Brazil and the United States reopened trade talks on August 31, with the goal of discussing a reduction of the tariffs imposed by Washington. The first meeting, held virtually, involved Foreign Minister Mauro Vieira, Minister of Development, Industry and Trade Márcio Elias Rosa, and U.S. Trade Representative Jamieson Greer.
Despite the willingness to keep talking, the initial round did not produce concrete progress. The Brazilian government is seeking lower U.S. tariffs and an expanded list of products exempt from the surcharges, while the American side is signaling openness to future talks.
Background on the tariffs and impact on exports
The additional tariffs applied since July comprise two charges:
- 25% attributed to alleged unfair trade practices;
- 12.5% related to allegations about imports of products made with forced labor.
When both apply at the same time, the surcharge can reach 37.5%. Nearly 4,000 Brazilian products are affected, representing about US$ 10.8 billion in exports to the United States.
The Brazilian government disputes the grounds for these tariffs, describing them as unilateral and incompatible with multilateral rules, and points out that they increase the trade deficit between the two countries. In response, Brasília has launched a process under the Economic Reciprocity Law, which may allow countermeasures, although this does not mean automatic retaliation.
Excluded products and affected sectors
More than 2,100 items have been removed from the list of additional tariffs. The exclusion covers products considered strategic for the U.S. economy and essential to avoid shortages. The measure prevents these products from being hit with surcharges of up to 37.5%, but does not eliminate any regular tariffs already in force.
Even with these exceptions, sectors such as footwear, machinery, wood, sugar and part of the chemical industry remain subject to the extra charges. These tariffs can reduce the competitiveness of Brazilian exporters, raise product prices and make it harder to compete with suppliers from other countries.
Priorities and limits in the negotiations
Brazil’s goal is to expand the exclusion of products from the tariffs and, where that is not possible, to seek lower rates. The strategy aims to protect integrated supply chains, which also affect costs for U.S. companies that use Brazilian inputs.
Reports indicate that the Brazilian government is expected to propose lower tariffs on capital goods and raise issues related to ethanol. In earlier talks, other topics already addressed included machinery, equipment, healthcare products and information technology items.
On the other hand, Brazil has ruled out sensitive topics such as the operation of Pix and the exploitation of critical minerals, which should not be used as bargaining chips during the negotiations. The country recognizes the strategic interest of the U.S. in these areas and wants to ensure processing, technology and value creation within its national territory.
Consequences for trade and next steps
As long as the tariffs remain in force, Brazilian exporters will face reduced competitiveness in the U.S. market. U.S. importers will have to decide between absorbing the costs, passing them on to consumers or seeking alternative suppliers. This effect is felt most in lower-margin manufactured goods such as machinery, furniture, footwear, chemicals and processed wood.
Contracts already signed may face delays or revisions, and part of the goods may be diverted to other markets. For Brazil, lower exports to the U.S. could affect dollar inflows, industrial output and employment in sectors dependent on foreign trade, as well as create uncertainty for future investments.
The resumption of dialogue minimizes the risk of an immediate breakdown, but does not yet guarantee a deal. New technical meetings are scheduled for the coming weeks, along with the return of ministerial-level meetings, with the aim of assessing whether the United States will agree to expand the exceptions and lower tariffs or whether the stalemate will persist.
