Brazilian President Luiz Inacio Lula da Silva, who is expected to run for reelection in October, said the U.S. decision was without any 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.
“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."
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.
The Brazil tariffs would apply to thousands of imports, including sugar, agricultural machinery, apparel, electrical machinery, paper and steel.
Still, the U.S. 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, and include hundreds of others that were expected to face levies, such as pig iron and unflavored instant coffee.
The most impactful exemptions include beef, coffee, rare earths, energy products, aircraft, and aircraft parts.
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."
The investigation into Brazil, opened last July, 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 Brazilian products to 37.5%.
SPY•
