USTR Proposes 25% Tariff on Brazil, Citing Ethanol and Trade Barriers

Key Takeaways

The U.S. Trade Representative plans to impose a 25% tariff on many Brazilian goods due to trade practice concerns.
Key exemptions from the tariff include coffee, orange juice, cocoa, and certain beef cuts.
The proposal follows a year-long investigation into Brazil’s trade practices, including ethanol access and deforestation issues.

Proposed Tariff on Brazilian Goods

The U.S. Trade Representative (USTR) is proposing a 25% tariff on a broad range of Brazilian products after a year-long investigation into the country’s trade practices. While most Brazilian goods would be subject to this new duty, specific items including coffee, orange juice, cocoa, and certain beef cuts would be exempt.

The USTR’s investigation scrutinized various elements of Brazil’s trade policies such as market access for ethanol, issues of deforestation, preferential tariffs, and enforcement of anti-corruption laws. The findings indicated that some of Brazil’s practices are “actionable” under Section 301 of the Trade Act, which allows for retaliation through tariffs against countries engaging in unfair trade practices.

According to a USTR announcement, the agency is open to receiving written comments regarding the proposal until July 1 and plans to hold a public hearing on July 6. USTR Jamieson Greer noted that while dialogues with Brazilian President Luiz Inácio Lula da Silva have been constructive over the past year, significant differences remain concerning the issues identified in the investigation.

One major point in the investigation was the access to the U.S. ethanol market. USTR General Counsel Jennifer Thornton labeled the current 18% tariffs Brazil imposes on U.S. ethanol as “unreasonable,” citing a significant decline in U.S. ethanol exports to Brazil—from $761 million in 2018 to just $96 million in 2025. Brazil implemented a tariff-rate quota on ethanol imports in 2017 and expanded it in 2019, but the quota expired in 2020, leading to high tariffs that affected U.S. exporters.

In response, Brazilian Minister of Foreign Affairs Mauro Vieira argued that the 18% tariffs apply universally and comply with World Trade Organization obligations since they do not discriminate against U.S. imports.

U.S. industry representatives have echoed USTR’s concerns. Geoff Cooper, President of the Renewable Fuels Association, stated that Brazil’s ethanol policies are not only unreasonable but have also caused financial harm to U.S. producers. He emphasized the need for equitable trade relationships. Similarly, Growth Energy CEO Emily Skor expressed appreciation for USTR’s actions and encouraged further measures to ensure fairness in the ethanol market.

Another area of concern for USTR is Brazil’s handling of deforestation. Thornton criticized Brazil for its failure to enforce laws against illegal deforestation, suggesting that over 90% of deforestation in Brazil since 2001 is linked to agricultural expansion, particularly cattle ranching, which accounted for 78% of such deforestation between 2018 and 2022.

However, Vieira defended Brazil’s trade surplus with the U.S., adamantly stating that over 70% of agricultural exports, including coffee and orange juice, are not associated with deforestation. He emphasized that Brazil’s agricultural practices should not be unfairly linked to deforestation issues.

The USTR’s proposed tariffs and the ensuing discussions signal a potentially contentious chapter in U.S.-Brazil trade relations as both nations navigate complex trade practices and environmental concerns. Further updates are anticipated leading up to the public hearing and subsequent evaluations of the proposal.

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