The Brazil tariff returns on a Section 301 footing, and its exemption list is where the policy now lives

A year ago the United States reached for an emergency statute to punish Brazil. Executive Order 14323, signed July 30, 2025, invoked the International Emergency Economic Powers Act (IEEPA), cited the prosecution of former President Jair Bolsonaro, and imposed an additional 40 percent duty on articles of Brazil⁵. That tariff ended in February, when the Supreme Court held that IEEPA does not authorize tariffs and the President ordered the IEEPA duties, Brazil’s among them, to stop being collected^7,10, leaving importers to reclaim what had been paid through a refund process examined here in July. Its successor, a 25 percent duty that applies from 12:01 a.m. on July 22, rests on different ground: section 301 of the Trade Act of 1974, after a year-long investigation, a formal finding of unreasonable and discriminatory practices, 360 written comments and two days of hearings^1,2. The rate is lower and the legal footing is firmer. The interesting question is how much of Brazil’s trade the new duty actually touches, and the answer lies less in the headline rate than in the exemption list that the Office of the United States Trade Representative (USTR) rewrote between June and July.

The instrument: what section 301 lets USTR do

Section 301(b) of the Trade Act directs the Trade Representative, once a foreign practice is found “unreasonable or discriminatory” and a burden on U.S. commerce, to take all appropriate and feasible action, subject to any specific direction from the President¹. Section 301(c)(1)(B) authorizes duties on the goods of the country concerned. The clause that makes a country-wide tariff possible is section 301(c)(3)(B), which lets USTR act against any goods or sector “without regard to whether or not such goods or economic sector were involved in the act, policy, or practice” at issue¹. USTR cited it twice in the July notice to reject arguments from stone quarriers and machinery importers that their products had nothing to do with censorship orders or deforestation¹.

The findings themselves, published June 4, span six subjects³. They include secret Brazilian court orders requiring U.S. platforms to remove political content; the central bank’s dual role as regulator and operator of the Pix instant-payment system, which it requires large institutions to offer free to individuals; partial-scope tariff preferences for Mexico and India covering more than a thousand Mexican tariff lines; weak foreign-bribery enforcement; intellectual property; ethanol; and illegal deforestation³. The breadth matters for the legal posture. A section 301 action that responds to a documented record, after notice and comment, is a different object in court from an emergency order, and the President’s July 15 memorandum states that a lower rate, negotiation without tariffs, or action under another statute “would be less effective and less preferable”².

The statute also contains its own exit. Under section 307, USTR may modify or end an action if the burden on U.S. commerce rises or falls, and an action lapses after four years unless the industry that benefits from it asks for continuation in the last 60 days of that period^1,8. The notice spells out both directions: Brazilian concessions could make the action “no longer appropriate,” while higher Brazilian duties on U.S. goods could show the rate is not enough¹.

How the 25 percent Brazil tariff works at entry

The duty is assessed under new heading 9903.05.01 and stacks on ordinary duties, on any other duty in subchapter III or IV of Chapter 99, and on antidumping and countervailing orders¹. Eight further headings carve out exceptions. Heading 9903.05.02 relieves goods loaded onto a vessel and in transit before July 22, provided they are entered before July 29¹; C.H. Robinson reads the vessel language to exclude air, truck and rail cargo¹³. Heading 9903.05.03 exempts a long annex of HTS subheadings, among them fresh and frozen beef lines, cocoa, crude and refined petroleum, chemical wood pulp, natural rubber, and a run of nickel, tin, tungsten and other metals¹. Press reports and Digital Policy Alert also place coffee among the exempt goods^9,10. Heading 9903.05.05 exempts civil aircraft and parts meeting general note 6, and 9903.05.06 exempts listed chemicals only when they are for pharmaceutical use¹.

Heading 9903.05.07 removes goods already covered by Section 232 duties on steel, aluminum, copper, passenger and heavy vehicles and parts, wood products and semiconductors. A second phase, effective July 31, adds patented pharmaceuticals under headings 9903.04.60 to 9903.04.66¹. Goods admitted to a foreign trade zone after July 22 must take privileged foreign status unless they qualify as domestic¹.

The changes since June run in both directions. USTR dropped high-purity dissolving pulp from the exemption list after testimony linking it to deforestation, and narrowed several chemical exemptions to pharmaceutical uses¹. It added twelve categories, including aluminum hydroxide, pig iron, iron and steel scrap, organic honey, unflavored instant coffee, used clothing, certain seafood and certain wood products¹. Its reasons are specific. Commenters said Brazil supplies about 40 percent of U.S. aluminum hydroxide, and that U.S. producers meet only 3 percent of domestic demand for organic honey¹. Other requests were refused, for agricultural machinery, footwear, apparel, stone and organic sugar among them, on the reasoning that importers “have been on notice” since June 1 to find other sources¹. There is no product-exclusion process¹.

Who pays: how much Brazilian trade the tariff covers

Digital Policy Alert, working from 2024 import data, estimates that of $39.6 billion in U.S. imports from Brazil, only $8.5 billion pays the full 25 percent. Some $20.1 billion is exempt under the annex, led by crude oil and coffee; $7.3 billion falls outside because it already pays Section 232 duties; and $3.2 billion is aircraft⁹. The July additions moved 86 tariff lines and about $2.4 billion of trade out of the duty, with pig iron, at $1.5 billion, the largest⁹. On those figures the action raises Brazil’s trade-weighted U.S. tariff from 11.0 percent to about 17.5 percent on July 22, and the implied annual duty from $4.4 billion to roughly $7.0 billion⁹. Machinery, wood products and sugar carry the heaviest remaining duty⁹.

Two other instruments shape that number. The 10 percent surcharge imposed in February under section 122 of the Trade Act, a balance-of-payments authority capped at 150 days, expires at 12:01 a.m. on July 24⁶. For two days the surcharge and the 301 duty overlap⁹. Brazil is also among 54 economies that USTR found in June had failed to impose and enforce a forced-labor import ban, a separate section 301 proceeding in which USTR proposed duties of 10 or 12.5 percent⁴. Ethanol witnesses warned that the two actions together could put Brazilian ethanol at 37.5 percent¹.

The burden is distributed by what remains dutiable. Al Jazeera lists sugar, apparel, paper and steel among affected goods¹⁰. Exempted beef and coffee were running 11.8 and 12 percent above year-earlier prices in the latest consumer price data¹⁰, which helps explain why they stayed off the list. U.S. ethanol producers, who said Brazil’s ethanol tariff cost them market value, supported the full rate¹.

The longer view: Brazil and section 301 since 1988

This is not the first time Washington has used section 301 against Brazil. On October 20, 1988, President Reagan’s Proclamation 5885 found that Brazil’s failure to provide process and product patent protection for pharmaceuticals and fine chemicals was “unreasonable” and a burden on U.S. commerce, and imposed duties of 100 percent ad valorem on selected Brazilian goods¹⁴. The Christian Science Monitor put the covered trade at $38 million, in pharmaceuticals, paper and electronics, and reported that Washington said it would lift the duties once Brazil protected foreign drug patents¹⁵. President José Sarney answered, “We’ll defend our interests at GATT”¹⁵.

The comparison measures how far the instrument has travelled. In 1988 the duty was a narrow lever on one grievance, priced in tens of millions of dollars. In 2026 it is a country-wide tariff answering six grievances at once, with the selection of goods driven by U.S. supply needs rather than by any link to the practices found^1,9. The Brazilian response follows the old script with new tools. The government’s communications secretariat called July 15 “a deplorable milestone,” said Brazil would “immediately begin the procedures” under its Reciprocity Law and return to the World Trade Organization’s dispute settlement mechanism, and noted a U.S. goods and services surplus with Brazil of $424.5 billion over 15 years¹². Secretary of State Marco Rubio wrote that Lula “has put his own ego ahead of making a deal”; Foreign Minister Mauro Vieira called the remark offensive¹⁰.

USTR Jamieson Greer said “extensive negotiations” had failed and that talks remain open^10,11. Deborah Elms of the Hinrich Foundation suggested the case “may give important clues about the likely treatment of other, newer Section 301 cases”¹¹. Those cases are close behind: the forced-labor action and a structural overcapacity investigation, both pending^4,11. Brazil’s general election is in October, and Flávio Bolsonaro had asked that the tariff wait until after it¹⁰. It did not wait. Whether the exemption list holds once Brazil names its countermeasures, and whether section 307 is used to cut the rate or to raise it, is not answered by anything published so far.