Brief preliminary analysis of the investigation initiated by the USTR against Brazil.

On July 17th, the USTR opened Docket No. USTR-2025-0043 regarding an investigation initiated against Brazil under Section 301 of the Trade Act of 1974, which aims to combat unfair trade practices committed by countries or companies against the United States.

The open lobby aims to publicly announce the start of the investigation, as well as initiate the public consultation process on the subject. Through the lobby, interested companies and individuals can submit complaints, reports, and opinions on the topics under investigation. 

It is a way of compiling evidence for the subsequent decision-making process.

According to the document summary:

In accordance with the President’s specific direction, on July 15, 2025, the U.S. Trade Representative initiated an investigation into Brazil’s actions, policies, and practices relating to digital commerce and electronic payment services; unfair preferential tariffs; enforcement of anti-corruption measures; intellectual property protection; market access for ethanol; and illegal deforestation. The Section 301 Committee is holding a public hearing and seeking public comment regarding this investigation.

According to the released document, a public hearing will be held at the USTR on September 3rd regarding the matters under investigation, a hearing that may be extended to the following day if necessary.

Up to 7 days after the conclusion of this hearing, arguments and information may be presented to refute the accusations against Brazil. 

Now, let's move on to the accusations.

1. E-commerce and Digital Payment Services

The essential accusation in this area is that Brazil is harming the interests and competitiveness of US Big Tech companies.

According to the document:

The Brazilian Supreme Court (STF) recently voted to hold social media companies liable for illegal posts by their users, even in the absence of a court order to remove that content, but includes a wide range of speeches, including political speeches, within the scope of these "illegal" posts. This regime could trigger the preemptive removal of content and restrictions on a wide range of speeches, as well as significantly increasing the risk of economic harm to US social media companies. Furthermore, Brazilian courts have issued secret orders... (A blatant lie!) instructing US social media companies to censor thousands of posts and remove dozens of political critics, including American citizens, for lawful speeches on American soilWhen U.S. and U.S.-based companies refused to comply with these orders, Brazilian courts imposed substantial fines on the U.S. and U.S.-based companies, ordered the suspension of U.S. and U.S.-based platforms in Brazil, and threatened executives of U.S. and U.S.-based companies with imprisonment or criminal prosecution.

As can be seen, the document reproduces the complaints of Elon Musk and Bolsonaro supporters regarding the judicial and legal control of social media in Brazil.

The document's premise is that U.S. laws must supersede Brazilian laws on this matter. Thus, Brazilian law would have to accommodate speech and behaviors considered legal in the U.S., but which, under national law, would be crimes punishable by law.

This is part of Trump's international campaign to defend the unchecked, judicially unhindered operation of US Big Tech companies, which, according to MAGA, should only be subject to the US Constitution and laws. Australia and the European Union, for example, face the same criticisms leveled against Brazil.

Regarding Pix, the document dedicates the following paragraph to it:

Furthermore, Brazil also appears to engage in a number of unfair practices with regard to electronic payment services, including, but not limited to, to take advantage of electronic payment services developed by the government.

Clearly, there's nothing unfair about PIX. What's irritating the major US credit card companies (Visa, Mastercard, American Express, Elo, etc.) are the installment payments via PIX, which are taking a chunk out of these large companies' market share in the national credit market. 

In the last 3 months of 2024, 52% of financial transactions in Brazil were made using Pix, compared to only 9,8% with credit cards. Furthermore, Pix successfully competes with PayPal, WhatsApp Pay, and all those digital payment systems linked to US Big Tech companies.

However, it's an imperialistic illusion to want to eliminate Pix. These companies, with their exorbitant spreads, will have to face this legal and fair competition. 

1. Brazil's preferential and unfair tariffs.

The complaint here is against preferential tariffs that Brazil offers to certain countries by virtue of trade agreements, a universal practice that is compatible with WTO rules.

The document cites, in particular, “The preferential tariffs that Brazil grants to India and Mexico. Preferential tariff treatment that Brazil does not grant to the United States. This preferential treatment covers thousands of tariff lines for Mexico and hundreds of tariff lines for India, with rates between 10% and 100% lower than Brazil's MFN (Most Favored Nation) rate. This preferential treatment applies to hundreds of products in various sectors, such as agricultural products, motor vehicles and parts, minerals, chemicals, and machinery. In 2023, Brazil imported approximately US$5,5 billion worth of goods with these preferential tariff rates – US$4,6 billion from Mexico and US$1 billion from India.

Now, we reiterate that preferential tariffs established under specific bilateral or multilateral trade agreements do not violate the WTO's most-favored-nation principle, according to which tariff concessions made to one nation must be extended to other countries. 

Preferential tariffs established under specific trade agreements, based on reciprocity, do not necessarily have to be extended to all countries and are exceptions permitted by WTO rules. A typical example is free trade agreements, whether bilateral or multilateral.

The US, by virtue of the USMCA, for example, grants tariff concessions to Canada and Mexico that, obviously, are not extended to Brazil. 

Brazil could negotiate something along those lines with the US. The problem is that, with Trump, this has become virtually impossible. 

1. Application of Anti-Corruption Standards

According to the document:

Evidence ( which?) Reports suggest that Brazil's efforts to combat corruption have weakened considerably in some areas. For example, (Which ones?, whose?) They indicate that prosecutors have signed. shady deals to grant leniency to companies involved in corruption and indicate conflicts of interest in judicial decisions. In a widely publicized case involving bribery of public officials for public projects and money laundering, decisions by a Supreme Court justice that overturned convictions generated widespread criticism. Evidence (Again, which ones?) "These indicate that the lack of implementation of anti-corruption measures and the lack of transparency by Brazil may harm American companies involved in trade and investment in Brazil, which raises concerns regarding anti-corruption and corruption standards, such as those provided for in the Protocol to the Agreement on Trade and Economic Cooperation between the Government of the United States of America and the Government of the Federative Republic of Brazil Relating to Trade Rules and Transparency, Annex III, or in the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, concluded in Paris on December 19, 1997."

Now, leniency agreements made in Brazil are transparent and public, and they follow Brazilian laws and international conventions on the subject.

Incidentally, in this area Brazil closely follows the example of the US, which constantly makes leniency agreements, mainly with US companies, to avoid greater damage to the American productive sectors.

According to the U.S. Department of Justice, "Since the beginning of the 1990s, the Antitrust Division has offered significant, predictable incentives and..." transparent mechanisms that allow companies to voluntarily self-declare and cooperate in antitrust criminal investigations in exchange for protection against criminal prosecution for the corporate entity and its employees.The Antitrust Division's Corporate Leniency Policy has assisted the Antitrust Division in uncovering domestic and international cartels, resulting in successful prosecutions of companies and conspiring executives and the recovery of billions of dollars in criminal fines and damages to victims of antitrust crimes.

Indeed, in 1993, the Antitrust Division of the U.S. Department of Justice created its Leniency Program, issuing its Corporate Leniency Policy. The Leniency Program offers a means for a company to avoid criminal prosecution for violating federal antitrust laws—such as price fixing, bid rigging, and market allocation—by self-reporting the illegal activity to the Antitrust Division.

According to the DOJ"Although some have recently questioned the effectiveness of the Leniency Program, the Leniency Program is widely regarded as a success and a fundamental part of the Antitrust Division's enforcement toolbox."

The US therefore has a whole Leniency Policy that prevents companies and individuals from being prosecuted to the full extent of the law, in exchange for information and cooperation with the Justice Department.

Brazil is simply following, on a much smaller scale, the example set by the US.

1. Intellectual Property Protection

According to the document:

Brazil (What do you mean, Brazil?) engages in a variety of acts, policies, and practices that apparently They deny adequate and effective protection and enforcement of intellectual property rights. For example, Brazil has failed to effectively address the widespread import, distribution, sale, and use of counterfeit products, modified game consoles, illicit streaming devices, and other evasive devices. Counterfeiting remains widespread because enforcement operations are not accompanied by deterrent measures or penalties and by the long-term disruption of these illicit business practices. The Rua 25 de Março area has remained one of the largest markets for counterfeit goods for decades, despite targeted enforcement operations in that area.

Well, this is a global problem that affects many countries, including the USA.

A report from the Buy Safe America Coalition He stated that $1,5 billion worth of counterfeit toys and $6,8 billion worth of counterfeit cell phones were imported into the US in 2023. That's far more than what circulates on 25 de Março Street. US Customs and Border Protection In 2024 alone, the country seized approximately US$731 million worth of counterfeit goods. However, this is only a fraction of what comes in.

According to the OECD, the international trade in counterfeit goods reaches US$467 billion per year. That's almost half a trillion dollars annually. 

But that number could be much higher, as estimates suggest that the total trade in counterfeit goods could have reached $600 billion in the US alone in 2016.

There are also estimates that predict this type of trade could reach US$1,7 trillion by 2030 worldwide.

What can be deduced, therefore, is that the market for counterfeit products in the US is much larger than in Brazil. 

Brazil, for its part, has been doing its part in this difficult global effort.

In 2024 alone, seizures of contraband and counterfeit goods in Brazil totaled R$ 471 billion, according to the Federal Revenue Service, an increase of 27% compared to the previous year. 

The accusations from the Trump administration are therefore unfair and unfounded.

1. Ethanol Market

According to the document, Brazil and the US had established, until 2017, a bilateral trade in ethanol with virtually no tariffs, which benefited both countries, the world's largest producers of the product.

However, according to the same document, "Starting in September 2017, Brazil abandoned this mutually beneficial approach, particularly harming the United States, which supplies the majority of Brazilian ethanol imports. Since then, U.S. ethanol producers have sometimes faced high and unfair Brazilian import tariffs on their products."

Brazil initially imposed a tariff quota (CTQ) of 600 million liters annually in 2017, with an extra-quota rate of 20% on ethanol imports. In September 2019, the CTQ was expanded to 750 million liters annually, but expired in December 2020, causing all ethanol imports to face a 20% rate, which was subsequently changed to 18% in November 2021. The expiration of the CTQ and the significantly higher Brazilian tariff rates had a negative impact on the previously robust bilateral ethanol trade. Brazil temporarily eliminated its tariff on ethanol from March 23, 2022, to January 31, 2023, but later reinstated it at 16%. As of January 1, 2024, Brazil set its tariff rate on ethanol at 18%, a value that remains unchanged.

These tariff rates had a clear impact on US ethanol exports to Brazil.

US ethanol exports to Brazil peaked at US$761 million in 2018, but fell to US$140.000 in 2023 and reached US$53 million in 2024, suggesting that US ethanol producers are at a significant disadvantage under the current tariff system.

Unlike the others, this specific complaint has a technical and rational basis and could be the subject of a negotiation uncontaminated by political and ideological factors..

However, it must be taken into account that ethanol manufactured in the US benefits from the enormous subsidies that the US government offers to its corn producers. 

It is important to note that corn was the most subsidized agricultural crop in the US in 2024. In total, US corn farmers received $3,2 billion in direct government subsidies (not counting indirect subsidies), representing 30,2% of total direct agricultural subsidies in the US.

Well, it's obvious that this distorts the international price of ethanol manufactured in the USA.

In truth, if the WTO were functioning properly, Brazil could file a complaint against the US due to this very high and distorted level of subsidies.

But all of this can be the subject of technical negotiations.

1. Illegal Deforestation

This is the international joke of the year. Such a complaint, coming from the Trump administration, perhaps the most denialist and environmentally hostile administration in the world, is nothing more than gigantic hypocrisy.

According to the document:

Evidence (which?) Studies indicate that Brazil's lack of effective enforcement of environmental laws and regulations has contributed to illegal deforestation in the country, and Brazilian ranchers and farmers have used these illegally deforested lands for agricultural production, including livestock farming and a wide range of crops, including corn and soy. The conversion of illegally deforested lands for agricultural production It provides an unfair competitive advantage to agricultural exports by reducing costs and expanding the availability of agricultural inputs.

Brazil is a major competitor of the United States in global sales of agricultural products, including beef, corn, and soybeans. When China exerts economic coercion and restricts or prohibits U.S. agricultural exports, Brazilian producers readily replace those products. Although the United States has an overall trade surplus with Brazil in goods and services, the U.S. trade deficit with Brazil in agricultural products has increased sharply in recent years, from approximately $3 billion in 2020 to $7 billion in 2024.

As can be seen in this last paragraph, the Trump administration finally acknowledges that the US has an overall surplus in goods and services with Brazil..

Nevertheless, they complain about the competitiveness of Brazilian agriculture, which has increased its surplus in the bilateral agricultural market. Furthermore, Brazil has been rapidly replacing US agricultural exports in third-party markets, such as the Chinese market, for example.

But this competitiveness is not significantly related to deforestation. It is related to the increase in overall productivity of Brazilian agriculture. 

According to a study released by Ipea in 2023, the productivity of Brazilian agriculture increased by 400% between 1975 and 2020. 

The study highlights that, in the context of national agricultural production, the expansion of capital in the form of machinery, fertilizers, and pesticides has outpaced the growth of other factors, such as land and labor. "We can say that our production is intensive in science and technology and increasingly less intensive in traditional factors.""This dynamic results in a huge increase in labor productivity over time," said José Eustáquio Ribeiro Vieira Filho, a researcher at Ipea and one of the authors of the study.

It should be noted that, in this third Lula administration, just as happened in the first two, a real and significant effort is being made to reduce deforestation. 

According to MapBiomas' annual report, deforestation in Brazil showed a significant decrease in 2024, with a 32,4% reduction compared to the previous year. This decrease occurred in five of the six Brazilian biomes, with the Atlantic Forest being the only one that remained stable.

Furthermore, as soon as he was elected, Lula made a serious international commitment to zero illegal deforestation in the Amazon by 2030.

Ironically, the label of "deforestation country" did indeed apply to the government of Bolsonaro, an ally of Trump, which instigated this tariff aggression against Brazil. 

The Bolsonaro government, just like the Trump government is today, was a government that denied climate change and promoted illegal deforestation, letting "the cattle run wild," to use the vulgar and idiotic metaphor of the anti-environmental minister from that sad era. 

Today, however, such an unfounded "accusation" sounds like nothing more than an illegal excuse to protect a heavily subsidized agriculture from a more efficient competitor.

Finally, it should be noted that this investigation, under US law, should have preceded any US trade measures against Brazil.

But in reality, she is only trying to find, after the fact, some justification for the real trade embargo imposed on Brazil for sordid political reasons and for widely known geopolitical reasons.

Reason, legality, and sovereignty must prevail.