US hits Brazil with 25% tariffs, Brazil vows to retaliate

The United States will place a 25% tariff on thousands of Brazilian imports starting July 22, and Brazil has promised to retaliate if this happens. This escalates a dispute in which Washington singled out Brazil’s Pix payment network as an unfair trade practice.

US Trade Representative Jamieson Greer announced the new tariffs imposed late on Wednesday, finalizing a year-long investigation under Section 301 of the Trade Act of 1974 which allows Washington probe practices it considers unfair with corresponding tariffs.

The goods covered by the incoming tariffs include sugar, apparel, paper, and steel, according to Al Jazeera. Beef, coffee, aircraft parts, certain fruits, some rare-earth materials and certain oil and gas products are exempt from this levy.

The exempted products are very much intentional. Beef costs 11.8% more than a year ago and coffee 12% more, according to the most recent Consumer Price Index from the US Department of Labor. Removing both of these goods from any potential tariffs spares American consumers a further price increase on two important consumer goods that have shot up during Trump’s trade war.

Washington decision based on payment system investigation

The administration’s final decision mentioned Brazil’s use of Pix, the free instant-payment system run by the South American country’s central bank, arguing it disadvantages US credit-card companies. The trade office also listed “illegal deforestation,” anti-corruption interference and preferential tariffs among the practices it deemed unreasonable, according to Time.

Pix has become the default way Brazilians move money since its 2020 launch, handling everything from street-vendor payments to bill payments at no cost to users. Placing this particular system in a trade complaint directly puts a national payments system at the center of a trade conflict instead of any subsidies or previously imposed tariffs.

Brazil has rejected the findings from the investigation. President Lula’s office said that “Brazil does not recognize the legitimacy of investigations without support in the multilateral rules of trade.” It called the deforestation claim “absurd,” noting the government has cut deforestation across the country’s geographical area since President Luiz Inacio Lula da Silva took office in 2023.

Brazil’s retaliation amid possible WTO intervention

Lula’s office described the tariffs as a “lamentable milestone” in relations between both countries and said it would invoke Brazil’s Reciprocity Law, passed unanimously by Congress, to impose its own countermeasures.

It also plans to take the case to the World Trade Organization’s dispute settlement system.

Once the tariffs take effect, Brazil will become Washington’s second most heavily tariffed country after China, The Guardian reported. The US runs a trade surplus with Brazil that reached $14.4 billion in 2025, up from $7.7 billion in 2024, which means the target of these tariffs is a country that the U.S. sells to more than it buys from.

Trade Rep. Greer stated that negotiations had run their course. “Extensive negotiations with Brazil over the past year have not resolved these issues, but we remain open to continuing negotiations,” he said in a statement carried by Al Jazeera, which reported the two governments held more than 30 meetings.

Greer also argued that the tariffs were needed to open a market of “over 210 million consumers” to US exporters.

Brazil election remains in background

Brazil is set to have another presidential election in October of this year. President Lula’s office said the tariffs resulted from “a narrative constructed with the active collaboration of the Bolsonaro family,” referring to relatives of former president Jair Bolsonaro, who was sentenced in 2025 to 27 years in prison for plotting a coup after losing the 2022 vote to Lula, The Guardian reported.

President Trump has previously called that trial a “witch hunt.”

Flávio Bolsonaro, the far-right senator set to challenge Lula, asked the USTR at a hearing last week to suspend the tariffs, worried that they could help the incumbent. His concern is based on recent surveys which show that the tariff threat has strengthened Lula, with more than half of Brazilians blaming the Bolsonaro family. After his request was ignored, the senator instead blamed Lula.

US Secretary of State Marco Rubio, who met with Bolsonaro’s sons in Washington, defended the move. “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,” he wrote.

Brazilian Foreign Affairs Minister Mauro Vieira called Rubio’s remarks offensive and said Lula had been ready to negotiate from the start.

The South American country is the first country hit under the administration’s Section 301 strategy, which it turned to after the Supreme Court ruled in February that President Trump lacked the authority to impose sweeping tariffs. That ruling has led to roughly $81 billion in refunded tariff payments so far, according to Time.

Similar Section 301 investigations into China, Mexico, Japan and the European Union are underway, and a separate probe involving Brazil over alleged forced labor is due to reach a conclusion later this month.