USTR Launches Section 301 Investigation for Brazil; Comments Due Aug. 18

• Restricting the ability of online platforms to make money through fines, suspensions and increased compliance costs, after judicial action on speech on those platforms.
• Lower tariffs for $4.6 billion worth of Mexican imports across thousands of tariff lines, including cars and car parts, while U.S. cars and car parts were subject to 14% to 35% MFN (most favored nation) rates.
• Lower tariffs for $1 billion worth of Indian imports, across hundreds of tariff lines, including ag, minerals, chemicals and machinery. The Federal Register notice complained that in 2024, Brazil had a 12.2% average MFN applied rate, where the U.S. had a 3.3% MFN.
• Lack of enforcement of anti-corruption measures.
• Inadequate intellectual property protection.
• Illegal deforestation, which both sends illegally harvested timber and gives an unfair competitive advantage to agricultural exports grown or raised on that cleared land.
• An 18% tariff on imported ethanol, after about seven years of duty-free trade in the sector, and a tariff rate quota system from 2017 to 2020; USTR estimated the lost sales at $708 million annually.

The Section 301 investigation was announced after 7 p.m. July 15.

"At President Trump’s direction, I am launching a Section 301 investigation into Brazil’s attacks on American social media companies as well as other unfair trading practices that harm American companies, workers, farmers, and technology innovators," USTR Jamieson Greer said in the press release announcing the investigation.

The docket for comments will open July 17, and comments and requests to appear at the Sept. 3 public hearing are due by Aug. 18.

Parties are asked to say whether "Brazil’s acts, policies, and practices identified in this initiation notice burden or restrict U.S. commerce, and if so, the nature and level of the burden or restriction. This would include economic assessments of the burden or restriction on U.S. commerce." They would also like to know what action stakeholders suggest the U.S. take in response, including tariff and non-tariff actions.

The Computer and Communications Industry Association responded to the news, welcoming a deliberative investigation. "Burdensome tariff regimes for U.S. exports to the country, and proposals for discriminatory platform regulations and network usage fees all threaten U.S. competitiveness. This is particularly so in such a significant market with notable growth potential for continued investments in the digital economy," CCIA wrote.

The largest ethanol trade association, Growth Energy, wrote, "Today’s action by USTR is a sign that the old days of Brazil enjoying unfettered access to the U.S. ethanol market while unfairly putting a tariff on American ethanol imports could soon come to an end. On behalf of U.S. ethanol producers across the heartland, we say it’s about time."

Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, noted that the earlier threat of 50% tariffs on Brazilian exports used the International Emergency Economic Powers Act, which is being challenged in court. "If it falls, tariffs can still be imposed under Section 301. Worse, in my view, Section 301 tariffs can stick for a very long time," she wrote on LinkedIn.

In May, the top Brazilian exports to the U.S. were crude oil (almost $600 million), semi-finished iron (over $200 million), and coffee (nearly $200 million).

In response to the 50% threat, Brazil granted the government the authority to suspend commercial concessions, restrict investments and review IP obligations if a foreign country is acting out of protectionism, S&P Global reported. The new retaliation rules were published on July 15 in the Diário Oficial da União, the country's official gazette, and come amid escalating trade tensions with the U.S.