Executive summary

The United States (US) government's latest (29 May 2026) proposal to impose a 25% tariff on Brazilian imports continues a pendulum-like movement in global trade. Tariff instability has become a structural component of the business environment, requiring companies to undertake a deeper reassessment of their international market-access strategies.

(For more on the 25% tariff, see EY Global Tax Alert, USTR issues Section 301 determination on Brazil, initiates Section 301 IP investigation into Vietnam; tariffs proposed and comment periods open, dated 2 June 2026.)

Latest tariffs' effect on Brazilian trade

Grounded in Section 301 of the Trade Act of 1974, the latest 25% tariff proposal targets Brazilian practices deemed "unreasonable" in areas such as digital trade, electronic payments, intellectual property, rare earths and access to the ethanol market.

Compared with previous US tariff announcements regarding Brazil, the scope of this proposal is broader and is not limited to specific sectors, although it includes relevant exceptions, such as beef, coffee, energy and aircraft parts, as well as products already subject to Section 232 of the Trade Expansion Act of 1962 (e.g., certain steel, aluminum, copper and automotive flows).

The process remains under public consultation, with clearly defined deadlines for submissions and the possible adoption of measures by mid-July 2026. Although the new tariffs are not yet final, their proposal indicates that the cost of entering the US market could increase significantly.

The US government is also investigating several countries for failing to restrict imports of products allegedly manufactured using forced labor, with the possibility of imposing additional tariff of 10% or 12.5%. If this investigation were extended to imports from Brazil, tariff "stacking" could arise, which is when tariffs accumulate (e.g., 25% + 12.5%, resulting in 37.5%).

No-regrets activities

Against this backdrop, a central question emerges: are we entering a new phase of volatility in which Brazil's trade exposure with regard to the United States ceases to be episodic and instead reflects a new operational baseline? If so, simply reacting to tariff fluctuations that disrupt existing contracts and erode margins is no longer a sustainable approach.

Instead, companies need to engage in strategic reflection that goes beyond their customs agendas. It requires international tax approaches that involve decisions on logistics networks, product origin and supply-chain configuration. These decisions need to bring together Trade, Tax and Supply Chain functions to analyze the Operating Model Effectiveness (OME) framework to help reduce and redistribute costs in ways that are aligned with overall business operations.

In this context, practical short-term solutions could help reduce the impact, provided the solutions remain adaptable and sustainable over time in the event of further fluctuations. These "no-regrets" activities are actions that can help generate value regardless of the direction of future changes.

Potential responses

The available alternatives are numerous and, in many cases, complementary. Depending on the industry, the most effective response may lie in adopting one or more of the alternatives outlined below.

Among them, planning based on non-preferential origin rules can redefine the tariff classification of products. The pursuit of alternative customs valuation methods, combined with a review of cost composition, could create opportunities to modify the taxable base. Likewise, special customs regimes, when combined with local value-added tax (VAT) mechanisms, can help reduce residual tax obligations on Brazilian exports. Approaches such as "First Sale for Export" arrangements and the use of customs warehouses (Bonded Warehouses or Free Trade Zones) are gaining relevance as efficiency-enhancing tools.

Going a step further, the response also requires reassessing the economic balance within multinational groups themselves. The reallocation of functions, risks and assets from a transfer-pricing perspective becomes central to determining who absorbs the economic impact of tariffs within the group and on what documentary basis. Consequently, aligning the transfer-pricing perspective with customs valuation becomes critical in this environment.

In turn, this movement must be evaluated within the broader tax and business framework of both the jurisdiction and the multinational group, including corporate income tax, future profitability projections, the basis for deferred tax accounting and potential impacts on effective tax rate (ETR) approaches, which interact with the effects of Brazil's Worldwide Taxation Regime, as well as with Pillar Two.

Extreme caution is required, as asset- and labor-intensive operations may benefit from the Pillar Two substance-based income exclusion calculation, favoring certain tax incentive environments in a balanced approach to reducing top-up tax. This demands a careful assessment of how and where investments should be structured and profits allocated.

Critically, decisions made to reduce tariffs may generate adverse consequences on other fronts, increasing the effective tax burden, altering cash flows or affecting indicators such as earnings before interest, taxes, depreciation and amortization (EBITDA). After all, a logistics or commercial adjustment may improve the tariff outcome while worsening the ETR, and vice versa. In other words, an integrated, multidisciplinary international perspective is required.

Conclusion

In a global environment characterized by greater trade friction and reduced regulatory predictability, abrupt price renegotiations can be a palliative measure that should generally be avoided. Instead, mapping and reducing tariff exposure, reassessing operating structures and aligning customs, tax and logistics decisions can help.

For Brazilian exporters with a significant presence in the US market, competitiveness will also be determined by their ability to adapt to an increasingly fragmented global system. Anticipating risks, integrating internal capabilities and even redesigning supply chains have become essential conditions for preserving margins, cash flow and relevance in international trade.