Trump eyes new tariffs on Brazil after court loss

The Trump administration will impose a 25% tariff on many imports from Brazil later this month, reviving a trade dispute that began last year after the Supreme Court blocked a key legal tool the president had used to levy similar duties.

New tariffs follow a Supreme Court ruling that cost billions

The decision follows a February Supreme Court ruling that prevented President Donald Trump from using the International Emergency Economic Powers Act to impose tariffs. The Treasury Department has since refunded about $71 billion to importers, with total refunds expected to reach $166 billion. Domestic manufacturing grew only 1.1% year-over-year as of June.

James Knightley, chief international economist at ING, said the tariffs were meant to generate revenue but may instead create a financial loss for the government. “The hope was tariffs were going to be a big revenue raiser, and right now it appears that actually tariffs are going to be potentially a loser through the second half of this year,” he told Fortune.

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The administration briefly used Section 122 of the Trade Act of 1974 to impose a temporary 10% global import surcharge, but that measure expires later this month. It now relies on Section 301 of the same law, a slower but more stable process that allows the U.S. to investigate and penalize unfair trade practices.

Trump previously used Section 301 during his first term, placing 25% tariffs on roughly $250 billion worth of Chinese imports under the same authority. Those tariffs survived legal challenges, unlike the IEEPA-based duties the Supreme Court struck down.

Brazil is only the first target in a broader strategy

The latest tariffs on Brazil result from a yearlong investigation by the Office of the U.S. Trade Representative, which found the country engaged in unfair trade practices. The action follows separate 50% tariffs imposed last year after Brazil’s former president, Jair Bolsonaro, was accused of attempting to overturn his 2022 election loss. Bolsonaro was later sentenced to 27 years in prison.

Melissa Irmen, director of advocacy for the National Association of Foreign-Trade Zones, said the Section 301 process allows the administration to adjust tariff rates without restarting investigations. “If you set the tariff at say 15% and it’s deemed that it needs to be modified, then changing it to 30% isn’t the same involved process,” she explained.

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Still, the method has risks. Irmen noted that lawsuits could challenge whether the administration sufficiently proved foreign practices harmed the U.S. economy or whether the tariffs would solve the issue. Even if courts later block the duties, businesses might pay them for months or years before seeking refunds—a cycle that occurred after the IEEPA-based tariffs were invalidated.

The administration has already proposed tariffs on other trading partners, including the European Union, following investigations into their enforcement of bans on goods made with forced labor. If those duties proceed, Brazil may only mark the beginning of a broader wave of trade restrictions.

Companies are watching closely.