On July 15, 2026, the Office of the United States Trade Representative (USTR) issued its final decision in the Section 301 investigation into Brazil. The decision confirmed a new 25 percent tariff on a range of Brazilian products while expanding the exemptions included in the preliminary proposal released in June.

To assess the decision’s implications, the Brazil Program combined its analysis with conversations held in recent days with policymakers, industry representatives, and other stakeholders in Washington.

Below are the Program’s main takeaways, followed by a Q&A with economist Monica de Bolle on the significance of the final exemption list and what it reveals about the tariffs’ practical reach.

Brazil Program: Main Takeaways 

• For Washington, negotiation meant concessions from Brazil. For Brasília, it required a reciprocal and legally viable bargain. Brazilian negotiators maintained that the government could not unilaterally commit to changes that would violate World Trade Organization rules or domestic law.

• Roughly two-thirds of the value of Brazilian goods exported to the United States appears to fall outside the new 25 percent Section 301 tariff, either because of exemptions or because the products are already covered by other trade regimes, including Section 232.

• Washington exempted products whose taxation could raise prices, create shortages, or disrupt U.S. supply chains. The final list is effectively a map of where American consumers and industries depend on Brazilian inputs.

• Companies engaged with the USTR directly for product-specific exclusions. The process became highly fragmented, centered on protecting individual supply chains rather than reaching a broader bilateral settlement.

• The Brazilian government has announced plans to invoke its Reciprocity Law and challenge the measure at the WTO. Neither route is likely to produce an immediate result, although both may intensify the political dispute.

• Public opinion and electoral considerations will shape the next steps on both sides. With Brazil’s presidential election and the U.S. midterms approaching, there is little political room for a comprehensive agreement. Negotiations are likely to remain narrow and product-specific. 

Expert Q&A: Monica de Bolle, economist, member of the Inter-American Dialogue and senior fellow at the Peterson Institute for International Economics  

You estimated that roughly 60 cents of every dollar of US imports from Brazil would already be exempt from the new tariff, taking into account the preliminary list of exemptions, Section 232, and other special trade regimes. What does this figure reveal about the actual scope of the measure?

Monica de Bolle (MB): Based on the preliminary list of exemptions released in June, we calculated the share of Brazilian exports that would be excluded from the tariffs. That calculation showed that around 60 percent of Brazilian exports would be exempt. In other words, 60 cents of every dollar exported by Brazil to the United States would not be subject to the tariffs under the preliminary list. 

However, following the updated list announced by the USTR, that figure rose from 60 to almost 66 percent of Brazilian exports to the United States that would not be subject to the 25 percent tariff. Thus, 66 cents of every dollar that Brazil exports to the United States would remain outside the tariff. 

This is quite significant because it means that the general headline suggesting that all Brazilian goods will now be subject to a 25 percent tariff in the United States is simply not accurate. In fact, nearly two-thirds of Brazilian exports remain outside the tariff. 

This also reveals the limitations the Trump administration faces in reinstating or re-establishing tariffs totaling nearly 50 percent, as had been imposed on Brazil last year. The attempt to reimpose the tariffs that were struck down by the US Supreme Court is therefore facing the difficulties and constraints that we had already anticipated. Why? 

Because Brazil is an important trading partner of the United States and supplies several key products to the US market. Brazil also plays a prominent role in the export of some of these products. Put simply, the United States does not have the capacity to impose tariffs on these exports as broadly as it might like, because doing so would affect both US consumers and US companies and their supply chains. 

So, what this list of exemptions reveals, even more than the tariff itself, is that the Trump administration wants to maintain tariffs as a central feature of its trade policy and continue pursuing protectionist measures. However, rhetoric is much stronger than reality in practice. In practice, the administration cannot go as far as its rhetoric would suggest. 

Why might the final list of exemptions be more important than the 25 percent tariff rate itself? Which products or sectors should be watched most closely, and how much room is there to expand those exemptions?

MB: The final list of exemptions ends up being even more important than the 25 percent tariff rate itself because it ultimately reveals the limitations the Trump administration faces in imposing tariffs on countries whose products are critical to the US market, as is the case with Brazil. That would be my first observation. 

As for the United States’ ability to further expand these exemptions, we have already seen an expansion in the final list compared to the preliminary list released in June. Pig iron, for example—which is also not covered by the Section 232 measures—has now been excluded from the tariff, whereas it was not exempt under the June list. Organic honey and several other agricultural products that were not included in the preliminary list have also been added to the final list of exemptions. That is why the share of Brazilian exports exempt from the tariff increased from 60 to 66 percent. 

At this point, however, I believe the scope for further expanding the list of exemptions is relatively limited. Negotiations with the United States are still ongoing, and the USTR announcement itself left the door open for future discussions. Even so, I think there is much less room for significant changes. There may still be sector-specific negotiations, with one industry or another obtaining an additional exemption, but the overall impact is likely to be limited given that roughly two-thirds of Brazilian exports to the United States are already outside the scope of the tariff. 

Ultimately, this means that while it is certainly not positive for part of Brazil’s exports to be affected by the tariff, the economic impact is likely to be relatively limited. Since the majority of exports will remain exempt, Brazil is broadly in a similar position to the one it faced last year, when the 50 percent tariffs were announced. As we saw then, those tariffs ultimately did not have major repercussions for the Brazilian economy, and I expect a similar outcome this time.