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US Opens Trade Probe, Threatens Brazil with 50% Tariffs Amid Trade and Political Disputes

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US 17 Jul 2025 04:33 PM IST steelorbis

US Opens Trade Probe, Threatens Brazil with 50% Tariffs Amid Trade and Political Disputes

The United States has launched a formal Section 301 investigation into Brazil’s trade practices, signaling rising tensions between the two countries. The probe targets digital trade restrictions, Brazil’s electronic payment system (Pix), and potential non-tariff barriers in the steel and aluminum sectors.

Simultaneously, the US has threatened to impose up to 50% tariffs on a wide range of Brazilian imports beginning August 1, unless concerns are addressed. The measures could significantly disrupt bilateral trade and affect key Brazilian exports.

At the heart of the probe are allegations that Brazil’s trade framework favours local players—particularly in tech and finance—while imposing hidden barriers that disadvantage American companies. Additionally, the U.S. claims Brazil’s steel industry benefits from protectionist practices that distort market access.

Observers note that the move comes amid political friction over Brazil’s domestic affairs, including U.S. concerns regarding legal action against former Brazilian President Jair Bolsonaro. Some analysts believe the tariff threat is also politically motivated, aimed at pressuring President Lula’s administration.

In response, Brazil has proposed formal trade talks with the U.S., seeking to negotiate terms that would avoid punitive measures. The proposal includes discussions around steel, aluminum, digital regulation, and payment systems.

If implemented, the tariffs could impact billions in trade and heighten diplomatic strain. Brazil has warned that such measures would hurt both economies and has urged the U.S. to return to the negotiating table.

As the August deadline approaches, the global market watches closely. The outcome could redefine U.S.-Brazil trade ties and set new precedents for politically charged trade enforcement.