The new program is based on investigations into unfair trade practices under Section 301 of the US Trade Act and close to 80 cases involving dozens of countries have been opened by the US Trade Representative.
The investigations include probes into excess industrial capacity and trade in goods produced using forced labour.Wednesday’s announcement by the USTR follows the Trump administration’s proposal in June to impose a 25% tariff on many imports from Brazil after concluding that its trade practices were unfair across 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,” US Trade Representative Jamieson Greer said in a statement.
Brazilian President Luiz Inácio Lula da Silva said the US decision was unjustified.
Brazil would immediately begin proceedings under its Reciprocity Law and pursue the matter through the World Trade Organization’s dispute settlement mechanism, Lula said in a post on X.
Joe Brusuelas, chief economist at RSM US, said the U.S. move could be the precursor to a new round of trade negotiations using the “maximalist negotiating tactics” that have become a hallmark of the Trump administration.
“It is likely the start of a new round of bilateral negotiations that will result in a trade framework involving tariffs and continued negotiations, rather than a comprehensive trade policy.”
India, one of the US’s largest trading partners, has struggled to secure a trade agreement with Washington, partly because of the Section 301 investigations.
“The Brazil case is a warning for India,” said Ajay Srivastava, founder of the Global Trade Research Initiative. “It shows that Washington can use trade action not only over tariffs and market access, but also against any policy it considers unfair to US businesses.”
’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 US proposed the tariffs in June, blamed the Brazilian president, saying that “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.
The Brazil tariffs would apply to thousands of imports, including sugar, agricultural machinery, apparel, electrical machinery, paper and steel.
The US said it would exempt all the products proposed for exemption in the June notice, except high-purity dissolving pulp and non-pharmaceutical applications of certain products.
The exemptions include beef, coffee, rare earths, energy products, aircraft and aircraft parts.
The US also added organic honey, pig iron, unflavoured instant coffee and several other products to the exemption list on Wednesday.
The investigation into Brazil, opened last July, cited several alleged unfair practices, including illegal deforestation and Brazil’s instant payment system, Pix, which the US government argues disadvantages credit card companies.
Brazil vehemently rejected all the allegations.
Brazil is also part of a separate USTR Section 301 investigation, due to conclude on July 24, into alleged forced labour links in the supply chains of dozens of countries.
The probe is expected to result in an additional 12.5% tariff, taking the total tariff burden on Brazilian products to 37.5%.
