Brazil Faces 40% Policy Tariff Under Section 122 — Highest Non-China Rate

UPDATE (August 2026 outcome): both halves of the 50% stack described below are gone, and a different instrument replaced them. Section 122's 10% component lapsed by operation of law on July 24, 2026 (19 U.S.C. §2132). The 40-point component was imposed under IEEPA by Executive Order 14323, and Executive Order 14389 ('Ending Certain Tariff Actions', 91 FR 9437) names that order among those whose duties 'shall no longer be in effect'. What Brazil pays instead is a Brazil-specific Section 301 duty of 25% under HTSUS 9903.05.01 (USTR Notice of Action, 91 FR 45516), effective 12:01 a.m. ET July 22, 2026, which stacks additively on the 12.5% forced-labor Section 301 duty Brazil also carries (CBP CSMS #69326983) — a non-MFN total of 37.5% charged on top of each product's own MFN rate. That action carves out its own product set at HTSUS 9903.05.02-9903.05.09, covering the Section 232 metals and vehicles as well as several agricultural and energy categories. Original pre-cliff analysis: under the Section 122 bilateral deal framework effective February 25, 2026, Brazil was assigned a 40% policy tariff — the highest rate among non-China trading partners at the time. Combined with the 10% Section 122 surcharge base, that produced a 50% effective tariff rate on most Brazilian imports then. The elevated rate reflected trade tensions over Brazilian agricultural and industrial goods policies.

US importers of Brazilian goods including agricultural commodities, steel, iron ore, aircraft parts, and manufactured goods. Brazilian exporters face a significant competitive disadvantage versus countries with lower bilateral rates. US buyers of Brazilian-origin coffee, orange juice, steel pipes, and industrial goods will see notably higher landed costs.

Brazil Faces 40% Policy Tariff Under Section 122 — Highest Non-China Rate (effective 2026-02-25). UPDATE (August 2026 outcome): both halves of the 50% stack described below are gone, and a different instrument replaced them. The country-specific rates widely reported as bilateral trade deals were the primary mechanism for differentiated tariff treatment during the pre-February 2026 period. They were not a separate instrument. They were country lines inside the reciprocal tariff imposed by Executive Order 14257, enumerated in HTSUS Chapter 99 alongside the universal reciprocal baseline. Executive Order 14389, "Ending Certain Tariff Actions" (91 FR 9437), provided on February 20, 2026 that the additional duties imposed under IEEPA in Executive Order 14257, as amended, are no longer in effect and are no longer to be collected — so those rates ended rather than becoming legally uncertain, and CBP has published a refund worksheet for duties collected under the terminated headings (91 FR 42207). The Section 122 proclamation four days later set a single uniform rate rather than differential country rates, and Section 122 itself lapsed to 0% on July 24, 2026. India and Vietnam, which had carried the highest of those country rates, therefore pay MFN plus the forced-labor Section 301 duty today — 10% and 12.5% respectively — the same structure as every other covered economy. USMCA partners Canada and Mexico remain the most significant exception: USMCA-qualifying goods enter the US at 0%, bypassing every layer except Section 338. The trade policy trend still favors USMCA-qualifying supply chains, but the gap to other origins narrowed sharply when the reciprocal country rates were terminated.

Importers who paid one of the terminated reciprocal country rates should ask their customs broker about refund eligibility rather than about current rates: those duties stopped being collected on February 20, 2026 and CBP has published a refund worksheet (91 FR 42207). One trap to check for is that the HTSUS still prints the terminated headings, because the implementing Federal Register notice required to amend the schedule has not issued — a heading in Chapter 99 is not evidence a duty is live. The most reliable tariff reduction strategy remains USMCA qualification for Canadian and Mexican-origin goods, which provides statutory 0% rates. For countries without bilateral deals — such as Australia, New Zealand, and most of Africa — Section 122 itself lapsed to 0% on July 24, 2026, so the operative rate today is the forced-labor Section 301 duty (10% or 12.5%, if the country is on the roughly 60-economy covered list) or 0% otherwise, unless a Section 232 exemption governs instead.

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