Brazilian industry still counting cost of U.S. tariffs, but sees alternatives in other markets

After a year of dealing with tariffs imposed by the U.S. government, several Brazilian industries are still assessing the full impact of President Donald Trump’s trade measures on their operations.

The affected sectors include major exporters of steel and aluminum, leather and footwear, furniture, textiles, tobacco, firearms and ammunition, and wood products.

The measures were introduced at different times. In April 2025, Trump imposed a baseline tariff of 10% on Brazilian goods under the International Emergency Economic Powers Act, or IEEPA.

Steel and aluminum have followed a separate timeline from most other Brazilian exports affected by the tariffs. Since June 2025, both metals have been subject to a sector-specific tariff of 50% under Section 232 of the Trade Expansion Act of 1962, a mechanism used to restrict imports on national security grounds.

In addition to the 10% tariff introduced in April 2025, Trump announced a further 40% tariff on other Brazilian products in July of that year. When the U.S. Supreme Court struck down the IEEPA-based tariffs in February 2026, steel and aluminum were unaffected because their duties had been imposed under a different legal authority.

Two provisions are now being used more frequently. Section 232 gives the president authority to impose tariffs on specific industries on national security grounds. Section 122, applied since February 2026, allows tariffs of up to 15% to address trade imbalances.

A decision expected from the Trump administration on Wednesday, July 15, concerns the possible use of Section 301. The provision allows the Office of the U.S. Trade Representative, or USTR, to investigate whether another country engages in practices considered unfair to U.S. trade.

The investigation involving Brazil covers issues including the country’s ethanol tariffs, rules governing payment systems such as Pix, intellectual-property protections and efforts to combat illegal deforestation.

Brazil’s steel industry exported $3.8 billion worth of products to the United States in 2023 and had already been losing ground in the U.S. market before Trump returned to office. Shipments fell 26.1% to $2.8 billion in 2024 and declined further to $2.6 billion in 2025. From January through May 2026, exports totaled $977.7 million, according to data from the Brazilian Trade and Investment Promotion Agency, ApexBrasil.

Brazil is the second-largest foreign supplier of steel to the United States. Its shipments are concentrated in primary, low-value-added products, which are particularly exposed to U.S. tariffs.

“We expect to be included on the exemption list,” said Fausto Cançado, president of Sindifer, the association representing iron producers in the state of Minas Gerais. Other industries share that expectation.

In a preliminary assessment, Sindifer estimates that 55% of Brazil’s pig iron plants could halt production, either temporarily or permanently, if the new tariffs are imposed. Pig iron is a raw material used in steelmaking.

Exports of Brazilian machinery and equipment to the United States fell 9.1% last year. The sector’s association, Abimaq, nevertheless reported strong sales growth in other markets, including Argentina, where exports rose 38.4%; Singapore, up 74.3%; Peru, up 22.5%; and Chile, up 17%.

According to Abimaq, part of the increase in sales to markets such as Argentina and Singapore was not a direct result of the U.S. tariff measures. Other factors included improving economic conditions in those countries and temporary changes in supply routes.

The association said the machinery industry depends on lengthy negotiation, product-approval and technical-testing cycles, making it impossible to redirect sales quickly to other markets.

Leather and footwear, furniture, textiles, tobacco, firearms and ammunition, and softwood products remain subject to the 10% tariff imposed under Section 122. Those industries could face an additional 25% tariff depending on the decision expected on Wednesday.

Brazilian leather exports to the United States fell 14.5% between 2024 and 2025, declining from $142.7 million to $122 million. Shipments totaled $43.7 million through May 2026.

As an alternative, the leather industry reported higher sales to countries including South Korea, Spain and Mexico last year.

The decline was more modest for footwear. Exports fell from $132.1 million in 2024 to $130.2 million in 2025, according to ApexBrasil. Abicalçados, the Brazilian footwear manufacturers’ association, said exports to Latin American countries had increased significantly.

According to Datamar’s maritime cargo throughput data, footwear exports to the United States fell 25.7% in the first five months of the year compared with the same period a year earlier. That means only 466 TEUs were shipped to the North American market. See more details below:

Footwear Exports to the United States | Jan 2023 – May 2026 | TEUs

Source: DataLiner (click here to request a demo)

Brazil mainly supplies leather shoes to the United States. Abicalçados said a new trade barrier would therefore have an especially severe impact on the country’s leading footwear-producing regions, including the Vale dos Sinos and Vale do Paranhana-Encosta da Serra clusters in Rio Grande do Sul state and the city of Franca in São Paulo state.

“Redirecting the goods exported to the United States is not an option because most of the shoes are developed specifically to meet the demands of that market,” Abicalçados Executive President Haroldo Ferreira said in a statement.

The association said all segments of the footwear industry would be affected by a potential tariff increase, although their levels of dependence on the U.S. market vary.

Brazil’s furniture industry increased exports to the United States by 12% in 2024 but ended 2025 with a 3.6% decline, shipping $76.5 million worth of products. Exports totaled approximately $20 million between January and May 2026.

The United States receives around 33% of all furniture exported by Brazil.

Industry association Abimóvel said furniture manufacturers have faced a succession of tariff changes that has created instability in commercial relations with the United States.

The association said it has been explaining to U.S. authorities that an additional tariff on Brazilian furniture has no economic or commercial justification. Although the United States is the industry’s leading export destination, Brazil accounts for only 0.7% of U.S. furniture imports.

Companies have found some alternative markets for products previously shipped to the United States, including Uruguay, Argentina, Peru, Paraguay and Colombia. Although the volumes remain relatively small, some of those countries have doubled their share of Brazilian furniture exports over the past two years.

Abimóvel cautioned, however, that growth in other markets does not mean the United States can be replaced immediately, as it remains a strategic destination.

The association recommends maintaining dialogue with U.S. authorities while increasing investment in trade promotion, market intelligence and new sales channels, particularly in Latin America, Asia and the Middle East.

“We do not want to abandon established markets. We want to expand them while also opening new fronts, reducing risks and providing greater stability for the international expansion of Brazilian industry,” Abimóvel said.

Brazil’s textile and apparel exports fell from $42.9 million in the first half of 2025 to $37.8 million in the same period of 2026, according to government trade database ComexStat.

The Brazilian Textile and Apparel Industry Association, Abit, said Paraguay, which has been the largest market for Brazilian clothing for several years, increased its purchases from Brazil by 25% between January and June 2026.

Exports to Uruguay rose 4%, while shipments to Ecuador increased 52% to $4.9 million in the first half of the year.

The United States is the Brazilian apparel industry’s third-largest export destination, behind Paraguay and Uruguay.

The outlook is more uncertain for other industries. The United States still accounts for 50% of Brazilian exports of products such as wood moldings, which are manufactured to meet construction-industry specifications.

Concentrated in southern Brazil, the wood products industry had been recovering from the 40% tariff in force between July 2025 and February 2026. During that period, companies reduced production, placed workers on collective leave and carried out some layoffs.

“We do not have a Plan B because the international distribution network for Brazilian production is already firmly established,” said Paulo Pupo, superintendent of Abimci, the Brazilian association representing mechanically processed wood manufacturers.

Pupo said Abimci did not have an estimate of how many jobs had been lost. However, the association expects the same pattern to recur, with companies reducing both employment and investment.

Source: Folha de São Paulo

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