The Blowback Effect: Legal Contradictions in the U.S. Tariff Against Brazil

On July 30, 2025, the White House issued an executive order imposing an additional 40% tar

iff on a wide range of Brazilian-origin goods, citing threats to U.S. national security, foreign policy, and economy. We’ve previously covered the legal basis, timeline, and trade implications of this measure in another article. We also explored the contradiction between U.S. opposition to Digital Services Taxes (DSTs) and the Supreme Court’s reasoning in South Dakota v. Wayfair  in an earlier piece.

In this article, we explore the conceptual contradictions of this executive order, this time through the lens of the central argument presented by the U.S. Presidency: the alleged affront to American jurisdiction committed by Brazil in holding U.S. citizens criminally liable for statements made on American soil but with anti-democratic repercussions in Brazil.

A logic that backfires

By claiming that Brazil is overstepping its jurisdiction by applying its criminal laws to online statements made by U.S. citizens on American soil, the U.S. government finds itself in a logical crossroads: the American policy against Digital Services Taxes (DSTs) is based on the opposite premise.

In the DST context, the United States argues that countries like France, the United Kingdom, and Brazil lack jurisdiction to tax U.S. companies for digital sales made to local consumers — precisely because those companies have no physical presence in those countries. In other words, under the American line of reasoning: cross-border digital economic activity does not grant the destination country taxing authority.

However, by sanctioning Brazil for holding American citizens criminally liable for digital acts that, although committed from U.S. soil, impact Brazilian institutions and democratic order, the United States is, in practice, demanding that Brazilian sovereignty be limited to its physical borders — the exact opposite of what the U.S. claims for itself in the tax and trade arena.

Selective Sovereignty

The imposition of a 40% tariff surcharge on Brazilian products is precisely the kind of extraterritorial retaliation the U.S. so vocally criticizes in the DST debate. It is a clear case of selective sovereignty: when convenient, the U.S. denies foreign jurisdiction over its digital activities; when inconvenient, it economically punishes other countries for exercising their own legislative sovereignty.

This paradox reveals a deeper tension in the United States’ international legal and commercial policy: the attempt to export its normative vision while denying the legitimacy of others'.

Coherence as Strategic Legitimacy

Companies, governments, and international legal practitioners must pay attention not only to the text of economic and legal measures, but also to the coherence of the arguments that underpin them. A policy rooted in contradictory reasoning weakens its legitimacy before international bodies and opens the door for substantial legal challenges.

At Scharlack, we continue to monitor the developments surrounding this new measure and its legal and commercial implications. For a deeper and tailored analysis of your case, reach out to us.