The 37.5% Tariff Takes Effect: The First Impact on the Factory Floor

On July 24, 2026, the combined 37.5% tariff on a long list of Brazilian products actually took effect in the United States. Unlike the original 2025 announcement, this tariff survived the Supreme Court’s strike-down of the IEEPA, because it was built on another legal basis. Brazilian exporters felt the shock immediately.

Who was hit, and who was left out

Four product groups concentrated the largest impact: footwear, textiles and apparel, furniture and ethanol, and machinery and equipment. None of those sectors received an exemption, which means direct margin pressure, the risk of inventory buildup, and a loss of competitiveness against rivals from other countries in U.S. retail. Separately, steel and aluminum remained under a 50% surcharge from another investigation, also with no exceptions.

Left outside the tariff were products the United States considered strategic or hard to replace: coffee (nearly US$ 2 billion in annual exports), beef (preserving contracts of packers such as Minerva, JBS, and Marfrig), fruit such as mango, grape, and açaí, plus oil, pulp, and Embraer civil aircraft.

The immediate reaction from companies and the government

The effect was not gradual. Companies in export hubs in Mato Grosso do Sul, Espírito Santo, and Paraná began suspending shipments and applying collective work-contract suspensions within days of the tariff taking effect, a fast response that shows how much those production chains depended on the U.S. market.

On the Brazilian government’s side, three fronts opened at once: exploring retaliation tariffs under the newly regulated Economic Reciprocity Law; an effort to diversify markets, with commercial outreach to countries such as Indonesia, Vietnam, the Philippines, Egypt, and the United Arab Emirates; and discussion of subsidized credit lines for agribusiness exporters hurt by the loss of market. For companies that depend on bilateral trade, the episode left a practical lesson: diversifying destination markets stopped being a long-term strategy and became a short-term necessity.