US Trade Deal with Brazil 8-2-25

AI Overview

Trade relations between the US and Brazil in July 2025 are experiencing significant strain, marked by:

·       Section 301 investigation: The US Trade Representative (USTR) initiated a Section 301 investigation into Brazil's trade practices on July 15, 2025.

·       Focus areas of the investigation: The investigation targets several areas, including: digital trade and electronic payment services, Brazil's preferential tariffs benefiting other trade partners, anti-corruption enforcement, intellectual property protection, ethanol market access, and illegal deforestation.

·       Tariff threats and deadlines: The USTR's announcement of the investigation follows President Donald Trump's stated intention to impose 50% tariffs on Brazilian imports, scheduled to take effect on August 1, 2025.

·       Brazil's response: Brazil's Finance Minister Fernando Haddad has stated that Brazil will continue negotiating with the US to potentially avoid the tariffs, though he acknowledged the possibility of the tariffs taking effect. Brazil's government is also considering contingency plans, including redirecting exports to other markets.

·       Concerns regarding tariffs: Brazilian officials argue the tariffs are unjustified, noting that the US has maintained a trade surplus with Brazil for 18 years.  

Impact and Outlook:

·       The uncertainty surrounding the tariffs and the USTR investigation is impacting trade relations and creating economic concerns for Brazil.

·       The situation could lead to disruptions in sectors like agriculture and energy, potentially impacting Brazil's GDP.

·       The USTR has requested public comments and will hold a public hearing in September 2025 as part of the Section 301 investigation. 

Existing agreements:

·       The Agreement on Trade and Economic Cooperation (ATEC), signed in 2011, provides a framework for trade and investment issues between the two nations.

·       In 2020, a Protocol Relating to Trade Rules and Transparency, with annexes on Trade Facilitation and Customs Administration, Good Regulatory Practices, and Anti-Corruption, was added to the ATEC, entering into force in 2022.

·       The Brazil-U.S. Business Council (BUSBC) is urging the US and Brazilian governments to continue engaging through existing bilateral mechanisms and to explore opportunities for strengthening trade relations, including potential expansion of the ATEC Protocol. 

The overall picture in July 2025 points to a strained US-Brazil trade relationship, with the potential for further escalation if a resolution to the tariff issue isn't reached before the August 1st deadline. 

US trade agreements with Brazil July 2025 AI overview

US trade agreements and relations with Brazil: July 2025 AI overview

Key developments

·       The U.S. and Brazil do not have a formal Free Trade Agreement (FTA) but their trade relationship is governed by the 2011 Agreement on Trade and Economic Cooperation (ATEC), which establishes a framework for dialogue and cooperation on bilateral trade and investment issues.

·       In 2020, the ATEC was expanded with the Protocol Relating to Trade Rules and Transparency, which came into effect in 2022 and addresses trade facilitation, customs administration, good regulatory practices, and anti-corruption measures.

·       However, in July 2025, U.S.-Brazil trade relations face significant strain due to the U.S.'s announced 50% tariffs on Brazilian imports, set to take effect on August 1st.

·       In response to the U.S. tariff threat, the U.S. Trade Representative (USTR) initiated a Section 301 investigation into Brazil's trade practices, focusing on areas such as digital trade, preferential tariffs, intellectual property protection, and ethanol market access, according to the United States Trade Representative (.gov).

·       Brazil's Finance Minister, Fernando Haddad, acknowledged the possibility of failing to reach a trade deal with the U.S. before the August 1st tariff deadline but affirmed Brazil's commitment to negotiating and indicated the country has contingency plans to redirect exports if necessary.

·       Brazil has indicated it will retaliate with its own tariffs if the U.S. implements its proposed tariffs. 

Trade dynamics

·       The U.S. holds a trade surplus with Brazil, primarily driven by exports in sectors like transportation equipment, machinery, electronics, and chemicals.

·       Brazil's exports to the U.S. are heavily concentrated in raw materials such as wood products, stone, coffee, and meat.

·       Booking volumes for Brazil-to-U.S. shipments show signs of cooling, potentially reflecting anticipation of the upcoming tariffs or normal seasonal shifts.

·       U.S. exports to Brazil have decreased in 2025, with plastics making up a large portion of the export mix. 

Economic impact and concerns

·       The proposed tariffs pose risks to Brazil's export revenues, particularly for its agriculture and manufacturing sectors.

·       Brazil's currency, the real, has faced pressure due to the tariff threats and domestic fiscal uncertainties.

·       Foreign investors have been withdrawing from Brazilian stocks, contributing to market volatility. 

Looking ahead

·       Negotiations between the U.S. and Brazil are ongoing, but the outcome remains uncertain.

·       The Section 301 investigation will involve a public hearing and comment period, with potential for responsive actions by the U.S. based on the findings, according to the Federal Register (.gov).

·       The situation highlights a broader trend of increased trade protectionism and uncertainty in the global trade system. 

https://www.google.com/search?q=us+trade+agreements+with+Brazil+july+2025

Brazil is a founding member of BRICS and remains a member in 2025. In fact, Brazil holds the rotating presidency of BRICS for 2025, according to Portal Gov.br. 

BRICS is a group of emerging economies that aims to increase their influence in the global order. It was originally composed of Brazil, Russia, India, and China, with South Africa joining in 2010. In 2024 and 2025, BRICS expanded its membership, according to Geopolitical Economy Report. 

https://www.google.com/search?q=is+brazil+a+member+of+brics+in+2025

Brazil does charge tariffs on imports. These tariffs, also known as import duties, vary depending on the product and can range from 10% to 35% in most cases, according to Brazil's trade guidelines. 

Folgers does source coffee beans from Brazil. Folgers is a brand owned by The J.M. Smucker Company, which sources coffee beans from various regions globally, including Brazil and Vietnam. Specifically, Folgers uses a mix of Arabica and Robusta beans. While they don't specify the exact locations within Brazil, they highlight their commitment to sustainable coffee practices. 

https://www.google.com/search?q=does+folgers+buy+coffee+beans+from+brazil

Comments

Brazil nominal GDP for 2025 is estimated at $2.13 trillion. Nominal per capita GDP is estimated at $10,000/yr 

Population is estimated at 212.8 million. In 2024, Brazil’s Trade Surplus with the US was $7.4 billion. In 2024, Brazil's imports from the United States totaled US $40.65 billion, In 2024, Brazil’s exports to the US totaled $40.92 billion. In 2025, the US threatened to impose a 50% tariff on goods imported from Brazil, effective August 1st.

Brazil was the founding member of the BRICS Trading Group that included Brazil Russia, India, China and S Africa. This complicates things for Brazil and India and is likely to be a problem for Brazil and India to make a Deal with the US.

Norb Leahy, Dunwoody GA Tea Party Leader