Determination: Brazil's Acts, Policies, and Practices Related to Digital Trade and Electronic Payment Services

Notice of Determination and Request for Comments Concerning Action Pursuant to Section 301: Brazil's Acts, Policies, and Practices Related to Digital Trade and Electronic Payment Services; Unfair, Preferential Tariffs; Anti-Corruption Enforcement; Intellectual Property Protection; Ethanol Market Access; and Illegal Deforestation

DATES:

To be assured of consideration, the following schedule applies:

June 1, 2026: Comment period opens.

June 22, 2026: To be assured of consideration, submit requests to appear at the hearing, along with a summary of testimony, by this date.

July 1, 2026: Due date for written comments.

July 6, 2026: USTR will hold a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. If necessary, the hearing may continue on the next business day.

SUPPLEMENTARY INFORMATION:

I. Background

At the specific direction of the President, on July 15, 2025, the Trade Representative initiated an investigation into Brazil's acts, policies, and practices related to digital trade and electronic payment services; unfair, preferential tariffs; anti-corruption enforcement; intellectual property protection; ethanol market access; and illegal deforestation. The notice of initiation solicited written comments on:

Digital Trade and Electronic Payment Services

• The acts, policies, or practices of Brazil that may undermine the competitiveness of U.S. companies engaged in digital trade or electronic payment services.
• The extent to which Brazil's acts, policies, or practices discriminate against or unfairly disadvantage U.S. companies engaged in digital trade or electronic payment services.

Unfair, Preferential Tariffs

• The acts, policies, or practices of Brazil which accord lower, preferential tariff treatment only to certain large trading partners in specific sectors, including sectors in which these trading partners are globally competitive.
• The extent to which Brazil's acts, policies, or practices discriminate against or unfairly disadvantage U.S. exports and economic output.

Anti-Corruption Enforcement

• The extent to which Brazil's enforcement of anti-corruption measures is not sufficient.
• The extent to which Brazil's lack of enforcement of anti-corruption measures disadvantages U.S. companies engaged in trade and investment in Brazil.

Intellectual Property Protection

• The acts, policies, or practices of Brazil that deny adequate and effective protection and enforcement of intellectual property rights.
• The extent to which Brazil's acts, policies, or practices discriminate against or unfairly disadvantage American workers whose livelihoods are tied to American innovation- and creativity-driven sectors.
• Other acts, policies, or practices of Brazil relating to the protection or enforcement of intellectual property rights that may discriminate against or unfairly disadvantage U.S. businesses.

Ethanol Market Access

• The extent to which Brazil's tariff rates or any related regulations on ethanol discriminate against or unfairly disadvantage U.S. ethanol producers.
• Other acts, policies, or practices of Brazil that may discriminate against or unfairly disadvantage U.S. producers of ethanol, biofuels, or related products.

Illegal Deforestation

• The extent to which Brazil has laws and regulations to effectively address illegal deforestation, use of illegally deforested land for agricultural production, and illegal logging taking place in its territory.
• The extent to which Brazil is effectively enforcing laws and regulations to address illegal deforestation, using illegally deforested land for agricultural production, and permitting illegal logging in its territory.
• The extent to which farmers are producing agricultural products on illegally deforested land in Brazil and exporting those products, directly or through downstream agricultural products, to the United States or other markets.
• The extent to which Brazilian products, including lumber and wooden furniture, are being made with timber harvested illegally and are being exported to the United States or other markets.
• Other acts, policies, or practices of Brazil related to illegal deforestation that may discriminate against or unfairly disadvantage U.S. businesses.

General

• Whether there are any other acts, policies, and practices of Brazil related to the production of goods and services referenced in this notice that discriminate against or unfairly disadvantage U.S. businesses.
• Whether Brazil's acts, policies, and practices identified in this initiation notice are unreasonable or discriminatory.

• Whether Brazil's acts, policies, and practices identified in this initiation notice burden or restrict U.S. commerce, and if so, the nature and level of the burden or restriction. This would include economic assessments of the burden or restriction on U.S. commerce.

• Whether Brazil's acts, policies, and practices identified in this initiation notice are actionable under Section 301(b) of the Trade Act, and what action, if any, should be taken, including tariff and non-tariff actions.

Interested persons submitted over 295 comments and rebuttal comments. Some of these comments were non-responsive or contained irrelevant information. Other comments did not address actionability of any of the specific issues raised in the Notice of Initiation, but requested either specific application or exemptions from tariffs for certain products or categories of products. USTR has included responses to major comments that did address actionability in Section III below. In addition, USTR and the Section 301 Committee convened a public hearing on September 3, 2025, during which witnesses provided testimony and responded to questions. The public submissions are available at https://https://comments.ustr.gov/s/in docket number USTR-2025-0043, and a transcript of the hearing is available on USTR's website.

On July 15, 2025, the Trade Representative requested consultations with the Government of Brazil pursuant to Section 303(a) of the Trade Act (19 U.S.C. 2413(a)). Consultations were held on April 15 and 16, 2026.

II. Determination of Actionability

Based on information obtained during the investigation and in consultation with the Section 301 Committee, the Trade Representative has determined under sections 301(b) and 304(a) of the Trade Act that certain of Brazil's acts, policies, and practices related to digital trade and electronic payment services; unfair, preferential tariffs; anti-corruption enforcement; intellectual property protection; ethanol market access; and illegal deforestation are unreasonable or discriminatory and burden or restrict U.S. commerce and thus are actionable.

A. Brazil's Acts, Policies, and Practices With Respect to Digital Trade and Electronic Payment Services Are Actionable

The Trade Representative has determined that certain of Brazil's acts, policies, and practices with respect to digital trade and electronic payment services at issue in this investigation are unreasonable and burden or restrict U.S. commerce. ⁽¹⁾

First, Brazilian courts have issued secret orders directing U.S. social media companies, including X, Meta, and Google, to take down certain political content and to suspend the profiles of U.S. residents, sometimes globally, and prohibiting the platforms from disclosing these orders to profile owners. Brazilian courts have also subjected U.S. social media companies to substantial, daily non-compliance fines or required them to cease operations in Brazil in the event of non-compliance. For example, Rumble, a video-sharing platform, has been suspended in Brazil since February 2025 after it refused to censor a U.S. resident pursuant to a secret Brazilian court order and later elected to publicly defend that user's free-speech rights. Similarly, Brazilian courts prohibited X from operating in Brazil from August to October 2024 after the company refused to take down content created by a Brazilian journalist living in the United States and appoint a local representative. In addition to imposing significant daily fines on X for failing to comply with this take-down order, a Brazilian court froze X's bank accounts, financial assets, motor vehicle and real estate assets; blocked aircraft registered to the company from entering or leaving Brazil; prevented Brazil's central bank from sending X financial assets abroad; and blocked payment-processing platforms from processing payments for X. In 2023 and 2024, Brazilian courts ordered removal and demonetization of numerous accounts and channels related to a popular Brazilian podcaster who lives in Florida. In 2025, Brazilian courts allowed the unblocking of this podcaster's accounts only on the condition that allegedly offensive content remain inaccessible. Meta's transparency reports indicate that from July to December 2025, Brazil ordered it to restrict more content than it has restricted during any comparable period since 2016, including approximately 9,800 items in compliance with orders from local courts and through legal take-down actions related to civil, criminal, and electoral proceedings. Exacerbating this situation is the Brazilian Supreme Court's decision of June 26, 2025, declaring partially unconstitutional Article 19 of Brazil's 2014 internet Civil Rights Framework, which required a judicial order before civil liability could arise from third-party content.

Brazil's take-down orders are secret in that they are known to the social media company but not the affected individual. These orders have had adverse financial consequences for U.S. companies and persons. For example, access to X in Brazil was restored in October 2024 only upon the company's payment of a $5 million fine, and many of Brazil's take-down orders threaten significant daily fines in the event of non-compliance. Orders to cease operations in Brazil and block accounts or platforms in Brazil also result in a loss of market opportunities in Brazil for American social media companies and U.S. persons. The Brazilian Supreme Court's decision of June 26, 2025, compounds this situation of uncertainty and risk, and effectively requires companies to choose between potentially incurring substantial liability for user-generated content and preemptively taking down potentially lawful content.

These secret orders by Brazilian courts and harsh penalties for non-compliance are unreasonable because they require U.S. social media companies to take down political content and suspend the profiles of U.S. and Brazilian residents for political speech that is protected in the United States and necessary for vigorous political discourse. These orders also burden or restrict U.S. commerce by exposing U.S. social media companies to financial liability for failing to take down or suspend such materials, by imposing fines, restricting access to assets, accounts, and payment processing systems, and in at least one case, by shutting down a site altogether.

Second, Brazil has unfairly disadvantaged U.S. companies engaged in competing electronic payment services, including by policies that favor its national champion Pix. The Brazilian central bank established the instant payment system Pix in November 2020. Pix connects financial and payment institutions ("participating institutions") with individuals, firms, and government entities to provide instant or scheduled payments, cash withdrawals, payment invoices, and short-term borrowing, among other services. The Brazilian central bank's dual role as regulator and owner/operator of Pix creates a conflict of interest, in the absence of adequate procedural safeguards. The bank has acted as a regulator to disadvantage U.S. electronic payment services providers and preference Pix. For example, the central bank mandates the use of Pix by financial institutions with more than 500,000 accounts and requires that Pix be displayed on participating institutions' main application screen with no less prominence than any other payment or transfer functionality. In addition, the central bank encourages use of Pix over other services by mandating that participating institutions (including institutions that it requires to participate in Pix) offer Pix for free to individuals and by capping the fee those institutions may charge businesses for Pix transactions.

The acts, policies, and practices of Brazil related to its preferential treatment of Pix are unfair and discriminatory. It is unfair to require competitors to provide advantages to Pix, such as availability, visibility, and fee caps, and Brazil discriminates against U.S. electronic payment services suppliers by providing those advantages only to Brazil's national champion. The acts, policies, and practices of Brazil related to its preferential treatment of Pix are a burden or restriction on U.S. commerce by imposing costs on U.S. services providers and by forcing U.S. providers to promote their Brazilian competitor, without compensation.

B. Brazil's Acts, Policies, and Practices With Respect to Unfair, Preferential Tariffs Are Actionable

The Trade Representative has determined that Brazil's acts, policies, and practices with respect to unfair, preferential tariffs are unreasonable and burden or restrict U.S. commerce.

Brazil maintains partial-scope preferential trade arrangements with Mexico and India covering sectors in which Mexico and India are advanced, globally competitive producers. Brazil accords lower, preferential tariff treatment to hundreds of Mexican and Indian goods across multiple sectors, such as agricultural products, motor vehicles and parts, minerals, chemicals, and machinery. This preferential treatment covers over a thousand tariff lines for Mexico and hundreds of tariff lines for India at tariff rates that are between 10 and 100 percent lower than Brazil's most-favored-nation (MFN) rate, which applies to U.S. exports in those same sectors.

The discrete sectors covered by Brazil's preferential trade arrangements with Mexico and India are ones in which the United States is also globally competitive and actively exporting to Brazil. Accordingly, Brazil's preferential trade arrangements with Mexico and India particularly undermine the market access of U.S. goods in Brazil. Trade data demonstrate that imports from Mexico and India of covered goods increased after the arrangements were concluded, both in absolute terms and relative to imports from the United States. For example, Mexican goods' share of global imports under tariff classifications covered by Brazil's arrangement with Mexico rose from 1.7% five years before entry into force (1998) to 3.3% twenty years after entry into force (2023); by contrast, over this period, U.S. goods' share decreased by half from 22% to 11%. Similarly, Indian goods' share of global imports under the tariff classifications covered by Brazil's arrangement with India rose from 3.2% five years before entry into force (2004) to 6.7% fifteen years after entry into force (2024); during this period, U.S. goods' share dropped by four percentage points to 8.2%. Although these trends may reflect other market dynamics and cannot be attributed solely to the preferential trade arrangements, those arrangements were one key factor contributing to the erosion of the market share of U.S. goods in key sectors.

In 2025, Brazil imported approximately $5.9 billion in goods under tariff classifications covered by its preferential tariff commitments to Mexico and India-$4.7 billion from Mexico and $1.3 billion from India. These 2025 imports included approximately $1.8 billion in motor vehicles and motor vehicle parts from Mexico, relative to $1.0 billion from the United States, even though U.S. production of motor vehicles and motor vehicle parts is more than twice that of Mexico. Nearly all of Brazil's imports of motor vehicles and parts from Mexico were imported under tariff classifications subject to no tariffs, while Brazil's imports of these products from the United States were imported under tariff classifications subject to MFN rates, almost all of which are between 14% and 35%.

Brazil's trade arrangements with Mexico and India also create incentives to offshore U.S. production by creating a financial advantage to exporting to Brazil from these countries, as opposed to exporting from the United States. This incentive is particularly strong for sectors in which Mexico and India do not impose substantial barriers on the importation of U.S. (or other origin) inputs and manufacturing equipment. So long as production relocated from the United States to Mexico or India is sufficient to meet the rules of origin in Brazil's preferential trade arrangements with Mexico or India, the finished good would qualify as originating from Mexico or India under the relevant arrangement and be eligible for tariff preferences.

Brazil's acts, policies, and practices with respect to preferential tariffs benefiting Mexico and India are unreasonable or discriminatory because they apply substantially lower tariffs on Mexican and Indian goods for which Mexico and India are advanced, globally competitive producers, and thus particularly disadvantage U.S. exporters. Brazil's acts, policies, and practices burden or restrict U.S. commerce because they result in significantly higher tariffs on competing U.S. goods, and they create a strong incentive to offshore U.S. production to Mexico or India.

Brazil contends that that its preferential trade arrangements with Mexico and India are consistent with World Trade Organization (WTO) rules, including the Enabling Clause. For reasons discussed below in Section III, Brazil's reliance on the Enabling Clause is misplaced. The Enabling Clause effectively carves out developing countries-most of the WTO Membership-from the MFN principle in key respects. Developing Members invoke the Enabling Clause to conclude regional trade agreements with other developing countries that provide tariff reductions without having to provide the same treatment to other WTO Members. But, as explained above, it is fundamentally unfair for Brazil to provide tariff preferences to supposedly developing Members that are, in fact, advanced, globally competitive producers, and thus compete with an artificial advantage against U.S. exporters. The Enabling Clause has caused systemic distortions in the global trading system.

C. Brazil's Acts, Policies, and Practices With Respect to Anti-Corruption Enforcement Are Actionable

The Trade Representative has determined that Brazil's acts, policies, and practices with respect to anti-corruption enforcement are unreasonable and burden or restrict U.S. commerce.

Brazil has failed and continues to fail to take sufficient enforcement action to combat bribery and corruption. In an October 2023 report, the Organization for Economic Co-operation and Development (OECD) expressed concerns that Brazil has failed to achieve a sustainable level of foreign bribery enforcement consistent with its economic profile and particularly given the involvement by Brazilian companies in some of the world's largest corruption cases in the last decade. The report highlighted Brazil's failure to investigate and prosecute foreign bribery allegations. In 2023, the OECD noted that Brazil's first and only foreign bribery case brought to criminal trial was still ongoing despite commencing in 2014.

The report also expressed concern regarding the annulment of all evidence in a leniency agreement with a Brazilian construction company that was negotiated by Brazil's Public Prosecutor's Office as part of Operation Car Wash. This decision, rendered in September 2023 by Brazilian Supreme Court Justice Dias Toffoli, dealt with the largest transnational corruption scheme in history and led to the annulment of more than a hundred cases in Brazil. In 2024, penalties under Operation Car Wash imposed on companies that had confessed to mass corruption were suspended and allowed to be renegotiated. The renegotiation of these leniency agreements has been faulted for progressing without transparency and with serious conflict of interests. Regarding these renegotiations, the Organization of American States found that Brazil's actions "risk undermining the public trust in the use of these agreements and may contribute to a sense of legal uncertainty for legal entities" and questions regarding the fairness of these agreements. In 2025, Transparency International characterized the annulment of these cases as Brazil's most serious breach of the OECD's Anti-Bribery Convention.

Despite condemnation from intergovernmental organizations for its backsliding in anti-corruption enforcement, Brazil has taken few steps to reverse course and its efforts to fight corruption remain weak. In January 2026, Transparency International issued a statement indicating that its Brazil chapter had been subject to increasing harassment from the Brazilian government following the organization's calls for greater transparency in Brazil's public infrastructure sector. The OECD also recently reported that companies have a general distrust towards the Brazilian government and a general fear of being associated with the public sector. Additionally, the OECD reported that Brazil ranked below the OECD average on many public integrity indicators.

Brazil's judicial proceedings involving anti-corruption enforcement continue to move too slowly. Following Supreme Court Justice Toffoli's 2023 decision to set aside evidence in Operation Car Wash, Brazil's Public Prosecutor's Office, along with the Sao Paulo Public Prosecutor's Office and the National Association of Prosecutors, challenged the decision in court, highlighting many alleged inconsistencies in the decision. The challenge is still pending at the Brazilian Supreme Court.

In 2024, Brazil scored a 34 out of 100 on Transparency International's Corruption Perceptions Index (CPI), its lowest score since 2012, placing it well below the global average of 43, and positioning it at 107 out of 180 countries. In 2025, Brazil's CPI score remained low at 35 out of 100. Corruption in Brazil is not new, but with its recent actions, Brazil has moved farther away from global norms relating to fighting bribery and corruption.

The acts, policies, and practices of Brazil with respect to anti-corruption enforcement are unreasonable because Brazil's insufficient enforcement of its anti-corruption measures falls well short of global norms, including as reflected in its own laws. The acts, policies, and practices burden or restrict U.S. commerce because they allow corrupt companies to operate in Brazil with impunity while U.S. companies, which are subject to significant requirements and potential liability for foreign corrupt practices, are therefore disadvantaged in seeking trade and investment opportunities in Brazil.

D. Brazil's Acts, Policies, and Practices With Respect to Intellectual Property Protection Are Actionable

The Trade Representative has determined that Brazil's acts, policies, and practices with respect to intellectual property protection and enforcement are unreasonable and burden or restrict U.S. commerce.

In USTR's Special 301 Reports-prepared annually pursuant to Section 182 of the Trade Act to identify countries that deny adequate and effective intellectual property protections or fair and equitable market access to U.S. persons who rely on intellectual property protection-Brazil has been on the Watch List since 2007. Brazil's inclusion on this list reflects the longstanding and serious nature of the intellectual property issues U.S. companies have endured in Brazil.

Consistent with the findings in the 2026 Special 301 Report, these issues include Brazil's failure to sufficiently enforce its criminal laws and customs regulations to address the importation and trafficking of counterfeit goods. For example, Brazil lacks deterrent-level penalties authorized by statute or issued by its courts, has insufficient numbers of customs officers posted at border points, and fails to prosecute offenses in a timely manner. Although customs enforcement data shows some increase in seizures through periodic campaigns, Brazil has reportedly failed to carry out systemic and consistent inspections. Counterfeit goods have surged in Brazil through smuggling and a significant increase in small parcels entering Brazil. Local manufacturing and finishing of counterfeit goods have also increased.

Brazil has also failed to address the unreasonable length of time its authorities take to examine patent applications, particularly biopharmaceutical patents. Although Brazil reports efforts to decrease the average patent pendency in some fields, the overall average pendency for biopharmaceutical patent applications and its impact on effective patent term remain areas of serious concern. According to data from the World Intellectual Property Organization (WIPO) published in 2025, Brazilian authorities take an average of 38.4 months to examine a patent application, as compared to 29.5 months for U.S. authorities or 21.5 months for the "IP5" (United States, the EU, Japan, Korea, and China). Put differently, patent pendency in Brazil is 30% and 18% longer than in the United States and the IP5, respectively. For biopharmaceutical patents, the average pendency is at least 54 to 63.6 months from the date of filing (according to Brazil's data on relevant art units), and may be long as 109.7 months from the filing date of the application (according to some stakeholders).

Brazil has also failed to carry out consistent and continuous anti-piracy measures. Although Brazil conducts some enforcement campaigns against online piracy with enforcement officials in other countries, piracy remains widespread, warranting consistent and continuous enforcement operations throughout the year. Moreover, Brazil has not joined the WIPO Performances and Phonograms Treaty (WPPT) and WIPO Copyright Treaty (WCT), collectively known as the WIPO internet Treaties, which are aimed at preventing unauthorized access to creative works online. As a result, piracy of copyrighted content remains a significant barrier to the adoption of legitimate content distribution channels.

Brazil's failure to effectively enforce its criminal laws and customs regulations against counterfeit goods-including a lack of deterrent-level penalties and insufficient numbers of customs officers posted at border points-undermines investments of U.S. businesses that rely on creativity and innovation, thereby depriving them of fair commercial opportunities in the Brazilian market. Furthermore, Brazil's lack of deterrent-level penalties for counterfeiting enables these illegal practices to continue with insignificant consequences. With respect to patent pendency, Brazil's delays can harm innovators by negatively affecting patent value and reducing the effective patent term, and these harms are compounded by Brazil's lack of a patent-term-extension mechanism to compensate patent-holders for these unreasonable delays. Because the lack of consistent and continuous enforcement inhibits adoption of legitimate content distribution channels, Brazil's failure to combat piracy also harms American workers whose livelihoods are tied to America's innovation- and creativity-driven sectors.

The acts, policies, and practices of Brazil with respect to intellectual property protection and enforcement are unreasonable because Brazil has failed to address longstanding and serious issues long set out in USTR's Special 301 reports, including its failure to sufficiently address counterfeiting, patent pendency, and piracy. The acts, policies, and practices burden or restrict U.S. commerce because they harm American workers whose livelihoods are tied to America's innovation- and creativity-driven sectors by depriving them of fair commercial opportunities.

E. Brazil's Acts, Policies, and Practices With Respect to Ethanol Market Access Are Actionable

The Trade Representative has determined that Brazil's acts, policies, and practices with respect to ethanol market access are unreasonable and burden or restrict U.S. commerce.

Brazil has discontinued its previously balanced tariff treatment and failed to reciprocate U.S. tariff treatment of ethanol. In 2010, Brazil took steps to facilitate bilateral trade in ethanol by suspending a 20% tariff on imports of ethanol. In a similar spirit of promoting bilateral ethanol trade, the United States allowed the "blender" tax credit for U.S. ethanol producers and the $0.54/gallon surcharge on ethanol imports to expire the following year. Bilateral trade in ethanol subsequently flourished, with U.S. exports of ethanol to Brazil steadily increasing until Brazil abruptly departed from this reciprocal treatment in 2017. At that time, Brazil instituted a duty-free tariff rate quota (TRQ) of 600 million liters, with imports above that amount subject to a 20% tariff. This came after a successful lobbying campaign by the Brazilian sugarcane and ethanol industries, which claimed that ethanol imports jeopardized domestic Brazilian ethanol production. Since then, Brazilian tariffs on ethanol have fluctuated, but have been set at 18% since February of 2023. Brazil has the ability to evaluate and change its ethanol tariff on a monthly basis, which further contributes to uncertainty in the market. Brazil has therefore abandoned bilateral cooperation to promote ethanol trade, choosing instead to establish non-reciprocal and unfair conditions for trade in this critical product.

These actions by Brazil have denied fair and equitable market opportunities for U.S. ethanol producers. Imports of U.S. ethanol into Brazil have generally declined since Brazil reinstated its tariff on ethanol. In 2025, U.S. exports to Brazil totaled $96 million, an 87% decrease from the peak export value of $761 million in of 2018. Additionally, in 2024, U.S. ethanol import market share in Brazil had fallen to 54%, from a high of nearly 100% in 2018. At the same time, Brazilian ethanol exporters have continued to benefit from relatively open U.S. market access. In 2024, U.S. imports of ethanol from Brazil amounted to approximately $203 million dollars, while U.S. exports of ethanol to Brazil that same year amounted to only $53 million.

In markets that did not impose similar barriers to Brazil, by contrast, U.S. exports have grown. In 2016 and 2017, prior to Brazil's imposition of tariffs, U.S. exports to Brazil and Canada were comparable. For example, in 2017, the United States exported 430 million gallons of ethanol to Brazil and 326 million gallons to Canada. After Brazil's reimposition of tariffs in 2017, U.S. exports to Canada continued to grow (reaching 698 million gallons in 2024) while exports to Brazil declined (dropping to 28 million gallons in 2024).

The acts, policies, and practices of Brazil with respect to ethanol market access are unreasonable because Brazil has abandoned bilateral cooperation to promote ethanol trade and Brazil has instead established non-reciprocal and unfair conditions for trade, which denies fair and equitable market opportunities for U.S. ethanol producers. The acts, policies, and practices burden or restrict U.S. commerce because U.S. ethanol exports are increasingly unable to compete in the Brazilian marketplace given Brazil's high tariffs, while Brazil exports a significantly greater value of ethanol to the United States.

F. Brazil's Acts, Policies, and Practices With Respect to Illegal Deforestation Are Actionable

The Trade Representative has determined that Brazil's acts, polices, and practices with respect to illegal deforestation are unreasonable and burden or restrict U.S. commerce.

Despite having a legal framework for combatting illegal deforestation, Brazil has historically failed to effectively enforce this legal framework, and illegal deforestation persists. For example, under Brazil's Forest Code (Law No. 12,651/2012), rural properties are required to register on the Rural Environmental Registry and provide detailed information that facilitates verification and traceability of legal-origin products. However, these entries are not adequately audited for fraud and false information, such as by frequently cross-checking information provided with satellite data. Brazil's improved enforcement of the Forest Code and other environmental laws, policies, and regulations designed to combat illegal deforestation, as well as its investment in the technology that would facilitate more frequent and effective auditing, have not been sufficient. Reports indicate that, because of the prevalence of fraud in the timber sector, official documents are not sufficient to show that Amazonian timber was harvested legally. One 2024 study that analyzed protected areas throughout the Brazilian Amazon found that Brazil's policies failed to adequately prevent land grabbing, illegal ranching, and deforestation.

Deforestation often proceeds in three stages: (1) primary forest is logged or otherwise deforested to be converted to pastureland for cattle; (2) once that pastureland is "degraded" the land is converted into a productive field, for crops such as soy and corn; and (3) having lost previous pastureland and desiring to continue expanding production, cattle ranchers cut down more primary forest.

Deforestation, both legal and illegal, is closely linked to the production of certain timber and agricultural products. Estimates indicate that the conversion of land from primary forest to agricultural production accounts for over 90% of the deforestation (legal and illegal) in Brazil since 2001, and between 2018 and 2022, cattle ranching drove 78% of commodity-attributed deforestation. In addition, crops, such as soybeans and corn, are commonly planted on degraded pasture land, allowing those crops to benefit from the initial deforestation.

Without effective enforcement of environmental laws, loggers and sawmills may more easily launder illegally harvested timber in global supply chains, while ranchers may launder cattle ranched on illegally deforested land by transferring them to legitimate slaughterhouses. Corruption is also an issue, as loggers and ranchers are known to bribe government officials to obtain necessary approvals and documentation and to pass inspections and audits.

In addition, there is evidence that some sub-central levels of government are taking steps to eliminate or roll back tax and other public- and private-sector incentives designed to discourage deforestation. For example, the state of Mato Grosso, which covers territory in the Amazon and Cerrado biomes, is attempting to eliminate tax benefits previously available for companies that signed voluntary agreements designed to combat deforestation ( e.g., the Soy Moratorium). This action has already had a chilling effect, as large multi-national companies have recently begun withdrawing from the Soy Moratorium, which may weaken the agreement's impact on deforestation rates. As Brazil has failed to enforce-and even at times rolled back-its environmental laws, deforestation has become systemic, reaching a 15-year high in 2021. Deforestation also occurs across all biomes, and illegal deforestation is known to be particularly problematic in the Amazon and Atlantic Forest biomes. Reports indicate that, between 2023 and 2024, some 91% of deforestation in the Amazon was illegal. In the Cerrado biome, where there are more relaxed legal limits on maintaining forested land, estimates indicate that 51% of land clearing was illegal between 2023 and 2024.

While it is difficult to determine exact estimates of the share of Brazil's agricultural production that is grown on illegally deforested land, one 2021 study estimated that Brazil lost 18 million hectares of forest due to agro-conversion between 2013 and 2019, of which 95% was likely illegal. It is easier and less expensive to produce agricultural products on the degraded and previously deforested pastureland. This contributes to more Brazilian agricultural products competing in global markets, which leads to lower prices for those agricultural products. One study estimated that Brazil exported $19 billion in forest risk commodities in 2019.

Illegally sourced timber products contribute to distorted global prices, resulting in the devaluation of U.S. wood products. In general, illegally sourced timber is estimated to reduce the value of legally sourced timber prices by 7% to 16%.

Brazil's acts, polices, and practices with respect to illegal deforestation are unreasonable because they fail to effectively enforce Brazil's own laws, do not apply basic checks to ensure consistency with those laws, and promote unfair competition of Brazilian agricultural and wood products with goods produced without those practices. Brazil's acts, policies, and practices burden or restrict U.S. commerce because U.S. producers are forced to compete with artificially lower-cost Brazilian agricultural products. When agricultural and timber products produced on illegally deforested land enter the United States and global markets, this undermines the competitiveness of U.S. products, resulting in lost revenues and sales for U.S. producers and exporters.

III. Responses to Significant Comments

As discussed above, the Trade Representative has determined that certain of Brazil's acts, policies, and practices are unreasonable or discriminatory and burden or restrict U.S. commerce, and thus are actionable. Below, USTR responds to comments on the actionability findings that raise significant issues.

A. Responses to Significant Comments on Digital Trade and Electronic Payment Services

USTR received several comments regarding this issue area. Numerous commenters expressed concern with actions by Brazilian courts triggering aggressive take down of content and issuance of orders that require U.S. companies to remove content not just in Brazil, but worldwide, including in the United States. Commenters noted legal uncertainty, operational and compliance risks, and potential market access barriers for U.S.-based technology companies due to take-down orders by Brazilian courts and the Brazilian Supreme Court's decision to declare unconstitutional Brazil's statutory requirement of a judicial order before internet service providers could be held liable for user-generated content.

A number of commenters characterized Brazil's regulation of digital trade as motivated by public interest and an attempt to address online hate speech, misinformation, and violence. Other commenters noted that the liability imposed under the Brazilian Supreme Court's June 2025 decision has guardrails to limit the breadth of liability and that the decision is valid only until new legislation is enacted. However, these comments did not deny the existence of secret orders from Brazilian courts directing the take-down of political content and suspension of profiles of U.S. residents, nor did they dispute the global nature of certain orders issued by Brazilian courts.

With respect to electronic payment services, many commenters noted that the Pix payment network had successfully expanded access to banks and digital payment methods. However, several commenters noted that the Brazilian central bank faced a conflict of interest in serving as both the regulator and owner/operator of Pix. One commenter detailed how this conflict of interest was inconsistent with various global norms and best practices on good governance. Another commenter described what the commenter viewed as discriminatory regulations Brazil had implemented to favor Pix. Although several commenters described their satisfaction with the Pix service or pointed to Pix's status within Brazil's central bank and compliance with Brazilian law, such comments do not negate concerns regarding the conflict of interest or preferential treatment afforded to Pix by the Brazilian government.

Considering the public comments and the advice of the Section 301 Committee, the Trade Representative has determined that certain of Brazil's acts, policies, and practices with respect to digital trade and electronic payment services at issue in this investigation are unreasonable and burden or restrict U.S. commerce.

B. Responses to Significant Comments on Unfair, Preferential Tariffs

USTR received several comments regarding this issue area. Certain comments contended that Brazil's preferential trade arrangements with Mexico and India are consistent with WTO rules, including the Enabling Clause that permits certain trade arrangements between developing country WTO Members. Even assuming the consistency of Brazil's preferential trade arrangements with the Enabling Clause, that does not change the fact that the discrete sectors covered by Brazil's preferential trade arrangements with Mexico and India are among those trading partners' most advanced and globally competitive or are those in which the United States is also globally competitive and actively exporting to Brazil.

Certain comments contended that Brazil's tariffs on goods of Mexico and India are not unfair or preferential because the average effective tariff rate applied to U.S. exports is lower than that applied to exports from Mexico and India, on account of various duty suspension or reduction programs. The United States has received no data supporting this disparity, but even assuming such data exist, the disparity would not account for the non-automatic nature of duty suspensions and reductions (which are available only if goods meet legal and regulatory criteria and in some cases receive advance approval from Brazilian authorities), which stands in contrast to the lower applied duties available automatically and with certainty to Mexican and Indian goods (without additional application procedures or approvals).

Comparing average effective tariff rates is also inapposite, as that rate will reflect the product or sectoral composition of imports from the exporting country. No comments have suggested that within tariff lines covered by Brazil's preferential trade arrangements, U.S. exports to Brazil enjoy lower effective tariff rates on account of Brazil's duty suspension or reduction programs.

Considering the public comments and the advice of the Section 301 Committee, the Trade Representative has determined that Brazil's acts, policies, and practices with respect to unfair, preferential tariffs are unreasonable and burden or restrict U.S. commerce.

C. Responses to Significant Comments on Anti-Corruption Enforcement

USTR received limited comments regarding this issue area. Comments described Brazil's legal regime to combat corruption as comprehensive and transparent, pointing to a number of existing laws and regulations, as well as Brazil's attempts to update those measures. Comments also suggested that Brazil's enforcement of this anti-corruption regime was robust, pointing to the number of proceedings initiated in recent years and Brazil's role in global anti-corruption efforts. The existence of these laws and regulations and even their robust enforcement in certain instances does not refute the evidence in other instances that Brazil's acts, policies, and practices with respect to anti-corruption enforcement are unreasonable and burden or restrict U.S. commerce.

Considering the public comments and the advice of the Section 301 Committee, the Trade Representative has determined that Brazil's acts, policies, and practices with respect to anti-corruption enforcement are unreasonable and burden or restrict U.S. commerce.

D. Responses to Significant Comments on Intellectual Property Protection

USTR received several comments regarding this issue area. Several comments noted the lack of certain intellectual property protection mechanisms within the Brazilian system, such as patent term adjustments, particularly for biopharmaceutical products. These commenters expressed that the lack of such mechanisms denies fair and equitable opportunities for American biopharmaceutical innovators and in turn undermines the ability of American biopharmaceutical innovators to compete fairly in the Brazilian market.

Other commenters expressed that additional intellectual property protection mechanisms could delay generic competition, keep medicine prices high, and strain public health programs, especially in developing countries with limited healthcare funding. One commenter also questioned whether patent holders suffer financial harm due to long-term patent application pendency.

Commenters also acknowledged Brazil's effort and record of decreasing the average patent application pendency, but reported that the average patent examination timeline for such products remained above average. Regarding piracy and counterfeit-related crimes, commenters noted Brazil had increased enforcement activities conducted in Rua 25 de Março, while also noting that there remains room for tougher penalties for counterfeiting.

Considering the public comments and the advice of the Section 301 Committee, the Trade Representative has determined that Brazil's acts, policies, and practices with respect to intellectual property protection are unreasonable and burden or restrict U.S. commerce.

E. Responses to Significant Comments on Ethanol Market Access

USTR received several comments regarding this issue area. With respect to tariffs on ethanol imports, USTR received several comments providing evidence that Brazil's ethanol tariffs were unreasonable and discriminatory and burden and restrict U.S. commerce.

Other comments argued that Brazil's tariff rates are not unreasonable since they are within Brazil's bound rates at the WTO, are lower than the Common External Tariff on ethanol applied by the Southern Common Market (MERCOSUR), and are applied on an MFN basis to countries that do not have a preferential trade agreement with MERCOSUR. Brazil's ethanol tariff is nevertheless unreasonable because of Brazil's unwarranted departure from bilateral cooperation to promote ethanol trade and because of Brazil's establishment of non-reciprocal and unfair conditions for trade in ethanol.

Considering the public comments and the advice of the Section 301 Committee, the Trade Representative has determined that Brazil's acts, polices, and practices with respect to ethanol market access are unreasonable and burden or restrict U.S. commerce.

F. Responses to Significant Comments on Illegal Deforestation

USTR received many comments regarding this issue area. Most comments discussed the laws and regulations in place in Brazil that address illegal deforestation, and many summarized recent actions by the Government of Brazil to improve enforcement of laws intended to combat illegal deforestation. For example, some comments included discussion of recent efforts to strengthen enforcement, including recent technological advances and new regulatory and policy efforts that would combat and deter illegal deforestation. Even so, as historical data indicates, these efforts could be undone by future administrations, and rates of illegal deforestation could again increase. Moreover, these comments do not deny that illegal deforestation in Brazil has occurred and persists, leading to unfair agricultural and wood products production.

Other comments provided evidence that deforestation in Brazil has contributed to Brazil's ability to unfairly increase agricultural output and fraud and corruption remain common along the value chains of particular products and industries, including beef, soy, and Amazonian timber. Several comments also provided evidence regarding the burden or restriction that agricultural products and timber products produced on illegally deforested land place on U.S. commerce.

Many comments included a discussion of why various products, such as beef, soy, corn, sugar, cotton, coffee, eucalyptus wood and derivative products, Amazonian timber and wood products, yerba mate, nuts and dried fruits, carnauba wax, and others, either do or do not contribute to or benefit from illegal deforestation. While discrete products and industries might not contribute substantially to illegal deforestation or otherwise make efforts to minimize contributions to illegal deforestation, the fact remains that Brazil has taken insufficient action at a systemic level to address illegal deforestation or the unfair trade advantage that arises from it, and Brazil's lack of effective enforcement of environmental laws burdens U.S. commerce.

Considering the public comments and the advice of the Section 301 Committee, the Trade Representative has determined that Brazil's acts, polices, and practices with respect to illegal deforestation are unreasonable and burden or restrict U.S. commerce.

IV. Proposed Action To Be Taken in the Investigation

Section 301(b) provides that upon determining that the acts, policies, and practices under investigation are actionable and that action is appropriate, the Trade Representative shall take all appropriate and feasible action authorized under section 301(c), subject to the specific direction, if any, of the President regarding such action, and all other appropriate and feasible action within the power of the President that the President may direct the Trade Representative to take under section 301(b), to obtain the elimination of that act, policy, or practice.

Section 301(c) of the Trade Act authorizes the Trade Representative to take certain actions for purposes of carrying out the provisions of Section 301(b). For example, Section 301(c)(1)(B) authorizes the Trade Representative to "impose duties or other import restrictions" on the goods of the foreign country subject to the investigation. Pursuant to Sections 301(b) and (c), the Trade Representative proposes to determine that action is appropriate and that appropriate action would include applying tariffs of 25% on all goods of Brazil, with exemptions for certain goods, including informational materials, donations, accompanied baggage, all articles and parts of articles subject to section 232 tariffs, and certain products identified in the Annex. The proposed exemptions include raw materials that if subject to the proposed additional tariffs could lead to the unavailability of domestic supply. They also include products that could cause economy-wide disruptions if subject to the proposed additional tariffs; and certain products that cannot be grown or produced in sufficient quantities in the United States or obtained from other sources. Finally, the proposed exemptions include articles for which additional tariffs may not contribute substantially to the elimination of Brazil's acts, policies, and practices described above.

V. Request for Public Comments

In accordance with section 304(b) of the Trade Act (19 U.S.C. 2414(b)), USTR invites comments from interested persons with respect to the appropriate action to be taken. To be assured of consideration, you must submit written comments on the proposed action by July 1, 2026, in accordance with the instructions in Section VII below.

With respect to the proposed action, USTR invites comments regarding the scope of tariff coverage (including the proposed excluded products identified in the Annex).

In considering whether certain articles should be subject to additional duties under Section 301, USTR will consider the needs of the U.S. economy. In commenting on the inclusion or removal of particular tariff subheadings subject to the proposed action, USTR requests that comments address specifically whether the products under the tariff subheading are necessary raw materials, are available from alternative sources at reasonable prices or sufficient quantities outside of Brazil; whether additional tariffs would cause serious dislocations in the supply of the products and could cause economy-wide disruptions, or other similar factors; and whether imposing additional tariffs on products under the tariff subheading would be practical or effective in obtaining the elimination of the Brazil's acts, policies, and practices.

USTR also invites views on the U.S. engagement with Brazil in the context of the ongoing Special 301 review (19 U.S.C. 2242) and the subjects of that engagement.

Additional instructions on how to submit written comments are provided in section VII below.

VI. Hearing Participation

The Section 301 Committee will convene a public hearing on July 6, 2026. To testify at the hearing, you must submit a request to appear using the electronic portal at https://comments.ustr.gov/s/, following the instructions in Section VII below. Requests to appear must include a summary of testimony, and may be accompanied by a prehearing submission. USTR will announce details of the hearing at a later time, including the time allocated for each witness to testify and the start time of the hearing. All submissions must be in English. To be assured of consideration, USTR must receive your request to appear and summary of the testimony by June 22, 2026.

VII. Procedures for Written Submissions

You must submit written comments using the appropriate docket on the portal at https://comments.ustr.gov/s/. All submissions must be in English. To submit written comments, use the docket on the portal entitled "Request for Comments Concerning Proposed Action Pursuant to the Section 301 Investigation of Brazil's Acts,

Policies, and Practices Related to Digital Trade and Electronic Payment Services; Unfair, Preferential Tariffs; Anti-Corruption Enforcement; Intellectual Property Protection; Ethanol Market Access; and Illegal Deforestation", docket number USTR-2026-0331. Interested persons wishing to provide testimony at the hearing must submit a notification of intent and summary of testimony using the docket entitled "Request to Appear at the Hearing on the Proposed Action Pursuant to the Section 301 Investigation of Brazil's Acts, Policies, and Practices Related to Digital Trade and Electronic Payment Services; Unfair, Preferential Tariffs; Anti-Corruption Enforcement; Intellectual Property Protection; Ethanol Market Access; and Illegal Deforestation," docket number USTR-2026-0397. You do not need to establish an account to submit comments. The first screen of each docket allows you to enter identification and contact information. Third party organizations such as law firms, trade associations, or customs brokers, should identify the full legal name of the organization they represent, and identify the primary point of contact for the submission. Information fields are optional; however, your comment or request may not be considered if insufficient information is provided.

Fields with a gray Business Confidential Information (BCI) notation are for BCI information which will not be made publicly available. Fields with a green (Public) notation will be viewable by the public.

After entering the identification and contact information, you can complete the remainder of the comment, or any portion of it by clicking "Next." You may upload documents at the end of the form and indicate whether USTR should treat the documents as business confidential or public information.

Any page containing BCI must be clearly marked "BUSINESS CONFIDENTIAL" on the top of that page and the submission should clearly indicate, via brackets, highlighting, or other means, the specific information that is BCI. If you request business confidential treatment, you must certify in writing that disclosure of the information would endanger trade secrets or profitability, and that the information would not customarily be released to the public.

Parties uploading attachments containing BCI also must submit a public version of their comments. If these procedures are not sufficient to protect BCI or otherwise protect business interests, please contact the USTR Section 301 support line at (202) 395-5725 to discuss whether alternative arrangements are possible.

USTR will post attachments uploaded to the docket for public inspection, except for properly designated BCI. You can view submissions on USTR's electronic portal at https://comments.ustr.gov/s/.

Annex

Notes on certain HTSUS provisions for which only a portion of the provision is covered in this Annex, as provided in the "Scope Limitations" column:

• A subheading marked with "Ex" is defined and limited by the product description.
• A subheading marked with "Aircraft" includes only articles of civil aircraft (all aircraft other than military aircraft); their engines, parts, and components; their other parts, components, and subassemblies; and ground flight simulators and their parts and components, that otherwise meet the criteria of general note 6 of the HTSUS, regardless of whether a product is entered under a provision for which the rate of duty "Free (C)" appears in the "Special" sub-column.

In addition to the products listed in this Annex, the proposed action does not cover informational materials, donations, accompanied baggage, and all articles and parts of articles that are subject to section 232 tariffs.

[FR Doc. 2026-11158 Filed 6-3-26; 8:45 am]

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⁽¹⁾  On the facts gathered during this investigation, and at this time, the Trade Representative does not make any findings with respect to actionability of acts, policies, and practices relating to digital trade with respect to the Brazilian Supreme Court's decision of June 26, 2025, or restrictions on the transfer of personal data outside Brazil.