The United States just turned up the heat on its second-largest trading partner in the Western Hemisphere. A new 25% tariff on most Brazilian imports takes effect July 22, 2026, following a Section 301 investigation that concluded Brazil has been engaging in unfair trade practices.

Washington also expanded its exemptions list significantly, shielding roughly $11 billion worth of annual trade from the new duties.

What’s getting taxed, and what’s not

The exemptions include beef, coffee, orange juice, aircraft and parts, energy products, and rare earths.

Everything else is fair game. Brazilian manufacturers outside the protected categories are about to see their products become meaningfully more expensive for US buyers.

This isn’t the first swing, either. A 40% duty was imposed on certain Brazilian goods back in July 2025, meaning the trade relationship has been deteriorating for over a year now. The new 25% tariff broadens the scope of affected goods while the expanded exemptions try to prevent collateral damage to US supply chains that depend on Brazilian inputs.

The broader trade chessboard

The exemptions create a two-tier system among Brazilian exporters. Companies selling protected goods maintain their market access. Everyone else faces a 25% price disadvantage that could push US buyers toward alternative suppliers.

What investors should watch next

The immediate question is whether Brazil retaliates. Historically, tariff escalations invite counter-tariffs, and Brazil has its own tools available.

Third, watch stablecoin volumes in Latin America. Previous episodes of currency stress in Argentina, Turkey, and Nigeria all corresponded with spikes in stablecoin usage. Brazil’s already-robust crypto infrastructure could see increased utilization as a hedge if the economy absorbs significant damage from cumulative tariffs.