President Donald Trump has generally tried to justify his tariffs by asserting that they can help narrow the trade deficits the U.S. runs with most of the world. That argument is based on the fact that nearly all countries sell Americans more than they buy from the United States.
But the case of Brazil is different.
The U.S. announced a 25% tariff on Brazilian goods on July 15, 2026. A second measure, introduced eight days later, added another 12.5 percentage points on much of that trade. Both took effect on July 24, bringing the total to 37.5% where they overlap.
Here the imbalance goes the other way. U.S. exports to South America’s biggest economy have exceeded its imports for years. In 2025, American companies exported about US$54 billion in goods to Brazil, mainly refined fuel, aircraft parts, industrial machinery, fertilizer and electronics. They imported about $40 billion in Brazilian goods, mostly crude oil, semi-finished steel, coffee, orange juice, wood pulp, beef and passenger jets built by Embraer, the world’s third-largest aircraft maker.
In total, the U.S. ran a $14 billion trade surplus with Brazil.
Trump is discouraging Brazilian imports anyway. And this is his second attempt to do so. He announced a 50% tariff on Brazilian goods in July 2025, which the U.S. Supreme Court struck down in February 2026, along with most of his other tariffs.
As scholars of international political economy who study U.S. trade policy and Brazil’s trade negotiations, we are researching why the U.S. imposed tariffs on Brazil despite Brazil’s trade deficit with the U.S., and how Brazil is responding.
In our view, this dispute was never really about trade. It began with Trump’s objections to a criminal case against former President Jair Bolsonaro – his political ally in Brazil. Today, with Brazil on the verge of a presidential election, standing up to Washington could prove a winning argument for the incumbent, President Luiz Inácio Lula da Silva.
Making many exceptions
The administration spared 471 Brazilian products from the tariffs, among them coffee, wood and wood products, crude oil, natural gas, fertilizer, orange juice and pig iron. Most of the exempted goods are commodities and industrial inputs that American buyers would have trouble replacing quickly.
What stayed on the list is mostly manufactured: shoes, clothing, furniture, machinery and ethanol, the sugarcane-based motor fuel. Brazilian footwear and apparel, which compete on price in American stores, received no exemption at all.
While talks have deadlocked, in-person meetings are scheduled for Sept. 30 on the sidelines of a Group of 20 trade meeting in Wisconsin that will take place shortly before Brazilians go to the polls.
Pablo Porciuncula/AFP via Getty Images
Landing on American companies
Goods worth a total of $94 billion moved between the two countries in 2025, far below the volume of U.S. trade with Canada, Mexico, China or the European Union. But Brazil ranks among the 17 biggest trading partners of the United States in terms of the flow of goods, ahead of Spain, Australia and Saudi Arabia.
The goods still facing tariffs are largely industrial inputs rather than shelf-ready products. So the cost of Trump’s tariffs is mainly landing on U.S. companies, which are the ones that pay when the goods arrive at the border.
Trump’s ability to use tariffs to push Brazil to change policies his administration objects to is limited because Washington’s trade-related leverage over Brazil has been shrinking for years. China surpassed the U.S. as Brazil’s largest trading partner in 2009 and has widened its lead since then. In 2025, China bought roughly 29% of Brazil’s exports and the United States only 11%.
The erosion of Brazil’s reliance on the U.S. market limits what Trump’s tariffs can accomplish. It helps explain why, when Washington slapped tariffs on imports from the whole world in 2025, Brazilian exporters could largely sell their wares elsewhere.
The pressure may be self-defeating. In August 2026, White House adviser Peter Navarro and Treasury Secretary Scott Bessent published a report accusing about 40 economies, including Brazil, of helping China route goods around U.S. tariffs. Yet the more Washington restricts Brazilian access to the American market, the more attractive China becomes as a buyer of what Brazil’s selling.
Al Drago/Getty Images)
Why Trump is targeting Brazil
Trump didn’t emphasize trade-related concerns when he announced the 50% tariff in July 2025. Instead, he criticized the criminal prosecution of former President Jair Bolsonaro, a Trump ally, which Trump has called a “witch hunt.” The U.S. government also accused Brazil’s Supreme Court of censoring American social media platforms within the South American country’s borders.
Bolsonaro, who once aligned Brasília with Washington, cannot run again because he is serving a 27-year sentence for plotting a coup. But his son, Sen. Flávio Bolsonaro, is on the ballot.
Flávio Bolsonaro says he urged Trump not to impose tariffs. But his brother Eduardo, a Brazilian congressman, spent months in Washington lobbying the Trump administration to punish Brazilian officials over their father’s prosecution and welcomed the tariffs.
Even so, poll results point to a statistical dead heat between Flávio Bolsonaro and Lula. Another 13 minor candidates are also seeking the presidency.
Answering Trump’s tariffs
After the U.S. Supreme Court struck down the Trump administration’s first round of tariffs, it tried using a different legal tool: Section 301 of the Trade Act of 1974. That law lets a president retaliate against foreign practices it deems unfair.
In the second trade investigation, the U.S. placed additional tariffs on Brazil and 59 other countries, which the Trump administration said had to do with the alleged use of forced labor in their supply chains.
Brazil initially lacked the means to respond to either round of U.S. tariffs.
But in 2025, Brazil’s Congress passed a new “economic reciprocity” law that borrows Section 301’s logic. It allows the executive branch to determine whether a measure taken by a foreign country harms Brazilian competitiveness. If it does, the government may impose tariffs as countermeasures or suspend intellectual property obligations.
Brazil opened its first case under that law on Aug. 13, 2026. It’s against the United States.
To be sure, launching a case does not guarantee that Brazil will retaliate. The procedure runs through seven administrative stages that together can take more than six months.
Brazil is also working on a slower, multilateral strategy. It has taken the dispute to the World Trade Organization, the Geneva-based body that writes and enforces global trade rules. The first stage of any WTO case is a round of formal talks called consultations, which the two governments are required to attempt before the dispute can go further.
Because the consultations with Washington ended in August without agreement, Brazil says it will request a formal WTO dispute panel, which would rule on whether the U.S. tariffs break the organization’s rules.
China has also joined that complaint, with India, Indonesia, South Africa, Colombia and Egypt signing on as interested parties.
Evaristo Sa/AFP via Getty Image
Why Brazil may not hit back
We consider any official acts of retaliation against the U.S. by Brazil to be unlikely, due to the inherent power imbalance.
The U.S. consumer market is much larger than Brazil’s, and there are other asymmetries. The dollar-based financial system and Washington’s control over critical technologies give the United States ways to escalate trade battles that Brazil can’t counter. A trade fight could migrate to areas where Brazil has no way to respond in kind.
Canada’s situation shows what the alternative looks like. After its trade talks with Washington collapsed, Ottawa answered U.S. tariffs in August 2026 with tariffs of up to 50% on hundreds of U.S. goods, deepening a trade war between two countries that had been among the world’s closest trading partners. Canada sends roughly three-quarters of its exports to the United States, which gives its retaliation real bite – even if those tariffs may jeopardize its own economy. Brazil lacks that leverage.
Even if Brazil never retaliates, the steps it’s taking in that direction let the government show voters that it is doing something.
Lula’s approval ratings, which had been falling, recovered after he made national sovereignty the heart of his response to Washington. His officials say they don’t expect a deal with Washington to lift the tariffs before the Oct. 4 elections.
And whether Brazil ever activates its version of Section 301 to address what it sees as unfair trade practices may depend on who wins Brazil’s presidential election.