US launches probe into Brazil’s trade practices

The United States has opened a trade investigation into Brazil, escalating tensions between the two countries. The probe, announced by the U.S. Trade Representative (USTR), focuses on digital trade, tariffs, and alleged discrimination against American companies.

Trade Ambassador Jamieson Greer said the investigation follows President Donald Trump’s direction. “Brazil’s attacks on American social media companies and other unfair practices must face a thorough review,” Greer said in a statement Friday.

Section 301 Comes Into Play

The investigation uses Section 301 of the Trade Act of 1974. This provision allows the U.S. to act against what it considers unfair foreign trade practices. Section 301 previously led to tariffs on Chinese goods during Trump’s first term.

According to the USTR, Brazil may have imposed “unreasonable or discriminatory” barriers on U.S. commerce. Areas under scrutiny include digital payments, tariffs, ethanol trade, and protection of intellectual property rights.

The investigation follows a strongly worded letter from Trump to Brazilian President Luiz Inácio Lula da Silva. Trump accused Lula of using legal action against former President Jair Bolsonaro as a “witch hunt.”

U.S. Concerned About Censorship and Pix

One major concern is how Brazil treats American tech firms. The USTR says Brazil could retaliate against U.S. platforms that do not remove political content. It also flagged the country’s digital payment system, Pix.

Pix, launched by Brazil’s central bank in 2020, now dominates the nation’s payment ecosystem. The USTR claims Brazil favors Pix while disadvantaging foreign payment providers.

“Brazil engages in several unfair practices related to electronic payment services,” the agency said. These practices, it claims, give Pix an unfair edge over American alternatives.

Tariffs and Ethanol Tensions

The U.S. also accuses Brazil of giving trade breaks to its preferred partners. This, the USTR says, leaves American exporters at a disadvantage. One example is ethanol, where Brazil recently hiked tariffs on U.S. imports.

In 2019, Brazil offered nearly duty-free access to U.S. ethanol producers. But in recent years, it reversed that stance, imposing a higher tariff and sparking concern in the American agricultural sector.

“We’re seeing backtracking from Brazil on previous market-opening commitments,” Greer noted.

No Trade Deficit, But Tensions Rise

Unlike other trade spats initiated by Trump, the U.S. has no trade deficit with Brazil. In fact, it posted a $6.8 billion surplus last year. For 18 consecutive years, the U.S. has exported more to Brazil than it imports.

Despite this, Trump threatened a 50% tariff on Brazilian imports. He claims the move responds to censorship orders targeting U.S. social media firms and alleged threats to free elections.

Trump’s letter also aligns with a broader plan. He wants to impose a 10% levy on goods from BRICS nations—Brazil, Russia, India, China, and others—to “protect the U.S. dollar.”

Trump did not provide details about when the tariffs would begin or how they would be enforced.

Lula Pushes Back

President Lula responded quickly to the letter. “The United States does not have a deficit with Brazil. It’s Brazil that has a deficit with the U.S.,” Lula told a rally crowd.

“I should be the one taxing them,” he said.

Lula pledged to fight the tariffs through every possible avenue. That includes lodging complaints with the World Trade Organization and rallying BRICS members for support.

Brazil currently chairs the BRICS bloc. Lula has promised to use that position to build economic alliances and challenge Western dominance.

Looking Ahead

The trade investigation could lead to tariffs, sanctions, or other actions against Brazil. That depends on the findings of the Section 301 probe, which may take months.

Experts warn that political motives are driving the process. “This is a clear case of economic policy being used as a political weapon,” said Michael Shifter, senior fellow at the Inter-American Dialogue.

“The real danger,” he added, “is that it could spiral into a broader diplomatic rift.”