Insight Focus
New US tariffs took effect on July 22, targeting Brazil. The 25% surcharge is set to affect products including ethanol, tobacco and rice, although key exports such as beef, coffee and orange juice were exempted. Brazilian officials and industry representatives are continuing negotiations with the White House in an effort to limit the impact of the measures.
Brazil Pushes Back as New US Tariffs Take Effect
The new round of US tariffs, which took effect on July 22, is expected to affect approximately 36.5% of Brazilian agribusiness exports, according to the Confederation of Agriculture and Livestock (CNA). The 25% surcharge applies to products such as ethanol, rice, tobacco, eggs and grapes.
On the other hand, around 2,100 products from the sector were excluded from the list, including orange juice and coffee, which are among the main items exported to the US.
Source: Comex
Fish, beef, cereals, tropical fruits and nuts were also included in the list of exceptions. The exclusion of these products resulted from intense negotiations between agribusiness organisations and the White House, according to the CNA.
“Private sector representatives worked directly with the US government to technically defend the interests of Brazilian agribusiness, achieving good results,” said Sueme Mori, Director of International Relations at the CNA.
There is hope that the decision will be reversed at some point. Earlier this year, the Supreme Court overturned the tariff package imposed by President Trump in 2025.
Today, the US is Brazil’s second-largest trading partner, trailing only China. The surcharges are expected to affect around 3,000 products, including machinery, clothing and footwear.
Source: Comex
The new tariffs applied to Brazil are based, at least officially, on concerns regarding potential risks to US companies posed by issues such as deforestation, unfair competition and corruption.
Ethanol Emerges as Key Tariff Flashpoint
Among the products subject to the new tariffs, ethanol is one that has particularly mobilised the US industry. Growth Energy, an association representing US biofuel producers, championed the measure as a response to the barriers Brazil has imposed on the US product.
“The imbalance between US and Brazilian tariffs has caused losses for American ethanol producers, and the surcharges represent an important step toward recovering those losses,” said Emily Skor, CEO of Growth Energy, a US biofuels association.
Until 2023, Brazil granted tariff-free quotas for ethanol imports from the US. Today, the product is subject to an 18% tariff. However, the levy does not apply only to US ethanol. It applies to all countries from which Brazil imports the biofuel, except Mercosur members: Brazil, Argentina, Paraguay and Uruguay.
The US is the largest foreign market for Brazilian ethanol, with exports totalling 233 million litres and generating USD 145.7 million in revenue. This volume, however, represents approximately 0.7% of Brazilian production, which is geared more toward the domestic market, and about 0.5% of US consumption.
Source: Comex
Although the US is the world’s largest producer and exporter of ethanol, produced primarily from corn, production is rising in Brazil. Between 2020 and 2025, corn ethanol production grew by 400%, driven by an abundant supply of the grain and increased demand for biofuels.
Source: UNICA
Other strategic trade issues for both sides are also on the table. One involves discussions regarding access to rare earth elements, minerals essential for a wide range of applications, from mobile phone manufacturing to electric vehicle motors and X-ray machines.
Brazil holds the world’s second-largest reserves of these minerals, making it a potential strategic partner for the US. The US government has shown interest in expanding access to these materials through bilateral agreements, although negotiations have yet to progress.
According to Roberto Azevêdo, former Director-General of the World Trade Organization, this topic is likely to gain prominence in discussions regarding tariffs. “The US expects Brazil to participate more assertively in discussions on rare earth elements. A way must be found to address issues of strategic interest to the US,” he said.
In any case, Brazil is attempting to keep a channel for negotiation open with the US to limit the scope of the tariffs announced by Trump. These efforts involve private sector representatives, backed by Brazilian officials.
Companies such as Companhia Siderúrgica Nacional, Faber-Castell and JBS have already voiced their concerns by submitting comments to the Office of the US Trade Representative, the agency responsible for setting tariffs, warning of the commercial losses the measure would cause. The hope is that pressure from major corporate groups will help create room for an agreement, even as the private sector prepares to deal with the impact of the new tariffs.
