Key Points

  • In a July 9 letter sent to his Brazilian counterpart, President Trump vowed to impose a 50% tariff on “any and all Brazilian products” imported into the United States, effective August 1. He also previewed the initiation on July 15 of a U.S. investigation under Section 301 of the Trade Act of 1974 into Brazil’s alleged unfair trade practices.
  • Brazilian President Luiz Inácio Lula da Silva responded by indicating Brazil would negotiate with the United States to try to avert the tariff, but would also be ready to impose countermeasures in accordance with Brazil’s recently-approved Economic Reciprocity Act.
  • The situation and the resulting uncertainty will have important implications for companies doing business across the U.S. and Brazilian markets. Businesses should consider the short and long-term risks resulting from heightened trade and investment tensions between both countries.
  • Sectors and companies potentially affected may benefit from outreach to government officials in both countries. The Brazilian Economic Reciprocity Act in particular includes provisions for private sector input in case Brazil decides to retaliate. The Section 301 investigation launched by the United States into Brazil’s trade practices—which itself may result in additional U.S. tariffs or other retaliatory trade measures—will also provide interested sectors and businesses the opportunity to submit comments or testimony to the U.S. government.

Click here to read the full alert on cov.com.

Photo of Kate McNulty Kate McNulty

Kate McNulty advises U.S. and international clients on a range of complex international trade issues, dynamic U.S. and global tariff matters, and related trade compliance questions, including tariff stacking. She provides legal, policy, and strategic advice to companies, trade associations, and governments on…

Kate McNulty advises U.S. and international clients on a range of complex international trade issues, dynamic U.S. and global tariff matters, and related trade compliance questions, including tariff stacking. She provides legal, policy, and strategic advice to companies, trade associations, and governments on international economic policy matters, and assists clients in navigating geopolitical risk. She advises clients on the negotiation and enforcement of international trade agreements, including enforcement proceedings arising under the facility-specific rapid response labor mechanism of the USMCA.

Kate regularly represents clients before U.S. agencies such as the Office of the U.S. Trade Representative (USTR) and the U.S. Department of Commerce, including in proceedings arising under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. She also litigates before the U.S. Court of International Trade and represents clients in antidumping and countervailing duty (AD/CVD) proceedings.

Prior to joining Covington, Kate held various positions in the U.S. government. Most recently, Kate served in the Office of Multilateral Trade Affairs at the U.S. Department of State from 2009 to 2018, where she managed trade enforcement matters for the Department—including U.S. government actions under Section 301 and Section 232—and also participated in the negotiation of international trade agreements on behalf of the U.S. government.

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Photo of Daniel Erikson Daniel Erikson

Daniel P. Erikson has more than twenty years of experience in international relations, foreign policy, national security, and defense policy, primarily focused on Western Hemisphere affairs. A non-lawyer, Dan’s experience includes serving at the National Security Council, the Department of Defense, the Office…

Daniel P. Erikson has more than twenty years of experience in international relations, foreign policy, national security, and defense policy, primarily focused on Western Hemisphere affairs. A non-lawyer, Dan’s experience includes serving at the National Security Council, the Department of Defense, the Office of the Vice President, and the Department of State, as well as work for think-tanks, universities, and private sector consultancies.

Prior to joining the firm, Dan was Special Assistant to the President and Senior Director for Western Hemisphere Affairs at the National Security Council, where he served as the lead White House advisor on the hemisphere. His work covered all diplomatic, economic, and national security issues related to Mexico, Central America, the Caribbean, South America, and Canada.

Dan was previously the Deputy Assistant Secretary of Defense for the Western Hemisphere at the U.S. Department of Defense. At the Pentagon, he successfully advanced U.S. defense priorities as the Department’s senior policy official for the Western Hemisphere, with a focus on defense modernization, effective security cooperation, counter-narcotics, climate resilience, cyber, and humanitarian assistance and disaster relief. In this capacity, Dan served as a member of the Senior Executive Service and managed a team of civilian and military defense professionals to provide policy guidance to the Secretary of Defense, U.S. Northern Command, and U.S. Southern Command.

Dan also served in the White House as Special Advisor to the Vice President, where he covered foreign affairs, economic, and national security issues in the Western Hemisphere. Prior to this, Dan was Senior Advisor for Congressional and Inter-Governmental Affairs and Senior Advisor for Policy at the U.S. Department of State. His responsibilities included advising State Department leadership on complex diplomatic issues and key administration and congressional priorities.

In addition to his U.S. government experience, Dan has held senior positions in the private sector, think-tanks, and academia. He has published widely on a range of topics in international and Latin American and Caribbean affairs and testified before the U.S. Congress. He is the recipient of the Secretary of Defense Medal for Outstanding Public Service and the U.S. State Department’s Superior Honor Award.

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Photo of Diego Bonomo Diego Bonomo

Diego Bonomo is a senior advisor in the firm’s London office. Diego, a non-lawyer, has more than 25 years of Brazil regulatory, trade, and foreign affairs experience at leading business associations, think tanks, companies, and academic institutions. Diego also served in the Brazilian…

Diego Bonomo is a senior advisor in the firm’s London office. Diego, a non-lawyer, has more than 25 years of Brazil regulatory, trade, and foreign affairs experience at leading business associations, think tanks, companies, and academic institutions. Diego also served in the Brazilian government.

Before joining the firm, Diego was Team Leader of the Brazil Trade Facilitation Program at Palladium and Executive Manager of International Affairs at Brazil’s National Confederation of Industry — CNI. At the U.S. Chamber of Commerce, he served as Senior Director of the International Division and Senior Director for Policy of the Brazil-U.S. Business Council. Diego also was Executive Director of the Brazil Industries Coalition — BIC, the leading Brazilian business coalition in the United States, and General Coordinator of Foreign and Trade Affairs at the Federation of Industries of the State of São Paulo — FIESP. He previously served in the Office of the President of Brazil as advisor to the Minister of Long-Term Planning.

Diego holds a bachelor’s and master’s degree in international relations from the Pontifical Catholic University of São Paulo.

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