U.S. Imposes Tariffs on Brazil

The U.S. imposed 25% tariffs on all imports from Brazil, with certain exceptions, following the Section 301 investigation opened last year. The U.S. Trade Representative’s Final Notice of Action cites “certain of Brazil’s acts, policies and practices at issue in the investigation.”

• The tariffs will enter force on July 22, though goods in transit prior to July 22 have until July 29.

The details: The final notice included some Annex II exemptions, largely the same as those included in the original determination in June.

• Among the exemptions that remained from June were those for vaccines, minerals, fertilizers, auto parts and civil aircraft products.
• Meanwhile, the majority of machinery listed in Chapters 84 and 85 continue to be exempt only for use in civil aircraft, with no changes from the June determination.
• New exemptions, made following the comment period and hearing, include aluminum hydroxide; ash containing precious metals and precious metal compounds; certain pharmaceuticals and pharmaceutical ingredients; certain wood products; iron and steel waste and scrap; and pig iron, among others.
• However, USTR removed high-purity dissolving pulp and limited the scope of certain exempted chemicals and plastics to pharmaceutical applications.

The rationale: USTR emphasized that four types of products were included in Annex II:

• Raw materials that could lead to unavailability of domestic supply if subject to these tariffs
• Products that could cause economy-wide disruptions
• Products that cannot be grown or produced in sufficient quantities or at reasonable prices in the U.S. or obtained from other sources
• Products which would not contribute to the goal of eliminating the Brazilian trade practices cited in the investigation

Stacking: The additional Section 301 tariff will not apply to products subject to Section 232 action.

Brazil’s response: Brazilian President Luiz Inácio Lula da Silva announced that Brazil would pursue countermeasures through its Reciprocity Law, which could include trade restrictions on U.S. exports to Brazil or the suspension of U.S. investment or Brazilian intellectual property-related obligations to the U.S.