ANALYSIS · Latin America

Brazil Tariffs: How the US Trade Fight Is Sorting Brazilian Exporters Into Winners and Losers

Brazilian exports to the U.S. were already falling under tariffs in place since August 2025, and a new Section 301 duty with long exemption lists now decides which goods carry an extra layer.

Rendal Post Analysis Desk · Published October 2, 2026

The trade fight between Washington and Brasília has moved from threat to tariff schedule. In its July 2026 announcement, the Office of the U.S. Trade Representative said it was imposing a 25% tariff on certain goods of Brazil under Section 301, and DTN/Progressive Farmer reported that the action spared agricultural products such as beef and coffee. That new duty sits on top of an older layer: Brazilian goods have faced higher U.S. tariffs since August 2025, and the export figures for the first seven months of 2026 show the most heavily taxed products losing ground fastest. In our reading, the combined effect is a sorting machine, in which some Brazilian goods keep their American customers while others lose them, and the dividing line runs through product categories. For owners on either side of that trade, the practical question is which side of the line their goods sit on, and how long they can afford to wait for a negotiated settlement that has not yet arrived.

What Washington decided

The case began at the President's direction, when the Trade Representative initiated the investigation on July 15, 2025, covering digital trade and electronic payment services, preferential tariffs, anti-corruption enforcement, intellectual property, ethanol market access and illegal deforestation. On June 1, 2026, USTR found Brazil's conduct actionable in all six areas, according to an analysis by the law firm Covington & Burling. Before finalizing, the agency said it received over 360 written comments and heard 77 witnesses at a public hearing on July 6 and July 7, 2026.

Ambassador Jamieson Greer, the U.S. Trade Representative, framed the move as a response to failed talks, saying in the July release that "extensive negotiations with Brazil over the past year have not resolved these issues" while adding that Washington remains open to further negotiation. Secretary of State Marco Rubio was blunter on X, writing that Brazil's president "has put his own ego ahead of making a deal" and that the tariffs were the price, as reported by DTN/Progressive Farmer. DTN reported that the duties were scheduled to take effect on July 22, one week after the announcement.

On the Brazilian side, Covington noted in June that the federal government rejected the basis for the determinations and that President Luiz Inácio Lula da Silva called the tariffs unjustified and politically motivated, threatening possible retaliation if they took effect. The firm also placed the case inside a wider chill, citing a separate set of Section 301 findings against 60 economies, Brazil among them, on forced-labor import rules, with additional tariffs proposed there that Covington described as presumably cumulative. In our reading, that layering is what makes planning hard: the duty a buyer pays may depend on more than one proceeding.

The exemptions that shape the damage

The design of the action matters more than the headline rate. When USTR proposed the measure in June, Covington reported that proposed exemptions would cover over 1,600 product categories, including petroleum, coffee, beef, orange juice and civil aircraft products, and that certain metals and construction equipment could qualify because they already face Section 232 national security tariffs. That was the proposal, not the final list, so owners should check their own tariff lines against the published notice rather than rely on the June summary.

DTN's reporting on the final action shows that several major agricultural items stayed out. Beef was excluded even though Brazilian beef sales to the U.S. hit a record $1.66 billion in 2025, and coffee was exempted after a record $2.68 billion in coffee exports to the U.S. in 2025, according to the same report. Oranges and other produce were also excluded, while DTN listed sugar and wood products among the goods that will pay the duty.

Not every American industry welcomed the carve-outs. Bill Bullard, CEO of R-CALF USA, argued that leaving beef out of the proposed 25% duty would undermine the stated goal on deforestation. Jenna Stanton, director of policy and public affairs at the U.S. Cattlemen's Association, told USTR that American producers "are not looking for a way out." Those objections are worth watching because domestic lobbies contested the exemption list during the hearing process, and in our reading it may not be settled.

In our reading, ethanol shows how symbolic some of the targeting is. DTN reported that Brazilian ethanol now faces the new duty on top of an existing 12.5%, making the tariff as high as 37.5%, even though U.S. Energy Information Administration data cited in the article show Brazilian ethanol shipments to the American market dropping to almost nothing in 2024 and 2025. Growth Energy CEO Emily Skor nonetheless praised the decision as "an important step toward repairing the damage" to American producers.

What the trade data show so far

A note on timing comes first. The latest figures come from Amcham Brasil's Brazil–U.S. Trade Monitor, as reported by DatamarNews, citing UOL, on August 14, 2026, and they cover January to July. That period was shaped by the higher tariffs introduced in August 2025, and nearly all of it predates the Section 301 duty that DTN said was due to take effect on July 22, 2026. The numbers below therefore mostly reflect the older tariff layer, with at most the last days of July falling under the new duty.

Under that layer, Brazilian exports to the U.S. fell 12.2% between January and July 2026 to US$21 billion, the lowest level in three years and about US$2.9 billion below the same period of 2025. The steepest losses came in goods facing the highest additional tariffs, which the monitor puts at 25% to 37.5% after a peak of 50%, where exports fell 31.5% to US$3.2 billion.

Abrão Neto, president of Amcham Brasil, said the numbers show bilateral trade clearly losing momentum, with the heaviest impact on the most heavily taxed goods, and warned that trade is likely to keep weakening as long as the current tariff environment stays in place. July shipments to the U.S. came to US$3.6 billion, 5% below a year earlier, ending a brief June recovery that had been the first year-on-year increase since the higher tariffs arrived in August 2025.

The categories hit hardest year to date, according to the monitor, include tobacco, plywood and other wood products, granite, doors, faucets, fruit juices and beef tallow. Products under Section 232 behaved differently in July, rising 21.5% on the back of steel and aluminum, although semi-finished iron and steel products remained negative for the year. In our reading, that split fits the point about sorting: exposure depends on which tariff regime covers a product, and two exporters in the same broad industry can face very different conditions.

In our reading, the divergence from the rest of the world is the clearest signal. While shipments to the U.S. fell, Brazil's exports to all markets combined grew 10.5% from January to July, and the U.S. remained the country's second-largest destination behind China. Among the main tariff-hit products, Amcham said, half of Brazil's 10 leading products sold to the U.S. lost ground there through July while growing in other markets, and the group called that divergence a strong sign of the tariff impact.

How companies are adjusting

Covington's June advice to affected companies was concrete: assess the commercial impact, evaluate alternative suppliers, consider shifting merchandise to other markets, and take part in the public consultation process. DatamarNews, writing in August 2026, drew a similar conclusion from the trade figures, noting that exporters in wood, steel, metals, tobacco and fruit juice chains are seeking to redirect volumes, and that if tariffs keep curbing shipments, Brazilian exporters "may need to adjust routes, contracts and market priorities."

The flow in the other direction is moving too. Brazilian imports from the U.S. rose 0.6% year over year to US$4.3 billion in July 2026 after seven straight months of decline, leaving Brazil with a bilateral deficit of US$2.3 billion for January to July. In our reading, that matters for American companies selling into Brazil, since Covington reported in June that Lula had threatened possible retaliation should the tariffs take effect, and any countermeasure would land on those sales. The sources we reviewed do not show whether Brazil has acted on that threat.

What owners should do now

Start with classification. The exemption list decides whether a Brazilian product carries the new Section 301 duty on top of whatever tariffs already apply, so every importer and exporter in this corridor should map its own tariff lines against the final notice and the Section 232 coverage that applies to some metals. Owners whose goods are exempt should not assume the carve-out is permanent, since cattle groups argued during the USTR hearing process for removing beef from the exemption list.

For companies whose goods are taxed, the trade figures suggest the American market is shrinking for them while other destinations are growing, which in our reading argues for testing those markets now rather than waiting for a deal. American buyers of Brazilian inputs face the mirror decision: absorb the cost, qualify a second supplier, or renegotiate contracts that assumed duty-free supply. USTR has said it remains open to continuing negotiations, but in our reading the prudent position is a plan that works whether or not a settlement arrives.