Executive summary

On 15 July 2026, the United States Trade Representative (USTR) issued a Notice of Action under Section 301 of the Trade Act of 1974, as amended (Section 301), concluding its investigation into certain acts, policies and practices of Brazil. The investigation, initiated on 15 July 2025, examined issues related to digital trade and electronic payment services, unfair and preferential tariffs, anti-corruption enforcement, intellectual property protection, ethanol market access and illegal deforestation.

The USTR determined on 1 June 2026 that Brazil's acts, policies and practices under investigation are unreasonable or discriminatory and burden or restrict United States (US) commerce, and proposed imposing additional duties of 25% on all goods of Brazil, with specified exemptions. Following its review of written submissions and public hearing testimony, and at the specific direction of the President, the USTR has determined to impose the proposed 25% additional duty on certain products of Brazil, with exemptions set forth in Annexes I and II to the Notice of Action.

For more on the USTR's June 2026 actionability determination and proposed action, see EY Global Tax Alert,USTR issues Section 301 determination on Brazil, initiates Section 301 IP investigation into Vietnam; tariffs proposed and comment periods open, dated 2 June 2026.

Scope of the action

The additional 25% duty applies to all products of Brazil that are not identified in Annexes I and II to the Notice of Action. Products already subject to tariffs imposed under Section 232 of the Trade Expansion Act of 1962 are exempt from the Section 301 duty imposed by this action, preventing the stacking of Section 301 duties with Section 232 measures. Other tariff measures, including other Section 301 tariffs, will stack with the additional 25% duty under this action. Informational materials, donations and accompanied baggage are excluded.

Modifications to the proposed exemption list

The USTR retained substantially all products included in the exemption list proposed in the Notice of Determination and request for comments, with several targeted modifications. High-purity dissolving pulp was removed from the list, while certain chemical products, including cellulose, açaí preparations and phosphoaminolipids, remain exempt only when used in pharmaceutical applications.

In addition, the USTR expanded the exemption list to include certain products that it determined met one or more of the following criteria: (a) raw materials for which additional tariffs could lead to unavailability of domestic supply; (b) products that could cause economy-wide disruptions if subject to additional tariffs; (c) products that cannot be grown or produced in sufficient quantities or at reasonable prices in the United States or obtained from other sources; or (d) articles for which additional tariffs may not contribute substantially to the elimination of Brazil's actionable acts, policies and practices.

Ongoing monitoring and modification authority

The notice provides that imposition of tariffs under this action does not preclude continued negotiations with Brazil, and the USTR will continue to monitor the issues raised in the investigation. Section 307(c) of the Trade Act authorizes the USTR to modify or terminate any Section 301 action if the burden or restriction on US commerce has increased or decreased, or if the action is no longer appropriate. Actions by Brazil that reduce the burden on US commerce may support a reduction in scope or rate, while actions that increase the burden, including retaliatory duties on US goods, may support escalation. The notice also does not preclude other remedies under Section 301 or other authorities.

What this means for businesses

The 25% additional Section 301 duty will materially increase landed cost for a broad range of Brazilian-origin goods, and the 22 July 2026 effective date provides a limited window for importers to identify exposure, confirm classification and align with suppliers and customers before affected entries begin attracting the additional duty. Importers relying on the exemptions for chemical products limited to pharmaceutical applications should establish end-use substantiation and recordkeeping protocols sufficient to support duty-free treatment.

The requirement to admit Brazil-origin merchandise to a foreign trade zone under privileged foreign status limits the availability of duty deferral and downstream mitigation, and the Section 232 carve-out, while preserving existing treatment for covered steel, aluminum and other articles, will require careful documentation to avoid inadvertent application of the Section 301 duty. Cumulative rate exposure across other Section 301 and tariff regimes should be evaluated on a total landed cost basis; noting the USTR's retained authority under Section 307 to modify the action, importers should build flexibility into supplier contracts, pricing arrangements and inventory planning to accommodate potential changes in scope or rate.

Actions to consider

Actions for businesses to consider depending on their specific situations, include:

• Identify imports of Brazilian-origin merchandise by Harmonized Tariff Schedule of the United States (HTSUS) classification and confirm coverage under Annexes I and II to the Notice of Action
• Carefully evaluate supply chains with either Brazilian input or processing to determine if the finished good for importation into the US will likely be considered of Brazilian-origin and quantify duty exposure
• Model the impact of the 25% additional duty on a total landed cost basis, including cumulative exposure where Section 301 duties from this action may stack with other Section 301 or tariff measures, and confirm that products subject to Section 232 duties are classified consistent with the Section 232 exemption from this action
• Evaluate foreign trade zone inventory and admission strategies in light of the privileged foreign-status requirement for Brazilian-origin merchandise admitted on or after 22 July 2026
• Review supply chain and sourcing alternatives for products covered by the additional duty, including third-country sourcing options and mitigation strategies where available
• Review contractual arrangements with Brazilian suppliers and US customers to allocate duty exposure and monitor further USTR action