New Tariff on Brazilian Products in the U.S.: Executive Order Effective August 6, 2025

On July 30, 2025, the White House issued an executive order imposing an additional 40% tariff on a wide range of products originating from Brazil. The justification: certain practices and policies of the Brazilian government allegedly harm the national security, foreign policy, and economy of the United States.

The measure, based on statutes such as the International Emergency Economic Powers Act (IEEPA) and the Trade Act of 1974, also declares a national emergency with respect to Brazil — granting the President exceptional powers in the area of foreign trade.

When Does the 40% Tariff Take Effect?

Effective date of the order: July 30, 2025

General rule: The tariff takes effect on August 6, 2025 at 12:01 a.m. EDT, and applies to products:

• “entered for consumption”; or

• “withdrawn from warehouse for consumption” from that date onward.

Temporary exceptions: Products that were already in transit in their final mode of transportation and loaded before August 6, 2025 are exempt from the new tariff if they clear U.S. customs before October 5, 2025 at 12:01 a.m. EDT. In short:

• Goods in transit prior to August 6 and cleared by October 5 will be exempt from the additional tariff.

Permanent exclusions:

Products listed in Annex I

· Products excluded by 50 U.S.C. § 1702(b) (personal communications, humanitarian donations, informational materials, personal travel)

What Is the Real Tariff Impact?

Although the executive order sets an “additional 40% tariff,” it is cumulative with the existing 10% base tariff applied to many imported products. This means the effective increase may reach 50%, significantly raising the cost of access to the U.S. market for Brazilian exporters.

Annex I: Exempt Products

Annex I to the executive order lists hundreds of Brazilian products that will be excluded from the additional tariff. Sectors benefiting from the exemption include:

• Agribusiness (e.g., nuts, fruit pulps)

• Mining & energy (ores, petroleum derivatives)

• Chemical industry (benzene, toluene, industrial alcohols)

• Technology & electronics (circuit boards, subassemblies, sensors)

• Aerospace (aircraft, drones, parts, avionics)

• Precision instruments, furniture, lighting, and returned goods under warranty

Products and Transactions Excluded by Law: 50 U.S.C. § 1702(b)

Even though the executive order is broad in scope, the very legislation it relies on — IEEPA — imposes legal limits on presidential power. Section 1702(b) of Title 50 of the U.S. Code prohibits the President from regulating or restricting certain categories of goods and activities, such as:

1. Personal communications not involving transfers of value (e.g., letters, calls, messages);

2. Humanitarian donations (food, clothing, medicine) intended to relieve human suffering — unless the President makes specific risk-based findings;

3. Import/export of informational materials, including publications, artworks, films, CDs, photos, news feeds, and digital media — with exceptions related to nonproliferation and terrorism;

4. Transactions incidental to international travel, including personal baggage, lodging, meals, and transport.

These statutory exceptions narrow the scope of the order and reinforce potential legal vulnerabilities if the measure is applied too broadly.

Annex II: New Tariff Classification for Brazilian-Origin Good

Unlike Annex I, Annex II does not list specific goods. Instead, it introduces a structural change to the Harmonized Tariff Schedule of the United States (HTSUS) by creating a new subheading:

HTSUS 9903.01.77 (and related headings) — applicable to any product of Brazilian origin, regardless of its HTS classification.

This mechanism allows any Brazilian product not listed in Annex I and not excluded by 50 U.S.C. § 1702(b) to be subject to the 40% additional tariff.

Annex II also empowers the Office of the United States Trade Representative (USTR) to:

• Adjust the list of goods covered under the new tariff line;

• Define or interpret rules of origin for enforcement;

• Modify or expand the scope of the measure in the future.

Practical Effect

As a result, virtually all Brazilian-origin goods become potentially subject to the tariff, unless:

1. Explicitly listed in Annex I;

2. Covered by 50 U.S.C. § 1702(b); or

3. Protected by some future regulatory or legal exception.

This significantly expands the measure’s impact and underscores the need for precise origin tracking and tariff diagnostics.

Legal Challenges Ahead

The executive order raises serious questions about its legality — both domestically (under U.S. constitutional standards for declaring national emergencies in trade matters) and internationally, in light of trade agreements and WTO rules. Legal action by importers, trade associations, and foreign governments is expected.

What Now? Strategic Planning Is Essential

• Brazilian companies doing business with the U.S. must act immediately to:

• Check whether their products are listed in Annex II (subject to tariffs) or in Annex I (exempt);

• Assess contract and supply chain risks;

• Evaluate production relocation strategies, including shifting operations to third countries;

• Seek international legal counsel to mitigate risks and adjust their U.S. market strategy.

At Scharlack, we combine technical depth with strategic vision to support companies, exporters, and global groups in moments like this. Our team is ready to assist with the legal, commercial, and operational impacts of this new reality.