US Section 301 tariffs on Brazil, three months in: what to do now

On October 22, 2026, the 25% US Section 301 tariff on Brazilian goods turned three months old. Two days after it started, a second Section 301 duty of 12.5% arrived, and for a large slice of Brazil’s exports the two now stack to 37.5% on top of the normal US rate. No deal is on the table yet, Brazil has taken the dispute to the WTO, and a new bilateral working group has only just been agreed. For a foreign group whose Brazilian subsidiary sells to the United States, or buys from a US affiliate, the question is no longer whether the tariffs will bite. It is how to run the business while they stay in place for an unknown period.

Where things stand on October 23, 2026

Brazilian goods entering the US can now face three separate layers of trade measures, each with its own legal basis and its own exemption list.

The two Section 301 duties are cumulative on the same product. Brazil’s Ministry of Development, Industry, Trade and Services (MDIC) estimated, on 2024 trade figures, that 16.5% of Brazil’s exports to the US (about US$6.6 billion) face the full 37.5%, 4.7% face only the 12.5% duty and 1.9% only the 25% duty. Another 24.2% falls under Section 232 instead, and 52.7% (about US$21.3 billion) carries none of these extra tariffs. Goods already shipped before the start dates had short grace periods (entry by July 29 for the 25% duty and by July 28 for the 12.5% duty), so every shipment that matters for planning today pays the new rates.

The path to this point explains why many finance teams are still adjusting. The IEEPA tariffs of 2025, which had reached 40% or 50% on many Brazilian goods, fell when the US Supreme Court ruled, on February 20, 2026 (Learning Resources, Inc. v. Trump), that IEEPA does not authorize tariffs. A temporary 10% duty under Section 122 replaced it from February 24 and expired after the legal maximum of 150 days, on July 24. The Section 301 duties were built to outlast that. They have no end date, and USTR can modify or terminate them under Section 307 of the Trade Act.

What the first three months of data show

The headline monthly numbers look surprisingly good. According to MDIC’s foreign trade data, Brazilian exports to the US reached US$3.11 billion in August 2026 (up 9.4% on August 2025) and US$3.52 billion in September (up 31.9%). That comparison flatters 2026, though, because August and September 2025 were the months when those IEEPA tariffs of up to 50% were in effect. Over January to September 2026, exports to the US totaled US$27.46 billion, 6.5% below the same period of 2025, and the US accounted for only 9.6% of Brazil’s total exports, against 11.4% a year earlier.

Two readings matter for a subsidiary. First, aggregate figures hide very different outcomes by product: manufactured goods made up about 87% of the September total, and whether an item is exempt is decided line by line in the tariff schedule. Second, some of the summer volume may reflect buyers stocking up or rerouting orders while the rules were changing, so it is too early to treat the recent months as the new normal.

Three tracks that could change the picture

Bilateral talks

On September 30, 2026, Brazil’s foreign and trade ministers met US Trade Representative Jamieson Greer in Milwaukee, on the sidelines of the G20 trade ministers’ meeting. Both sides agreed to create a working group to discuss a possible agreement, and the US is expected to send, “in the coming weeks,” a proposal for the scope of the talks covering tariff and non-tariff issues. As of today, MDIC has not announced that the document was received or that the group has met. The original Section 301 case covered digital trade and electronic payments (including Pix), preferential tariffs, anti-corruption enforcement, intellectual property, ethanol market access and illegal deforestation, so any deal is likely to require movement on several of these fronts.

The WTO case

Brazil requested WTO consultations on July 27, 2026 (dispute DS646), challenging both the 25% and the 12.5% duties under GATT Articles I and II and the Dispute Settlement Understanding. The US accepted consultations on August 6. More than 60 days have passed, so Brazil may now ask for a panel. In practice, a panel report would take well over a year, and the WTO Appellate Body has been unable to hear appeals since December 2019, so the case is leverage rather than a short-term fix.

Brazil’s own response

Brazil has an Economic Reciprocity Law (Law 15,122/2025, regulated by Decree 12,551/2025) that allows countermeasures against unilateral trade measures, after an analysis by the Chamber of Foreign Trade (Camex) and a public consultation. No countermeasure against US goods has been published as of October 23, 2026. The government has chosen to support exporters instead: Law 15,473/2026 provides export financing lines under the Plano Brasil Soberano program, widened by Provisional Measure 1,379 of July 22, 2026, and Provisional Measure 1,387/2026 opened an extra R$7 billion in credit for those lines in August. For subsidiaries importing from US affiliates, this means no retaliatory tariff has been added on the Brazilian side so far, but the legal tool exists.

Brazil also holds its presidential runoff on October 25, and the next term starts on January 1, 2027. Whatever the result, the US measures, the WTO case and the working group continue on their own legal tracks.

What a subsidiary exporting to the US should do now

Most of the practical work sits at the level of the product and the contract, not the headline rate.

1. Confirm the classification of each product at 10 digits. The exemptions are listed by HTSUS subheading, and several carry scope limits (“Ex” lines, aircraft use only). A product may be exempt from one Section 301 duty and not the other. Ask the US importer’s customs broker to confirm the duty lines it is using, because the importer is the one that declares and pays.
2. Check origin before assuming you are stuck. The duties apply to “products of Brazil.” Being owned by a US or European parent does not change the origin of goods made in Brazil, but where the last substantial transformation takes place does. Moving final assembly is a major decision with its own costs, and it must reflect real manufacturing, not paperwork.
3. Review intercompany prices with both customs and tax in mind. When the US buyer is a related company, the price you invoice is also the customs value on which the 37.5% is charged. Lowering it to save duty affects Brazilian transfer pricing under Law 14,596/2023, and the two sets of rules must be documented together. Our guide to transfer pricing in Brazil and the one on intercompany transactions cover the Brazilian side.
4. Reopen contracts with third-party buyers. Incoterms decide who pays the duty on paper, but in practice the cost is negotiated. Contracts signed before July without a tariff clause are the most exposed.
5. Model the cash impact, not just the margin. Lower volumes, longer negotiations and price concessions show up first in working capital. A rolling 13-week forecast with tariff scenarios, as described in our article on cash flow management for Brazilian subsidiaries, gives headquarters a better basis than a single annual budget revision.
6. Look at the export credit lines and at other markets. The Plano Brasil Soberano lines target exporters and their suppliers affected by the measures. Eligibility depends on the program’s rules and the financial agent, so confirm the conditions before counting on them. For groups with European buyers, the EU–Mercosur interim trade agreement, applied since May 1, 2026, may offset part of the loss.

A hypothetical example of the stack

Take a Brazilian subsidiary that ships US$1,000,000 (customs value) of industrial parts to its US parent. Assume the parts are not covered by Section 232 or by either exemption list, and carry a US MFN duty of 2.5%. The figures are hypothetical and only illustrate the arithmetic.

Before July, the same shipment would have paid US$25,000 in MFN duty plus the 10% Section 122 duty (US$100,000). The group now pays US$275,000 more per million shipped. If the parts were on an exemption list for one of the two Section 301 duties, the extra cost would fall by US$125,000 or US$250,000, which is why the classification review in step 1 comes first.

What to watch in the coming weeks

• The US proposal on the scope of the working group, and the first meeting date.
• Any USTR notice modifying the Annex II exemption lists or the rates under Section 307.
• Whether Brazil requests a WTO panel in DS646.
• Camex deliberations under the Reciprocity Law, which would affect subsidiaries importing US goods.
• MDIC’s monthly trade data (October figures are due in early November), read against 2024 as well as 2025, since the 2025 base was depressed by the IEEPA tariffs.

How Solidy can help

Solidy already serves subsidiaries of multinational companies in Brazil. For groups exposed to the US tariffs, we help build tariff scenarios into the subsidiary’s cash flow forecast and monthly reporting to headquarters, and review intercompany pricing and transfer pricing documentation when export prices change. Explore Our CFO as a Service Solutions.