US imposes new 25% tariffs on Brazil, expands exemptions list

By Devika Madhusudhanan Nair and Shubham Kalia

July 15 (Reuters) – The U.S. has announced 25% duties on many imports from Brazil, while unveiling a broader-than-expected list of exemptions, reviving a trade war that could embroil dozens of countries around the world as the Trump administration reworks its tariffs policy, one of its signature diplomatic tools.

The late-night announcement by the office of the U.S. Trade ‌Representative made Brazil the first country targeted under the Trump administration’s new tariff strategy, which relies on Section 301 of the Trade Act of 1974, a statute that authorizes investigations into alleged unfair trade ‌practices, to justify new levies on dozens of countries.

The new tariffs, scheduled to take effect on July 22, two days before President Donald Trump’s temporary 10% global tariff is scheduled to expire.

Tariffs from other Section 301 probes are expected to eventually ensnare major U.S. trade partners including India, China, Japan, South Korea and the European Union as Trump seeks a trade reset after the U.S. Supreme Court struck down a previous round of global levies.

Wednesday’s announcement by the USTR office follows months of fruitless negotiations and over 30 meetings between U.S. and Brazilian officials after the Trump administration proposed new tariffs on many imports from Brazil in June, saying its practices were unfair on a range of issues from digital trade to illegal deforestation.

“Extensive negotiations with Brazil over the past year have not resolved these issues, but we remain open to continuing negotiations with Brazil to bring about long-needed changes to the problems identified in this investigation,” U.S. Trade Representative Jamieson Greer said in a statement.

Brazilian President ‌Luiz Inacio Lula da Silva, who is expected to run for reelection in ⁠October, said the U.S. decision lacks justification. Brazilian officials have long suggested, in private conversations, that the motives for the new tariffs were political, rather than technical, making negotiations fruitless.

Brazil would immediately begin proceedings to invoke instruments provided for under the “Reciprocity Law” and revisit the matter within the framework of the WTO dispute settlement mechanism, he said in a ⁠statement.

India, one of the biggest trading partners of the U.S., has struggled to sign a trade deal with Washington at least partly because of the Section 301 investigations into lax enforcement of forced labor bans and excess industrial capacity.

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“The Brazil case … is a warning for India,” said Ajay Srivastava, founder of the Global Trade Research Initiative think tank. “It shows that Washington can use trade action not only over tariffs and market access, but also against any policy it sees as unfair to U.S. business.”

‘LULA HAS PUT HIS OWN EGO AHEAD OF MAKING A DEAL’

Secretary of State Marco Rubio, who was accused by Lula of being anti-Latin America when the U.S. tariffs were proposed in June, blamed the Brazilian president and said “Lula ‌and his government have not negotiated with the US in good faith.”

“For the past year, Lula has put his own ego ahead of making a deal for the welfare of the Brazilian people, and these tariffs are the price for that,” Rubio said in a strongly worded post on X.

In a Thursday statement, Brazil’s Foreign Affairs Minister Mauro Vieira called Rubio’s remarks unacceptable and offensive to the Brazilian government and people, adding Lula had sought dialogue throughout the process.

“Rubio launched a rude and arrogant attack on the head of state of a friendly country,” he said.

Vieira also reiterated Brazil’s willingness to negotiate despite Washington’s “political motivation” in imposing the measure, saying there was no logic behind it.

The Brazil tariffs would be levied to thousands of imports, including sugar, agricultural machinery, apparel, electrical machinery, and paper.

USTR said that the new tariffs would not apply to products already subject to Trump’s Section 232 tariffs on ‌steel, aluminum, copper, autos and certain wood products.

After public comments and lobbying from some industries, USTR removed some products from proposed exemptions, including high-purity dissolving pulp and non-pharmaceutical applications of certain products.

But USTR kept in place major exemptions for beef, coffee, rare earths, energy products, aircraft, and aircraft parts and expanded this list with pig iron and steel scrap used by electric-arc furnace steelmakers, unflavored instant coffee and organic honey.

The American Chamber of Commerce for Brazil, a business group, reported the new tariff increased exemptions by 25%, covering some $11 billion in annual ‌trade, $2 billion less than expected, though it places “Brazil among the countries facing the most restrictive conditions for access to the U.S. market.”

Dan Anthony, executive director of a coalition of more than 1,200 U.S. small businesses called We Pay The Tariffs, called the tariffs “a blunt tool with a weak connection between the practices at issue and the American companies that will bear the costs.”

The investigation into Brazil, opened in July 2025, cited several alleged unfair practices, including illegal deforestation and Brazil’s instant payment system, Pix, which the U.S. government argues disadvantages credit card companies.

Brazil vehemently rejected all the allegations.

Brazil has also been included in a separate Section ‌301 investigation by the USTR, due to conclude on July 24, into connections to forced labor in the supply chains of dozens of countries.

The probe is expected to result in an additional 12.5% tariff, bringing the total burden for affected Brazilian products to 37.5%.

(Additional reporting by David Lawder, Shivangi Acharya, Rocky Swift, Akanksha Khushi, Joao Manuel Mauricio and Lisandra Paraguassu; Writing by Raju Gopalakrishnan, Isabel Teles and Fernando Cardoso; Editing by Muralikumar Anantharaman, Christopher Cushing, William Mallard, Chizu Nomiyama and Nick Zieminski)

US imposes new 25% tariffs on Brazil, expands exemptions list

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