The numbers that outline the US-Brazil commerce partnership

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New Atlanticist

July 17, 2025 • 5:36 pm ET

The numbers that outline the US-Brazil commerce partnership

By
Valentina Sader and Ignacio Albe

It’s been a rocky two weeks for US-Brazil commerce diplomacy. On July 9, US President Donald Trump introduced a whopping 50 p.c tariff on Brazil, which is slated to take impact on August 1. If this measure strikes forward, then it is going to be a major enhance from the ten p.c baseline tariff introduced in early April on Trump’s “Liberation Day.” Among the international locations that obtained particular letters final week from the White House, Brazil stands out as the one one with which the United States has had a constant commerce surplus in recent times.

Then, this week, the Office of the United States Trade Representative initiated an investigation of Brazil below Section 301 of the Trade Act of 1974. This investigation seeks to find out whether or not the Brazilian authorities acted in an unreasonable or discriminatory approach towards commerce with the United States.

A chronic commerce skirmish between Washington and Brasília might lead to far-reaching penalties. US threats to impose steep tariffs might, for instance, lead Brazil to imagine that the United States is an unreliable buying and selling associate. Brazilian leaders might then search to diversify their nation’s export markets towards different buying and selling companions, together with China. This, in flip, might give Beijing extra affect within the area, doubtlessly to the detriment of the United States.

To get a fuller sense of the stakes, it’s helpful to take inventory of the place the US-Brazil financial relationship stands at current, earlier than the August 1 tariff deadline.

Looking at US commerce in items information, the United States has a commerce surplus with Brazil. But much more importantly, Brazil has the best US commerce surplus amongst rising economies, as evidenced by the 2024 commerce information amongst Group of Twenty (G20) economies.

In May, Brazilian Finance Minister Fernando Haddad met with US Treasury Secretary Scott Bessent in Los Angeles. Although the assembly was non-public, Haddad later informed reporters that one of many foremost aims in his engagement with the US authorities was to barter tariffs primarily based on the premise that the United States has traditionally run commerce surpluses with Brazil, and with South America extra broadly. Since Trump’s announcement final week, Brazilian President Luiz Inácio Lula da Silva, too, has underscored the US commerce surplus in his public feedback. 

But what lies behind these numbers? A more in-depth have a look at the construction of bilateral commerce reveals that the US commerce surplus is concentrated in a couple of high-value sectors. These are transportation tools, equipment, electronics, and chemical compounds, reflecting the United States’ comparative power in capital and technology-intensive industries. For instance, Brazil is a major purchaser of US items, significantly fertilizers, which account for almost 20 p.c of complete US fertilizer exports. These US exports—starting from plane and automotive components to stylish industrial equipment and specialised chemical merchandise—underscore the United States’ function as a provider of superior manufactured items to the Brazilian market.

By distinction, Brazilian exports to the United States are dominated by commodities and semi-processed items, similar to iron ore, oil, and agricultural merchandise. For instance, pulp of wooden and different fibrous cellulosic supplies make up virtually 40 p.c of US imports on this class. This is adopted within the listing by espresso, leather-based, iron and metal, and sugar. This dynamic highlights not solely the totally different industrial profiles of the 2 economies but additionally Brazil’s dependence on US high-tech inputs for its personal manufacturing and infrastructure wants.

One of the primary irritants for the United States within the bilateral relationship has been Brazil’s tariffs, significantly in key sectors such because the ethanol gas commerce. Brazil has lengthy maintained greater tariffs than the United States for all merchandise and all international locations. Simple averages present that Brazil’s import duties exceed these of the United States, particularly on nonagricultural items. Even when adjusted for commerce flows, Brazil’s tariffs stay greater general—although the United States protects some agricultural imports extra closely. 

On ethanol, Brazil has constantly imposed steep tariffs, almost six instances greater than US ranges, to guard the home market of sugar cane–primarily based ethanol. These tariffs might be an space for negotiation between Brazil and the United States towards commerce practices which might be seen as extra mutually helpful. 

However, in contrast to the United States, Brazil can’t simply decrease its tariffs unilaterally as a consequence of its commitments below the Mercosur customs union, which limits its flexibility on commerce coverage. At the identical time, Brazil’s excessive tariffs are a structural dynamic confronted by most non-Mercosur commerce companions, and they don’t seem to be essentially discriminatory towards US merchandise, as Brazil imposes the same charge to all international merchandise.

Finally, if Brazil loses entry to the US market due to excessive tariffs, Brazil might look to extend its commerce with international locations similar to China. Brazil’s exports are predominantly commodities, which might be redirected towards different commerce companions if Brazilian producers wrestle to compete within the US market due to excessive tariffs. Brazilian commerce with China has already risen in recent times. And given the unreliability of the US commerce partnership, Brazil would probably shift the place it will get its imports from, too, doubtlessly to the detriment of US exporters.

Valentina Sader is a deputy director on the Atlantic Council’s Adrienne Arsht Latin America Center.

Ignacio Albe is a program assistant on the Adrienne Arsht Latin America Center.

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Further studying

Image: A drone view exhibits a ship and containers on the Port of Santos, in Santos, Brazil April 3, 2025. REUTERS/Amanda Perobelli/File Photo

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