit" status for late July arrivals and ensure CBP entry filings are completed before the July 29 cutoff to avoid unnecessary duty payments;
• Enhanced Supply Chain Due Diligence - Strengthen supply chain mapping and transparency in light of tariff linkages to environmental (deforestation) and labor standards (forced labor) practices; and
• Contingency Planning for Stacked Duties: Update financial models to account for the potential 12.5% increase in duties following the final results of USTR’s Section 301 investigation on forced labor policies and laws.