SAO PAULO — A new 25% American tariff took effect Wednesday on a broad range of goods imported from Brazil, including farm equipment, wood products, ethanol, and clothing, further straining the relationship between the two largest nations in the Western Hemisphere.
This tariff marks the first one imposed under the Trump administration’s approach of using the Trade Act of 1974 to target what it considers unfair trade practices by other countries. Earlier this year, the U.S. Supreme Court struck down the White House’s broader use of emergency powers to apply steep tariffs against most of its global trading partners.
According to estimates from Brazil’s government and its National Confederation of Industry (CNI), the new tariff puts between $7 billion and $11 billion in Brazilian exports to the U.S. at risk — representing roughly 18% to 26% of everything Brazil ships to American markets.
To limit the impact on certain U.S. industries, Washington carved out exemptions for several important imports from Brazil, including beef, coffee, aircraft, and airplane components.
Brazil is the first nation to face a tariff following a year-long Section 301 investigation into alleged unfair trade practices — despite the fact that the U.S. has consistently run a trade surplus with Brazil, meaning it sells more to Brazil than it buys.
“This is the irony of the U.S. measures,” said Welber Barral, a former Brazilian foreign trade secretary, pointing to that trade balance.
Washington has defended the tariffs as a necessary response to what it describes as unfair practices, citing issues such as electronic payment services, restrictions on ethanol market access, and illegal deforestation.
The new duties went into effect just two days before a temporary 10% global tariff was set to expire, and came after the Supreme Court had previously thrown out a separate set of 50% U.S. tariffs on Brazilian goods that had already pushed Brazilian exporters to look for other markets.
Footwear Industry Facing Layoffs
The pain has already been felt across multiple sectors. Brazil’s shoe industry, which relies on the United States as its biggest foreign customer, has revised its export forecast downward to an expected 7.1% decline for the year — a steeper drop than its earlier projection of a 3.6% decline.
According to the Brazilian Footwear Industries Association (Abicalçados), one out of every five pairs of shoes exported from Brazil goes to the United States.
“There is no other market capable of replacing the U.S.,” said Toni Hajel, owner of exporter TH Shoes and head of the footwear industry union in Franca, a major shoe-producing hub in Sao Paulo state.
Hajel said approximately 40% of the region’s exports — about 650,000 pairs of shoes per year — are sold to American buyers. He warned that the new tariffs would make those sales economically unworkable, potentially forcing local producers to cut jobs unless Brazil can renegotiate the tariffs or win an exemption for the footwear sector.
Economists Warn of Lasting Damage
Economists caution that the back-and-forth nature of tariff announcements and partial exemptions could cause damage that extends well beyond immediate trade losses.
“It undermines confidence,” said Gustavo Pessoa, an economics professor at Fundação Getulio Vargas university in São Paulo, who traveled to Washington this month to speak against the tariffs at a public hearing.
Pessoa said the tariffs threaten to damage long-term trade ties on both sides: American buyers may become wary of sourcing more products from Brazil, while Brazilian exporters may pull back from investing in supply chains built around the U.S. market.
Data from CNI show U.S. tariffs have already taken a toll on trade, with Brazilian exports to the United States falling by $2.6 billion — a 13% drop — in the first half of this year compared to the same period in 2025. The decline has been driven mainly by reduced shipments of industrial products such as iron and steel, petroleum oils, and woodpulp.
Brazil is also the subject of a separate U.S. investigation into forced labor allegations, which concludes on July 24. That probe could result in an additional 12.5% tariff, potentially pushing total duties on some Brazilian goods as high as 37.5%.
The unresolved investigation has left Brazilian officials uncertain about what comes next. Brazilian Trade Minister Marcio Elias Rosa recently admitted he did not know exactly how any additional penalty would be applied, even though he expects one to be confirmed.
“We will find out if it will be cumulative or not, whether we will have 25% plus 12.5% or if we will get an exemption,” he told reporters in Brasilia.
