USTR Finds Brazil's Trade Practices 'Unreasonable,' Moves to Propose Tariffs Under Section 301

The U.S. Trade Representative (USTR) has determined that Brazil's trade practices are 'unreasonable' under Section 301, moving the case from investigation to a phase where tariffs can be imposed.

This action gains importance as recent court rulings have struck down other U.S. tariff authorities, making Section 301 the administration's primary tool for trade enforcement.

The dispute focuses on digital trade, ethanol market access, and intellectual property, potentially impacting a significant portion of Brazil's nearly $42 billion in annual exports to the U.S.

The U.S. has officially escalated its trade dispute with Brazil, signaling that tariffs could be on the horizon. The United States Trade Representative (USTR) announced it found Brazil's trade practices "unreasonable" and is moving to the next phase: considering specific remedies like tariffs. This marks a significant shift from fact-finding to action.

This development is crucial because of the legal context surrounding U.S. trade policy. Recently, U.S. courts invalidated two other major tariff tools the administration had been using: tariffs based on the International Emergency Economic Powers Act (IEEPA) were struck down by the Supreme Court, and a separate global tariff under Section 122 was blocked by the trade court. With these options off the table, the administration has pivoted to Section 301, a more legally resilient but procedurally complex law, making this Brazil case a key test of its current trade strategy.

The core of the U.S. complaint against Brazil centers on three main areas. First is digital trade, where the U.S. raises concerns about Brazil's central bank-operated payment system, PIX, and the legal environment for American tech platforms, which it argues create an uneven playing field. Second involves market access for ethanol; U.S. producers have long objected to Brazil's 18% tariff on American ethanol, which has caused U.S. exports to plummet. Third, ongoing issues with intellectual property (IP) protection and other barriers remain a point of contention.

So, what's at stake financially? The U.S. and Brazil share a substantial trade relationship, valued at over $94 billion in 2025. Brazil's exports to the U.S. alone were about $41.6 billion. While the exact scope of potential tariffs is unknown, earlier estimates suggested that a significant action could target nearly $15 billion of these exports. A 10% tariff on this amount would generate about $1.5 billion in revenue, while a steeper 25% tariff could bring in nearly $3.7 billion. The upcoming hearing on June 6 will be critical, as it will likely reveal the specific products and tariff rates the U.S. is considering.

Section 301: A U.S. trade law that allows the USTR to investigate and retaliate against foreign trade practices that are deemed unfair, discriminatory, or restrictive to U.S. commerce.
USTR (United States Trade Representative): The U.S. government agency responsible for developing and conducting the nation's trade policy.
IEEPA (International Emergency Economic Powers Act): A law that gives the U.S. President the authority to regulate commerce in response to a declared national emergency.

USTR Finds Brazil's Trade Practices 'Unreasonable,' Moves to Propose Tariffs Under Section 301

The U.S. Trade Representative (USTR) has determined that Brazil's trade practices are 'unreasonable' under Section 301, moving the case from investigation to a phase where tariffs can be imposed.

This action gains importance as recent court rulings have struck down other U.S. tariff authorities, making Section 301 the administration's primary tool for trade enforcement.

The dispute focuses on digital trade, ethanol market access, and intellectual property, potentially impacting a significant portion of Brazil's nearly $42 billion in annual exports to the U.S.

Section 301: A U.S. trade law that allows the USTR to investigate and retaliate against foreign trade practices that are deemed unfair, discriminatory, or restrictive to U.S. commerce.
USTR (United States Trade Representative): The U.S. government agency responsible for developing and conducting the nation's trade policy.
IEEPA (International Emergency Economic Powers Act): A law that gives the U.S. President the authority to regulate commerce in response to a declared national emergency.