US 25% Tariff Takes Effect but Brazil Agro Secures Key Exemptions
The new US 25% tariff on Brazilian imports took effect July 22, but key agricultural exports secured exemptions, protecting 63% of Brazil's agro trade.
A new 25% U.S. import tariff under Section 301 of the Trade Act of 1974 officially took effect on July 22, 2026, targeting up to $11 billion in Brazilian goods. However, global investors looking to invest in Brazil received a major relief as the Office of the U.S. Trade Representative (USTR) expanded its final list of exemptions. These strategic carve-outs shield approximately 63.5% of the total value of Brazil agribusiness exports to the U.S., preserving the core trade flow between the two nations.
The exemptions cover critical commodities including beef, coffee beans, and orange juice, which Washington spared to prevent supply chain disruptions and domestic food inflation. While major agricultural players like Minerva (B3: BEEF3) and global beverage firms tied to Coca-Cola (B3: COCA3) dodged the tariff blow, non-exempt products face the full 25% duty. Affected niche goods include corn ethanol, wood products, and select fruits such as grapes. For ethanol, the new levy sits on top of existing duties, pushing potential total tariffs to 37.5%, though Brazil’s direct ethanol exports to the U.S. have already been near zero in recent years.
This trade development is heavily influencing the USD BRL exchange rate and the Ibovespa today as market participants digest the mixed economic impact. While industrial sectors face headwinds, the resilience of the agricultural sector provides a cushion for the broader Brazilian economy and the popular Brazil ETF (EWZ). On the ground, Brazilian farmers continue to navigate challenging weather conditions. Recent crop monitoring reports show persistent dry spells, with Luís Eduardo Magalhães (Bahia), Sorriso (Mato Grosso), and Rio Verde (Goiás) all recording 0.0mm of rain and 7 consecutive dry days, while Cascavel (Paraná) registered 39.5mm of rain with 3 dry days.
In the financial derivatives market, trader positioning reflects active hedging amid the shifting trade landscape. The latest Commitment of Traders (COT) data shows soybean positions at 20,018 long and 1,139 short, corn at 482,223 long and 350,760 short, and coffee at 53,913 long and 26,086 short. Industry groups in both nations continue to monitor the situation, particularly as Brazil evaluates potential reciprocal trade measures under its domestic laws.