Brazil’s government believes the 25% rate could rise to 37.5% before the end of July, a scenario that worries exporters and adds pressure on the dollar
Starting July 22, Brazilian products exported to the United States face an additional 25% tariff, a measure announced by the Trump administration and already treated by analysts as one of the main economic risks Brazil faces in the second half of 2026. The impact does not stop at exporting companies. Exchange rates, inflation and even the pace of foreign investment in the country tend to feel the effects of a measure that, according to Brazil’s own government, could still get tougher in the coming days. Understanding how this tariff works, who it hits and what might come next helps separate confirmed facts from speculation about trade between the two countries.
How the 25% tariff got here
The tariff taking effect this week has roots in months of trade and political friction between Brasília and Washington. According to a report from the economics outlet SpaceMoney, the 25% rate on Brazilian products was announced by the American government at a delicate moment, as Brazil also heads toward presidential elections in October. The outlet describes the situation as leaving little room for error, combining an external shock with an internal electoral race, a mix that market analysts cited in the report consider unusually hard to manage at the same time.
It is worth remembering that this is not the first round of tariff tension between the two countries in this cycle. Back in 2025, the Trump administration had gone as far as announcing a tariff of up to 50% on most Brazilian goods, a decision linked, according to the White House at the time, to the criminal trial against former president Jair Bolsonaro. After negotiations, the American government exempted sectors considered strategic, including civil aircraft, energy, orange juice, pig iron, precious metals, pulp and fertilizers, according to the financial data agency Trading Economics. Brazil’s Treasury Secretary, Rogério Ceron, described the outcome of that round as less severe than initially feared. The 25% tariff now in effect is, in that sense, part of a longer dispute rather than an isolated episode.
Why the rate could climb to 37.5%
The most sensitive part of the current round is the possibility that the tariff could rise even further before the month ends. According to a report from Jornal Passaporte published on July 20, Brazil’s Planalto Palace believes the Trump administration could raise the rate from 25% to 37.5% still this month. That estimate is tied to a separate American investigation into forced labor which, according to Brazil’s Ministry of Development, Industry, Trade and Services, cited in the same report, could result in an additional 12.5% tariff for Brazil over alleged failures to ban and inspect imports linked to that kind of labor. The investigation, based on Section 301 of U.S. trade law, is not exclusive to Brazil: more than 59 countries were named in the same process, and the ministry expects the extra tariff to apply broadly across all of them, not just Brazil.
That detail matters for understanding the scale of the problem. The additional 12.5% tariff under discussion now does not stem directly from the political dispute over Bolsonaro, as happened in the 2025 episode, but from a separate technical and trade investigation into labor practices across supply chains. That means even if political tensions between the two governments ease, the tariff tied to forced labor could still follow its own path within the American trade system, on a timeline and logic distinct from what drove last year’s tariff crisis.
What is at stake for exporters, consumers and the dollar
In practical terms, a higher tariff makes Brazilian products more expensive in the American market and tends to reduce the competitiveness of sectors that rely heavily on exports to the United States, such as steel, agribusiness and higher value-added manufactured goods. Exporting companies had already been preparing for a scenario around 25%, but a jump to 37.5% would require fresh price adjustments, contract renegotiations and, in some cases, a search for alternative markets outside the United States.
There is also an indirect effect on the exchange rate. Rising uncertainty around foreign trade tends to pressure the Brazilian real, as investors reassess their appetite for risk in emerging economies facing this kind of external shock. Add to that Brazil’s election calendar, with party conventions already underway this month according to Jornal Passaporte, and it becomes easier to understand why market analysts cited by outlets like SpaceMoney treat the period between now and October as particularly sensitive for the currency and for foreign capital flows into the country.
What to watch in the coming days
For anyone following the story closely, three points deserve immediate attention. The first is whether the American government actually confirms the increase from 25% to 37.5% before the end of July, the scenario Planalto currently considers likely. The second is whether Brazil and the United States resume some form of direct bilateral negotiation, something that has already happened in earlier rounds of the tariff crisis and that has previously opened room for sector exemptions, as seen with aircraft and pulp last year. The third is how the dollar and Brazilian exporters trade on the stock market in the coming weeks, since markets tend to price in any signal from Washington quickly, whether positive or negative.
For now, what is confirmed is that the 25% tariff takes effect this week and that Brazil’s government believes an additional tariff, tied to the forced labor investigation, could push the total rate to 37.5% still in July. Anything beyond that depends on negotiations that remain open at this point, and readers whose businesses depend on trade with the United States, directly or indirectly, would do well to follow the next developments carefully rather than act on early speculation.
Sources consulted: SpaceMoney, Jornal Passaporte, Trading Economics
