What Changed
Effective February 25, 2026Under 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. Combined with the 10% MFN base rate and Section 122 surcharge, this results in a 50% effective tariff rate on most Brazilian imports. The elevated rate reflects trade tensions over Brazilian agricultural and industrial goods policies. USMCA-qualifying goods and S232-covered products are exempt.
Rate Changes
| Item | Before | After |
|---|---|---|
| Brazilian imports (S122 bilateral) | S122 standard rate | 50% effective rate (10% MFN + 40% bilateral) |
Who's Affected
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.
Analysis
Brazil Faces 40% Policy Tariff Under Section 122 — Highest Non-China Rate (effective 2026-02-25). 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. Bilateral trade deals negotiated under IEEPA authority served as the primary mechanism for country-specific tariff rates during the pre-February 2026 period. When the Supreme Court struck down IEEPA tariff authority on February 20, 2026, the legal basis for these bilateral deals became uncertain. The administration has maintained the effective rates from these deals without formal reimplementation under new statutory authority, meaning the rates apply in practice but their legal durability is uncertain. The Section 122 proclamation uses bilateral deals as a "replace" mechanism: countries with negotiated deals at or above the Section 122 base rate have their bilateral rate applied instead of the standard Section 122 rate. Countries like India (18%) and Vietnam (18%) face higher bilateral rates than the standard Section 122 rate of 15%, creating differentiation in the tariff treatment of US trading partners. USMCA partners Canada and Mexico are the most significant exception: USMCA-qualifying goods enter the US at 0%, completely bypassing both Section 122 and most bilateral deal frameworks. The trade policy trend clearly favors USMCA-qualifying supply chains and penalizes imports from countries without formal preferential agreements with the United States.
Impact & Next Steps
Importers from countries with bilateral deal rates should verify current effective rates with their customs broker, as the legal framework for these deals remains uncertain following the IEEPA ruling. 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 — the standard Section 122 rate of 15% applies unless a Section 232 exemption is available.