Most Brazilian exports to the United States will be subject to a 50% tariff from 6 August, following US President Donald Trump’s announcement last week of the dramatic tax hike in response to what he called a “witch hunt” against his ally, former Brazilian president Jair Bolsonaro.
The 40% increase on top of the previous 10% baseline rate gives Brazil one of the highest levies against any economy in the US trade war. The new tariff kicks in just as Brazil’s Supreme Court has placed Bolsonaro under house arrest, in the latest development in his trial over allegations he plotted a coup to overturn Brazil’s 2022 election results.
Despite the high rate, the impact of the new tariff is softened by extensive exemptions covering major Brazilian export categories, including civil aircraft and parts, fertilisers, precious metals, pulp and paper products, and energy and mineral exports such as crude oil, natural gas and iron ore. Some agricultural goods such as orange juice and Brazil nuts are also exempt.
Economic analysts estimate the average effective tariff rate will actually hover around 30.8%, thanks to the exclusions.
However, other major exports are fully subject to the heightened duties, including beef, tallow, ethanol and coffee. The US is Brazil’s largest overseas coffee customer, importing 23% of Brazil’s production in 2024.
Brazil’s reaction has so far focused on reducing the impact on domestic businesses – 99% of which are small and medium-sized enterprises – rather than following in the footsteps of some other countries with retaliatory tariffs. Officials have expressed openness to negotiations, and the government is preparing targeted relief measures such as public credit lines for affected sectors.
At the same time, Brazilian producers looking to fill the gap from lost US business may find new markets opening up. China, for example, has authorised more than 180 new Brazilian coffee companies to export to the Chinese market. The unusually high number of licences is expected to help meet China’s steadily growing caffeine habit.