United States Agrees to WTO Consultations Over Tariffs on Brazil

The United States government under Donald Trump has accepted a request for consultations from Brazil at the World Trade Organization (WTO) regarding new tariffs reaching up to 37.5 percent. These tariffs were imposed based on trade investigations conducted by the Office of the United States Trade Representative (USTR). While the U.S. signal of willingness to meet is viewed as a positive step because the request could have been ignored, expectations for concrete results remain low due to bilateral tensions and the current paralysis of the WTO.

The Lula administration filed the action on July 27, arguing that the tariffs violate international trade rules and principles. Brazil is contesting a 25 percent surcharge based on investigations into unfair trade practices and a 12.5 percent tariff based on alleged failures to combat imports made with forced labor. The Brazilian government disputes the conclusions reached by U.S. authorities.

This request for consultations represents the first stage of the WTO process. If the dispute is not resolved within 60 days, Brazil may request a panel of three members to issue a report on the compatibility of the measures with WTO agreements. However, the final stage of the process, the Appellate Body, has been paralyzed since 2019 because the Trump administration stopped filling vacancies in 2017. This has led to many panel decisions being appealed into a vacuum, meaning the institution cannot reach final decisions if a country contests the results.

Last year, Brazil filed a separate WTO action against a 40 percent tariff imposed under the justification that former President Jair Bolsonaro was subject to a witch hunt. Those specific tariffs were later declared illegal by the U.S. Supreme Court.