US-Brazil trade

What it is

US-Brazil trade is the largest US bilateral goods-and-services corridor in South America. Total two-way trade reached US$127.6 billion in 2024, combining US$94.3 billion in goods and US$36.1 billion in services. The two countries operate without a free-trade agreement. The governing framework is the US-Brazil Agreement on Trade and Economic Cooperation (ATEC), signed in 2011 and expanded in 2020 by a protocol covering customs administration, good regulatory practices, and anti-corruption measures, which entered into force in 2022. The bilateral commission established under the ATEC last convened at ministerial level in 2016. On the US side the principal institution is the US Trade Representative (USTR); on the Brazilian side it is the Ministry of Foreign Affairs (Itamaraty) and the Ministry of Development, Industry, Commerce and Services.

History

The two economies deepened commercial ties through the 1990s after Brazil's trade liberalization, but successive administrations in Washington and Brasília never converted the relationship into a comprehensive FTA. Brazil won a landmark WTO dispute against the US over cotton subsidies (DS267, panel ruling 2004, appellate ruling 2005), eventually extracting a negotiated settlement in 2014. A parallel long-running dispute covered Brazilian government support for aircraft manufacturer Embraer.

During Trump's first term, Brazil won partial exemptions from the 2018 Section 232 steel and aluminum tariffs, accepting quotas in exchange. A 2017 US decision to end the bilateral ethanol tariff arrangement that had equalized market access for Brazilian and US ethanol became a standing grievance Brasília has raised in every subsequent bilateral.

Current state

Trump's second administration escalated sharply. In April 2025 the US applied a 10 percent baseline tariff on Brazilian goods under the International Emergency Economic Powers Act (IEEPA) as part of a near-universal "Liberation Day" round. In July 2025 Washington raised the effective rate to roughly 50 percent. A February 2026 US Supreme Court ruling restricting IEEPA authority pulled some Brazilian products back toward the 10 percent baseline.

Lula and Trump met at the White House on May 7, 2026, and instructed their ministers to resolve outstanding tariff disputes within 30 days. The deadline lapsed without a deal. On June 2, 2026, USTR released a Section 301 determination identifying six Brazilian "unreasonable acts": secret judicial orders compelling US social-media platforms to remove political content, preferential tariff treatment extended to Mexico and India but not to the US, weak anti-corruption enforcement, gaps in IP protection, the post-2017 withdrawal of balanced ethanol tariff treatment, and inadequate illegal-deforestation enforcement. USTR proposed a 25 percent tariff as a responsive measure; the public-comment period closed July 1, 2026, with a public hearing scheduled July 6, 2026, and a final determination expected mid-July 2026.

Brazil's National Congress enacted, with President Lula's signature, the Economic Reciprocity Law, authorizing the executive to suspend trade concessions, investment protections, and IP obligations in retaliation for unilateral foreign measures. As of early July 2026, implementation awaits the final US tariff decision.

The 2025 goods breakdown: US exports to Brazil totaled US$54.4 billion (led by aircraft, mineral fuels, machinery, and electronic equipment); Brazilian exports to the US totaled US$39.9 billion (led by iron and steel mill products, crude oil, aircraft parts, soybeans, and coffee). The US ran a goods surplus of US$14.4 billion and a services surplus of US$23.1 billion in 2025.

Relationships

The unfolding standoff is tracked in Lula threatens reciprocity as Trump's 25% tariff collides with Brazil's election, which covers the 30-day negotiation window, the Section 301 determination, and Brazil's Economic Reciprocity Law. The broader pattern of Trump-era tariff escalation across six bilateral fronts is mapped in Tariff fronts: the six bilateral trade confrontations shaping world commerce. Multilateral rules context sits in World Trade Organization (WTO); the WTO's disabled appellate body means Brazil cannot rapidly enforce dispute-settlement rulings against US measures. Lula's political framing of the dispute as a sovereignty issue, tied to the October 2026 Brazilian presidential election, is covered in Luiz Inácio Lula da Silva.

What to watch

The USTR final tariff determination, expected mid-July 2026, will set whether the 25 percent rate is confirmed, modified, or dropped. Brazil's decision on whether and how to deploy the Economic Reciprocity Law, particularly targeting US ethanol, will determine whether the standoff escalates into a tit-for-tat cycle. Any US-Brazil FTA or expanded ATEC negotiation would mark a significant reset. Brazil's parallel effort to diversify toward the EU and China, and the interaction with the Mercosur-EU trade agreement, will determine how urgently Brasília needs a Washington deal.