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Home | BakerHostetler

Effective July 22: USTR Imposes New Section 301 Brazil Tariffs on Imports

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Most Brazilian Imports will be subject to a new 25% Tariff

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Product exclusions provide important relief, but only for specific HTSUS classifications

Importers should expect increased CBP scrutiny on imports from Brazil

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On July 15, the USTR, in its published <a href="https://ustr.gov/node/14362" target="_blank" rel="noreferrer noopener">fact sheet</a>, imposed a 25 percent tariff on most imports from Brazil. A <a href="https://ustr.gov/sites/default/files/files/Issue_Areas/Enforcement/Section%20301/Brazil%20301%20Final%20Action%20FRN%207-15-2026%20final.pdf" target="_blank" rel="noreferrer noopener">Federal Register notice</a> was also drafted that includes annexes for modification of the HTSUS implementing the Section 301 Brazil tariffs and providing the list of HTSUS eight-digit subheadings excluded from the tariffs. CBP released its guidance in <a href="https://content.govdelivery.com/bulletins/gd/USDHSCBP-42178c8?wgt_ref=USDHSCBP_WIDGET_2" target="_blank" rel="noreferrer noopener">CSMS # 69302472</a>.

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The action goes beyond traditional tariff or market-access disputes to target a broad range of issues, including digital trade, electronic payment services, anti-corruption enforcement, intellectual property protection, ethanol market access and illegal deforestation. The decision suggests that Section 301 is being used as a broad economic policy tool in addition to addressing tariff and market-access barriers.

The USTR found actionable concerns in six principal areas:

<ol>
<li>Digital Trade and Electronic Payment Services</li>
<li>Unfair or Preferential Tariff Practices</li>
<li>Anti-Corruption Enforcement</li>
<li>Intellectual Property Protection</li>
<li>Ethanol Market Access</li>
<li>Illegal Deforestation</li>
</ol>

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<ul>
<li>General Rule – A 25 percent Section 301 tariff applies to most Brazilian-origin goods imported into the United States.</li>
<li>Effective Date – The duties become effective Wednesday, July 22.</li>
<li>FTZ Treatment – Imports covered by the action admitted into a foreign trade zone (FTZ) generally must be entered in privileged foreign status, limiting the ability to eliminate the additional duties through FTZ processing.</li>
</ul>

The Federal Register notice contains a substantial set of exclusions covering certain products from the following categories:

<ul>
<li>Pharmaceuticals</li>
<li>Medical products</li>
<li>Chemicals</li>
<li>Foods and agricultural products</li>
<li>Coffee</li>
<li>Honey</li>
<li>Seafood</li>
<li>Pig iron</li>
<li>Certain wood products</li>
<li>Artistic, informational and cultural materials</li>
</ul>

Note: Exclusion treatment is highly HTSUS-specific and requires careful review of the annexes.

The Federal Register notice indicates that USTR retains authority under Section 307 to modify the tariffs, expand or narrow exclusions, and increase or terminate measures depending on developments in Brazil and their impact on U.S. commerce.

<ol>
<li>Increased Duty and Cash Flow Exposure The 25 percent Section 301 duty will increase landed costs for most Brazilian-origin imports and may create pricing pressures, higher duty deposits and customs bond insufficiency issues.</li>
<li>Exclusion and Customs Compliance Risk Because the exclusions are highly HTSUS-specific, importers face risks associated with incorrect exclusion claims, classification disputes, country-of-origin determinations, and increased CBP scrutiny of valuation, transshipment and related-party transactions. </li>
<li>Supply Chain Disruption Risk Many products sourced from Brazil may have limited alternative suppliers. Companies dependent on Brazilian agricultural products, chemicals, forest products, pulp, paper, pig iron or other industrial inputs may face sourcing challenges and increased costs if supply chains need to be adjusted. </li>
<li>Commercial and Contractual Risk Importers should review supply agreements, purchase contracts, transfer pricing arrangements and intercompany transactions to determine responsibility for the new duties and to assess whether tariff adjustment, force majeure or renegotiation provisions apply.</li>
</ol>

For importers with significant Brazil sourcing, immediate actions to consider:

<ol>
<li>Conduct a product-level tariff exposure assessment.</li>
<li>Confirm HTSUS classification and exclusion eligibility.</li>
<li>Review country-of-origin determinations and sourcing strategies.</li>
<li>Assess customs bond sufficiency and update broker instructions.</li>
<li>Evaluate FTZ impacts and duty mitigation opportunities.</li>
<li>Review contracts, transfer pricing and tariff allocation provisions.</li>
</ol>

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