With eight days left on a statutory deadline, USTR wraps up hearings on a proposed 25 percent tariff on Brazilian goods as a Bolsonaro pleads for delay, Lula threatens retaliation, and US importers brace for a July 15 decision
By the US Trade Desk, Peacock Tariff Consulting
WASHINGTON, July 7, 2026
The clock on the next major front in American trade policy now reads eight days. The Office of the United States Trade Representative concludes two days of public hearings this morning at the US International Trade Commission on its proposed 25 percent tariff on imports from Brazil, an action the agency must finalize, modify, or abandon by a statutory deadline of July 15. By the time the last witness leaves the hearing room at 500 E Street SW, the fate of one of the largest bilateral tariff actions of 2026 will rest with a small team of USTR officials working against the hardest kind of deadline in trade law: one written into statute.
The hearing, which opened Monday at 10:00 am and continues today, is the final procedural step before the United States decides whether to impose the sweeping duty on Brazilian goods. According to USTR, the proceeding is on the record but closed to cameras and livestreams, with a full transcript to be posted on ustr.gov after the hearing concludes. Written comments closed July 1, and in a departure from prior Section 301 proceedings, USTR has not indicated it will accept post-hearing rebuttal comments, according to an analysis by the law firm Covington and Burling. That makes this week’s testimony the last word American businesses get before Washington acts.
The stakes were dramatized on day one by an extraordinary witness. Brazilian Senator Flavio Bolsonaro, the main opposition candidate challenging President Luiz Inacio Lula da Silva in Brazil’s October general election, traveled to Washington to urge the Trump administration to suspend the proposed tariff for 180 days, until after Brazilian voters go to the polls, according to Reuters. A foreign presidential candidate personally lobbying a US trade agency to delay a tariff on his own country, in the middle of his own campaign, is a scene without precedent in the nearly 52 year history of Section 301.
A deadline written into law
The proceeding traces to July 15, 2025, exactly one year before the current deadline, when USTR formally initiated a Section 301 investigation into Brazilian trade practices at President Trump’s direction. The investigation covered six areas: discriminatory practices affecting US competitiveness in digital trade and electronic payment services, including Brazil’s central bank instant payment system known as Pix; the granting of lower, preferential tariff rates to other countries, including under trade agreements with India and Mexico; weak anti-corruption enforcement and lack of transparency; denial of adequate and effective intellectual property protections; poor market access for US ethanol exports, a long-standing bilateral irritant; and failure to adequately address illegal deforestation, which USTR says confers an unfair competitive advantage on Brazilian agricultural producers.
On June 1, 2026, USTR announced its determination that Brazil’s acts, policies, and practices in all six areas are unreasonable or discriminatory and burden or restrict US commerce, making them actionable under Section 301 of the Trade Act of 1974. As a responsive action, the agency proposed a 25 percent additional tariff on all goods of Brazil not explicitly exempted, publishing the determination in the Federal Register on June 4.
Under the statute, USTR must determine what action to take within 12 months of initiating an investigation. Because the Brazil investigation was initiated on July 15, 2025, that clock runs out next Wednesday. The agency compressed the entire comment and hearing process into roughly six weeks to beat it, consistent with what Covington describes as the administration’s stated intent to conduct this and other Section 301 proceedings on an accelerated timeframe. Hearing requests were due June 22, written comments July 1, and the hearing convened July 6 and 7.
What is actually covered, and what is not
The proposed action is broad in form but narrower in practice than the headline rate suggests. The June 1 notice proposes exemptions covering more than 1,600 subheadings of the Harmonized Tariff Schedule of the United States, including roughly 430 tariff lines that apply only to civil aircraft uses, according to trade compliance analyses of the annex. Many of the exempted categories cover Brazil’s largest exports to the United States: petroleum, coffee, beef, orange juice, and civil aircraft products, according to Covington. Rare earths, other metals, and energy products also appear on the exemption lists, Reuters reported.
Goods already subject to Section 232 national security tariffs, including steel, aluminum, copper, and certain heavy equipment, would likewise be excluded from the new duty, avoiding stacked remedies on those products. Informational materials, donations, and accompanied baggage round out the carve-outs, according to a client alert from the law firm Thompson Hine.
USTR explained its logic in the notice itself. The proposed exemptions, the agency wrote, include raw materials that could face domestic supply unavailability if tariffed, products that could cause economy wide disruptions, products that cannot be grown or produced in sufficient quantities in the United States or obtained from other sources, and articles for which additional tariffs may not contribute substantially to the elimination of Brazil’s acts, policies, and practices.
That leaves a substantial middle tier of Brazilian exports exposed: manufactured goods, processed foods, wood products, footwear, machinery parts, chemicals, and consumer products that do not appear in the annex. For importers of those goods, the difference between the current tariff treatment and a 25 percent additional duty arriving as soon as next week is the difference between a workable landed cost and a broken contract.
The pivot from emergency powers to Section 301
The Brazil action is also the clearest test yet of the administration’s rebuilt legal architecture for tariffs. In February 2026, the US Supreme Court struck down the White House’s sweeping global tariffs imposed under the International Emergency Economic Powers Act, or IEEPA, forcing a wholesale migration of the tariff program onto more durable statutory foundations. US Customs and Border Protection has since been administering a phased refund process for duties collected under the invalidated IEEPA actions, announcing phases two and three in June, according to Thompson Hine.
Section 301 is the centerpiece of the replacement strategy. The statute gives the US Trade Representative broad authority to respond to foreign practices found to be unreasonable or discriminatory, and its use against China in 2018 and 2019 survived years of litigation; the Supreme Court declined in June to review the leading challenge to the China tariffs, according to Thompson Hine. The administration has followed the playbook aggressively in 2026: alongside the Brazil case, USTR announced findings on June 2 in 60 parallel Section 301 investigations concerning forced labor, proposing additional duties of 10 to 12.5 percent on most US trading partners, with hearings on that separate action also underway in Washington this week.
Notably, Brazil is among the 60 economies covered by the forced labor proceeding, and Covington observes that duties from the two proceedings would presumably be cumulative. A Brazilian product outside the exemption annex could therefore face the 25 percent country-specific duty plus a forced labor surcharge on top of ordinary tariffs, a stacking question importers pressed USTR to clarify during the comment period.
The Brazil case carries its own IEEPA history. In 2025, President Trump imposed several rounds of tariffs on Brazil reaching 50 percent on many goods, explicitly framing them as a response to what he called a witch hunt against former President Jair Bolsonaro, who was then on trial for attempting to overturn his 2022 election defeat, according to Reuters. Bolsonaro was ultimately convicted and sentenced to 27 years in prison. The Supreme Court’s IEEPA ruling swept those Brazil tariffs away with the rest, and the Section 301 determination now stands as their designated successor, this time resting on a formal investigative record rather than an emergency declaration.
A hearing with a campaign inside it
Monday’s session made plain how thoroughly Brazilian domestic politics has fused with the tariff question. Senator Flavio Bolsonaro, son of the imprisoned former president, used his appearance to argue that Washington should stay its hand until Brazil’s political future is settled. Brazil holds general elections in October 2026, and the political landscape that determines the viability of any negotiated resolution will be redefined within roughly ninety days, the senator wrote in his submission to USTR, proposing a 180 day suspension before any decision on the levies, according to Reuters.
New US tariffs on Brazilian products, Bolsonaro argued in the same filing, would hand the current Brazilian government precisely the political victory it has been engineering. The argument reflects an uncomfortable reality for the senator: the tariffs are widely blamed in Brazil on his own camp. The June 1 determination landed shortly after Bolsonaro met with senior US officials, including a May 26 White House meeting with President Trump, and President Lula has accused the senator of helping trigger the measure, a charge Bolsonaro denies.
The Lula government’s response to the senator’s Washington mission was blistering. It is deplorable that, once again, members of the Bolsonaro family are traveling to the United States to advocate for foreign interference in Brazil, the government said in a statement after the senator met with President Trump, according to Reuters.
Brazilian public opinion appears to favor Lula’s framing. In a survey published last month by the polling firm Quaest, 47 percent of Brazilians agreed with Lula’s accusation that Bolsonaro had asked the United States to impose fresh tariffs, while 35 percent agreed with Bolsonaro’s account that he requested the opposite, Reuters reported. They are trying to do damage control, Leonardo Paz, a professor of international affairs at Ibmec and Fundacao Getulio Vargas in Rio de Janeiro, told Reuters of the family’s lobbying push.
The political entanglement runs deeper still. On June 16, Brazil’s Supreme Court sentenced the senator’s brother, former Representative Eduardo Bolsonaro, to four years and two months in prison, finding that he acted with members of the US government to coerce the court by seeking American economic measures against Brazil and sanctions against its justices, according to Covington. And the perceived role of the Bolsonaro sons in securing the State Department’s May 28 designation of the Brazilian criminal organizations Primeiro Comando da Capital and Comando Vermelho as foreign terrorist organizations has further inflamed bilateral tensions.
So far, the senator’s efforts to avert the tariffs appear to have gained little traction with the administration. Responding to a letter Bolsonaro sent last month urging Washington not to impose additional levies, Secretary of State Marco Rubio wrote that US officials continue to have substantial differences in resolving the issues identified as justification for the proposed measures, according to Reuters.
Brasilia’s response: negotiation with a threat attached
President Lula has walked a careful line, denouncing the proposed tariff while keeping negotiating channels open and avoiding direct confrontation with President Trump. Speaking the day after the June 1 announcement, Lula said he could not accept the treatment his country had received and that he was surprised by the proposal, which arrived amid what he described as improving relations following a May meeting at the White House, according to Reuters. Brazil still wanted to build institutional relations with the United States, he said, but would seek other trade partners if needed.
The Brazilian federal government formally rejected the basis for USTR’s determinations in a press release issued shortly after the announcement, and Lula has called the tariffs unjustified and politically motivated while threatening possible retaliation should they come into effect, according to Covington. Brazilian officials have been negotiating with their US counterparts for months in an effort to head off the duties, Reuters reported, and the two governments held a bilateral summit in Washington on May 7 that followed productive meetings between the two presidents in New York and Kuala Lumpur in 2025.
Lula has focused much of his public criticism on USTR’s findings against Pix, the central bank’s free instant payment system, which is broadly popular in Brazil and gives the president a politically resonant symbol of perceived American overreach. He has also openly criticized Secretary Rubio while conspicuously sparing President Trump, a division of rhetorical labor that analysts read as preserving space for a deal.
US Trade Representative Jamieson Greer, for his part, has kept the door open. The United States continues to engage intensively with Brazil to seek resolution of US concerns, Greer said when the determination was announced, according to Thompson Hine. But Greer has also framed the case in terms that Brasilia disputes. Speaking on CNBC, he pointed to what he called a giant trade deficit between the United States and Brazil, according to Reuters. Public data cut the other way: the United States has historically run a goods trade surplus with Brazil, and in March the surplus stood at roughly 420 million dollars, one of the few bilateral relationships in which America sells more than it buys.
The economics of a 25 percent wall
For US businesses, the economic footprint of the proposal depends almost entirely on the annex. With petroleum, coffee, beef, orange juice, aircraft, and Section 232 metals carved out, the action spares the highest-volume categories of the bilateral flow and concentrates its force on Brazil’s manufactured and semi-manufactured exports. That design reflects lessons from the 2025 IEEPA round, when 50 percent duties on Brazilian coffee and beef fed directly into US grocery prices and generated political blowback; exempting consumer staples this time insulates households while still pressuring Brasilia.
The pain therefore falls unevenly. US companies importing Brazilian machinery components, auto parts, chemicals, plywood and engineered wood, footwear, tools, and processed industrial inputs face the full 25 percent if their tariff lines are absent from the annex. Because Section 301 duties apply on top of ordinary most-favored-nation rates and any other applicable surcharges, effective duty burdens on some lines could approach or exceed a third of customs value once the forced labor proceeding concludes. USTR specifically invited comments on whether the proposed tariffs would cause dislocations in product supplies or economic disruption, and on adding or removing particular subheadings, signaling that the final annex may differ from the proposal.
For American exporters, the larger risk is retaliation. Brazil enacted an economic reciprocity law in 2025 that provides a legal framework for countermeasures, and Lula’s explicit threat to retaliate if the tariffs take effect puts US agricultural machinery, fuels, chemicals, and technology exports in the line of fire. The US surplus with Brazil means a tit-for-tat exchange arithmetically threatens more American export value than it protects, a point Brazilian negotiators have made repeatedly. Retaliation would also complicate life for the US companies that dominate Brazil’s digital economy, the very firms whose complaints about Pix, data rules, and payments discrimination animate the digital trade findings.
There is also a systemic dimension. Brazil led opposition at the World Trade Organization’s 14th Ministerial Conference in March to the US push for a multi-year extension of the moratorium on customs duties for electronic transmissions, according to Covington, and a 25 percent unilateral tariff would harden Brasilia’s alignment with governments seeking to build trade architecture around, rather than with, Washington. Lula’s talk of seeking other partners is not idle: Brazil has spent the past year deepening ties with China, the European Union through the Mercosur agreement, and Gulf and Asian buyers for the very commodity exports the US annex exempts.
What importers and exporters should do now
For trade compliance teams, the next eight days are for preparation, not speculation. The first task is classification triage: map every Brazilian-origin tariff line in the import portfolio against the proposed exemption annex, distinguishing lines that are exempt, lines that are covered, and lines whose status could plausibly change in the final action. The roughly 430 aircraft-use exemptions carry use-based conditions, so importers claiming them should confirm they can document qualifying end use.
Second, model the stack. Covered goods will bear the 25 percent duty on top of existing MFN rates, and potentially on top of whatever emerges from the forced labor proceeding, whose final determination is expected later this month. Landed-cost models built on pre-June assumptions are already stale.
Third, examine entry timing. Section 301 actions typically apply to goods entered for consumption on or after a specified effective date. Cargo on the water when an action is announced has sometimes received grace treatment and sometimes not; importers with flexibility should evaluate accelerating entries of covered merchandise ahead of July 15, while recognizing that USTR controls the effective date and retroactive surprises are rare but not unknown.
Fourth, revisit contracts and origin. Duty allocation clauses, price adjustment mechanisms, and force majeure provisions negotiated in calmer years may not contemplate a 25 percent overnight swing. Sourcing teams weighing shifts to other origins should remember that nearly every alternative supplier is itself covered by the forced labor proposal, and that country hopping offers less shelter in 2026 than it did in 2018.
Finally, stay on the record. USTR’s questions about supply dislocations and annex modifications suggest the agency expects to fine-tune the product list. Companies that documented their exposure in comments are positioned for any exclusion or modification process that may follow; those that stayed silent will find the record closed. With no post-hearing rebuttal round announced, the record is effectively closed already.
Eight days, three clocks
The Brazil decision is one of three tariff clocks running in Washington this month. The forced labor Section 301 hearings continue at the ITC through July 9, with a final determination on those near-global duties expected around July 20. And the temporary 10 percent global import surcharge imposed under Section 122 of the Trade Act expires by operation of law on July 24, a deadline that has driven the administration’s race to anchor its tariff program in Section 301 before the stopgap falls away. The Brazil action, first in the queue, will be read as a template for how aggressive the final forced labor action is likely to be.
Between now and next Wednesday, USTR must weigh a record that includes nearly 300 written submissions and testimony from more than 30 witnesses gathered during the underlying investigation, plus this week’s hearing record. It must decide whether Senator Bolsonaro’s plea for delay serves or undermines the administration’s negotiating leverage, whether Lula’s retaliation threat is credible, and whether the exemption annex has drawn the line between pressure and self-harm in the right place.
The one thing it cannot do is wait. The statute that gives Section 301 its durability also gives it its deadline, and the deadline is July 15. For US importers of Brazilian goods, the prudent assumption is that a week from now, something changes: the tariff lands, a negotiated framework suspends it, or a modified action redraws the annex. All three outcomes reward the companies that spent this week reading the tariff schedule instead of the headlines.