Key Areas Under Investigation
The investigation will centre on a number of issues, including Brazil's policies on digital trade, electronic payment service requirements and regulations, tariffs and the establishment and enforcement of intellectual property rights. The investigation was initiated out of concern that Brazil will provide preferential tariffs to other trade partners and penalise U.S. companies, particularly in the digital space, who do not censor political speech, U.S. Trade Representative Jamieson Greer said.
"These actions hurt American business, workers, and innovators," Greer said. "I concluded that there are enough tariff and non-tariff barriers in place in Brazil that justify a full-blown inquiry and possibly action," he said.
The U.S. government also bemoaned what it called Brazil's "ineffective enforcement'' of intellectual property laws, which it said weakened U.S. industries that depend on innovation and creativity.
Tensions Flare Ahead of Tariff Measures
President Trump's decision to proceed with the inquiry came after he sent a letter urging Brazilian President Luiz Inácio Lula da Silva to "take action." In that letter, Trump announced that the U.S. would slap a 50% tariff on Brazilian imports starting on August 1. Lula retaliated that Brazil would impose a similar level of tariffs in response.
Relations between the two countries have also been strained after Trump urged Brazil not to develop legal proceedings against former President Jair Bolsonaro, whom he called a "witch hunt."
But despite the friction, the trade between the U.S. and Brazil is large. The combined efforts of the two countries yielded a trade volume of $90 billion in 2024, netting the United States a $7.4 billion surplus, which is 33% higher than the preceding year.
The inquiry represents a new chapter in the trade relationship between the two countries, with the potential to lead to reciprocal action and more heated trade disputes in the months ahead.
