US Slaps 25% Tariffs on Brazil, Coffee Spared but Bolsonaro Politically Stung

Former US President Donald Trump's administration recently imposed new 25% tariffs on most Brazilian exports, set to take effect on July 22. This move follows a Section 301 investigation by the United States Trade Representative (USTR). The USTR cited various reasons for the tariffs, including Brazil's digital-payments system Pix, its ethanol tariffs, deforestation, and its refusal to comply with US tech platforms on content moderation.

Brazilian officials, however, offered a different perspective on the tariffs. Foreign Minister Mauro Vieira stated that American negotiators had sought a "total, unrestricted, and exclusive opening" of entire sectors of the Brazilian economy without offering reciprocal benefits. Vieira also highlighted that 76% of American imports enter Brazil tariff-free and that the United States maintains a trade surplus with Brazil. He suggested that Washington's irritation stemmed from Brazil's refusal to "bow" to demands that would have amounted to "capitulation."

The new levies apply to specific Brazilian products such as apparel, steel, sugar, and paper. Notably, staples like coffee, beef, and orange juice were excluded from these new tariffs. These tariffs are considered to be on firm legal ground, making them potentially harder to reverse than a previous 50% tariff that the Supreme Court struck down in February.

The timing of these tariffs, four months before an election, has created political difficulties for the Bolsonaro family. Senator Flavio Bolsonaro, son of former President Jair Bolsonaro, finds himself in a challenging position. He has actively lobbied against the tariffs, even acknowledging in a prior interview that earlier US tariffs were "unfair" to Brazil's productive sector, and stating that the current moment was "the worst time possible" for new tariff hikes.

Despite his efforts, a recent Genial/Quaest poll revealed that 51% of Brazilians believe Flavio Bolsonaro encouraged Washington's pressure campaign to undermine President Lula's government. Only 30% of respondents accepted his claim of lobbying against the tariffs. The poll also indicated that 42% of Brazilians were more likely to vote for Lula due to the new tariffs, while only 27% felt the same about Flavio. This situation highlights how the tariffs could politically damage the Bolsonaro family, while President Lula appears strong in the face of US pressure.

Impact of the move & effect on chemical commodities tracked by ChemAnalyst

The tariffs will raise costs for Brazilian steel, sugar, paper, and apparel exporters, squeezing margins and potentially redirecting shipments toward alternative markets like the EU and Asia, while denting Brazil's trade competitiveness. For chemical commodities tracked by ChemAnalyst, the paper tariff could pressure pulp and paper-chemical demand (like caustic soda and bleaching agents), while sugar tariffs may indirectly affect ethanol and related petrochemical feedstock pricing, given Brazil's biofuel linkage. Overall, near-term price volatility is likely across affected value chains, with downstream chemical buyers facing supply-source realignment, potential cost pass-through, and cautious sentiment until trade tensions stabilize.