Yesterday the Office of the U.S. Trade Representative (USTR) self-initiated an investigation concerning the Government of Brazil’s acts, policies, and practices related to, inter alia, digital trade, anti-corruption enforcement, intellectual property protection, ethanol market access, and illegal deforestation.
Investigations under Section 301 of the Trade Act of 1974 (19 U.S.C. § 2411), like this one, address unfair foreign practices affecting U.S. commerce. Past Section 301 investigations have led to tariffs on billions of dollars’ worth of imported goods from China. During the first Trump Administration, the USTR also initiated a Section 301 investigation regarding digital services taxes (DSTs) in several countries (including Brazil). In 2021, this investigation was terminated without further action as the impacted jurisdictions did not adopt or implement a DST during the period of investigation.
Areas of Focus
As set out in the notice, USTR highlights the following areas where it concludes Brazil’s acts, policies, and practices may be unreasonable or discriminatory and burdensome or restrictive to U.S. commerce:
- Digital Trade and Electronic Payment Services: Highlighting the negative impact on U.S. companies’ competitiveness that are engaged in these sectors, USTR provides several examples. The Brazilian Supreme Court voted to make social media companies liable for illegal postings by their users, which the Administration considers is restrictive of free speech and as increasing the risk of economic harm to U.S. social media companies. Brazil also imposes broad restrictions on the transfer of personal data outside of Brazil which, USTR argues, prevents a business from processing data or providing services from U.S. servers, thus disadvantaging U.S. payment companies. Finally, the notice underscores the competitive advantage of Brazilian government-developed electronic payment services.
- Brazil’s Unfair, Preferential Tariffs: In the notice, USTR asserts that Brazil’s lower, preferential rates to other trade partners disadvantage U.S. exports. Specifically, it cites to “preferential trade agreements” with India and Mexico that resulted in about $5.5 billion of products imported into Brazil from the two countries in 2023. It also cites Brazil’s higher MFN rates as denying U.S. exports a level playing field on Brazilian markets, noting that Brazil’s simple average most-favored nation (MFN) rate is 12.2% while the U.S. average is 3.3%.
- Anti-Corruption Enforcement: USTR’s notice suggests that the Brazilian government’s efforts to fight corruption have significantly diminished, citing recently vacated convictions of public officials in a bribery and money laundering case by the Supreme Court. This lack of transparency and anti-corruption enforcement creates a potential disadvantage to U.S. companies trading with and investing in Brazil.
- Intellectual Property Protection: USTR’s concern for the inadequate protection and enforcement of intellectual property rights focuses on technological and pharmaceutical industries. One example provided is the widespread sale of importation, distribution, sale, and use of counterfeit goods, modified gaming consoles, illicit streaming devices, and other circumvention devices. Additionally, the notice cites lengthy pendency times for biopharmaceutical patent applications as cutting into patent terms.
- Ethanol Market Access: In 2024, the U.S. and Brazil’s ethanol production amounted to 80% of the world’s total ethanol production. Despite earlier suspensions of tariffs and imposition of tariff-rate quotas (TRQs) on imported ethanol, the current tariff rate set by Brazil at 18% went into effect January 1, 2024. USTR provides that this “decision to abandon the reciprocal, virtually duty-free treatment that promoted the development of both industries” has caused U.S. exports of ethanol to Brazil to fall from a peak of $761 million in 2018 to $53 million in 2024.
- Illegal Deforestation: The notice alleges that a lack of enforcement of environmental laws has caused Brazilian ranchers and farmers to illegally deforest land for agricultural production (notably corn and soybeans). USTR asserts that this practice, in turn, provides an unfair advantage to Brazilian crops and other products as it lowers costs and expands availability of land inputs.
Procedure and Public Participation
Section 301 authorizes USTR to initiate an investigation either independently, as in this case, or in response to a petition. Procedural requirements are largely the same for both, mandating that USTR complete its investigation and determine a response, if any, within 12 months. The process may go faster.
Here, USTR has provided for public input in the form of written comments and a public hearing. Testimony at the public hearing will be limited to five minutes per person to allow for possible questions from the Section 301 Committee. USTR encourages comments on whether specific Brazilian policies, laws, or practices discriminate against or unfairly disadvantage U.S. businesses, workers, or exports across the six targeted sectors. Commenters are also urged to provide evidence of how these actions burden or restrict U.S. commerce, and to assess whether such practices are unreasonable or discriminatory under Section 301 of the Trade Act. USTR also calls for recommendations of action(s), if any, that should be taken in response, including tariff and non-tariff actions.
Simultaneously, and consistent with the statute, USTR will undertake consultations with the Government of Brazil about its aforementioned concerns regarding Brazil’s trading practices.
Important dates provided include:
- July 17, 2025: USTR will open the docket for submission of written comments. (Docket No. USTR-2025-0043)
- August 18, 2025, at 11:59 p.m. EDT: Deadline for written comments, requests to appear at the hearing (Docket No. USTR-2025-0044), and a summary of the testimony (Docket No. USTR-2025-0044)
- September 3, 2025, at 10.00 a.m.: USTR public hearing at the U.S. International Trade Commission. If necessary, the hearing may continue the next business day.
- Seven calendar days after the last day of the public hearing: Deadline for submission of post-hearing rebuttal comments
Conclusion
Cassidy Levy Kent has experience at all stages of Section 301 proceedings and is available to assist clients interested in participating in USTR’s investigation or simply understanding the Section 301 process and procedures. Businesses should be aware of the possible outcomes when planning or reviewing their supply chains.