U.S. to impose a 25% tariff on most imports from Brazil
From July 22, the U.S. will impose a 25% tariff on most imports from Brazil following a year-long Section 301 investigation into alleged unfair trade practices. The new tariffs will exempt many products, including beef, coffee, rare earths, energy products, aircraft, aircraft parts, pig iron and steel scrap. Products that are already subject to Section 232 tariffs including steel, aluminum, copper, automobiles and certain wood products have also been exempted from the additional tariffs. Brazil could be further targeted by a separate forced labor tariff investigation, which could apply an additional 12.5% tariff to Brazilian imports, bringing the total tariff rate to 37.5%. The effective date for those forced labor-related tariffs has not yet been specified.
The U.S. tariff investigation identified several concerns that justified tariff action, including Brazil’s Pix electronic payments system, which the U.S. claims disadvantages American credit card companies, as well as alleged preferential treatment for imports from Mexico and India and inadequate enforcement of anti-corruption and intellectual property protections.
Brazil has rejected these U.S. allegations and said the tariffs are unjustified. The Brazilian government has further threatened to pursue retaliatory trade measures and seek relief through the World Trade Organization. Despite the escalation, both countries have continued negotiations, with Trump administration officials indicating openness to further talks.
U.S. to impose 50% tariffs on many goods from Canada
On July 20, the Trump administration also announced that it will impose 50% tariffs on many goods from Canada in response to what the administration claims are unfair trade practices that negatively impacted U.S. cars, alcohol and dairy products. The tariffs will cover a range of products, including cement, wine, and hockey sticks, as well as products previously protected from tariffs under the United States-Mexico-Canada (USMCA) agreement.
Canadian products already affected by tariffs aimed at protecting national security, such as steel and aluminum, will be exempt. Energy products, fish, critical minerals, and potash will also be excluded from the new tariffs. President Trump reportedly plans to impose the tariffs under Section 338 of the 1930 Tariff Act. According to the Trump administration, the tariffs will go into effect in 30 days, leaving the door open to further negotiations in the coming weeks.
China sanctions ten American defense and mineral producers
On June 22, Chinese authorities announced new export controls targeting ten U.S. defense and critical minerals companies. The restrictions prohibit these companies from receiving Chinese dual-use goods, which have both civilian and military applications. Companies and individuals in third countries will also be prohibited from transferring Chinese-origin dual-use products to the sanctioned firms, although Chinese exporters may apply for special government approval in some cases.
Chinese officials stated that the restrictions are intended to safeguard national security and respond to the U.S. Department of Defense’s recent decision to designate Chinese technology companies Alibaba Group Holding Limited and Baidu, Inc. as having alleged ties to the Chinese military, making them ineligible for U.S. defense contracts.
The measures notably target two U.S.-based rare earth minerals companies, MP Materials Corp. and USA Rare Earth, Inc. Although both companies have already reduced their reliance on Chinese equipment and materials, the move could discourage other firms from purchasing their goods to ensure that none of their products are affected by end-use restrictions.
U.S. threatens 100% tariffs on European countries over proposed digital services taxes
On June 26, President Trump threatened 100% tariffs on all goods imported from countries that introduce digital services taxes, broadly citing European countries in his statement but not specifying further details. President Trump said the tariffs would take effect immediately if any country enacted such a policy and would supersede any existing or future trade agreements with the affected countries.
Following the U.S. Supreme Court ruling that invalidated the Trump administration’s previous tariff authority, it is unclear what mechanism the administration could use to enact these levies. One option might be to utilize the Section 301 authority to implement new tariffs following an investigation of unfair trade practices. The U.S. has previously used this authority to investigate digital service taxes in France, Austria, Spain, and Italy and most recently proposed using it to enact tariffs related to forced labor allegations on dozens of countries.
The current U.S.-E.U. trade deal establishes a 15% tariff ceiling for most E.U. exports to the U.S. The European Commission has defended the E.U.’s authority to regulate economic activity within its territory through digital services taxes and said that the bloc would respond to any unilateral U.S. measures to protect its regulatory autonomy.
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