US Tariffs and Mercosul–China Agreement: What Changes Now

On July 23, 2026, the US government announced an additional 12.5% ad valorem tariff on products from various partners, including Brazil, under an action pursuant to Section 301, effective operationally in July 2026, according to the USTR and the Federal Register (USTR).

In practice, this immediately raises the cost of customs clearance in the US for the affected NCMs, pressures margins of Brazilian exporters and forces a review of price, Incoterms and contracts with American buyers. In response, Mercosul, led by Brazil, has accelerated talks for a trade agreement with China, seen as an alternative to reduce dependence on Washington's unilateral rules (Folha de S.Paulo).

Context and data: the US tariff shock and the pivot to China

The new tariffs are the result of a process that had been building since 2025 in investigations under Section 301 by the USTR. On July 23, 2026, the agency formally announced an action in response to the assessment that about 60 economies had not banned imports produced with forced labor, imposing a surcharge of 12.5% ad valorem on selected products, including Brazilian ones (USTR).

The measure followed consultations and public hearings held in June and July 2026, in which the USTR consolidated its determination that certain acts and practices of Brazil were "unreasonable" under Section 301 (USTR). The final details, including the scope of tariff lines and exceptions, were published in annexes to the Federal Register, with effective dates starting in July 2026 (Federal Register; Public Inspection).

In Brazil, the government publicly described the tariffs as "arbitrary" and announced support measures for exporters within initiatives such as the Plano Brasil Soberano, in addition to initiating diplomatic consultations with Washington in August 2026 (Agência Brasil).

At the same time, the strategic response came regionally. On June 30, 2026, the presidents of Mercosul met in Asunción and reaffirmed the priority of advancing the bloc's "external agenda," focusing on preferential agreements and negotiations with Asian economies (Mercosul). That document provides the political basis to accelerate efforts such as those with China.

A few weeks later, on July 26–27, 2026, President Luiz Inácio Lula da Silva and President Xi Jinping spoke by phone and agreed to accelerate talks for a Mercosul–China agreement (Folha de S.Paulo). In October 2026, a Folha report highlighted that, amid the US tariff shock, Mercosul “should turn attention” to this agreement as an alternative to reduce vulnerability to the US market (Folha de S.Paulo).

Analysts interviewed by Folha and representatives of the Brazil–China Business Council point out that an agreement could reduce tariffs and non-tariff barriers for Brazilian exports, increasing competitiveness and predictability in access to the Chinese market (Folha de S.Paulo).

Domestically, the repercussions went beyond the US–Brazil relationship. Brazilian industries began to advocate protection mechanisms against the advance of Asian products, including import quotas as a “remedy” to the US tariff shock, according to an interview published in July 2026 (C-Level / Folha).

Practical impact: cost, timelines, documents, routes and contracts

1. Direct cost: +12.5% on US imports

The additional 12.5% ad valorem tariff is charged on importation into the US on the customs value (local tax base) of the affected products (USTR). This does not change the DU-E, the export invoice or taxes on departure from Brazil, but it completely changes the US buyer's calculation.

With the increase in total CIF cost in the US, three effects tend to appear in operations:

• US importers push for FOB/CIF price reductions;
• negotiation and order finalization timelines lengthen, with re-evaluation of the viability of each item;
• projects with low margins may simply be canceled.

2. Scope and HS/NCM checks

The real impact depends on whether your NCM is listed in the annexes of the US measure. Lists of covered products and exceptions are included in the technical annexes of the Federal Register and associated documents (Federal Register – Public Inspection). Without that line-by-line verification, any impact estimate is a guess.

From an operational standpoint, this means:

• checking the HS code used in the US importation (which may not be identical to the Brazilian NCM);
• verifying whether that code appears on the lists of the Section 301 action;
• if it does, recalculating price and margin considering +12.5% on the US customs value.

3. Timelines: shipments from July/August 2026

The USTR determinations were announced in July 2026 and published in the Federal Register with effective dates also in July 2026 (Federal Register). In practice, shipments dispatched from Brazil and cleared in the US from July/August 2026 already face the new cost.

For ongoing contracts, this generates:

• discussion about who absorbs the cost when the contract does not foresee tariff changes;
• revision of tax variation clauses for new contracts;
• the need for rapid renegotiation in recurring operations (monthly, quarterly programs).

4. Incoterms, price and letters of credit

The surcharge is an import tax in the US. Therefore:

• in FOB/CFR/CIF sales, the tax is paid by the US importer, but they may demand a discount to offset the increase;
• in more complex structures (for example, DDP US via a subsidiary or trading company), the Brazilian exporter or affiliated company may end up assuming the local tax, which directly erodes margin;
• letters of credit and foreign exchange contracts may need to be adjusted in value and term if the deal is repriced.

Additionally, the validity period of proposals for US clients needs to be shorter or conditioned on regulatory changes, so the company is not locked into prices that ignore the extra tariff.

5. Routes and logistical volumes

The increased cost of access to the US market tends to reduce export volumes to the US and shift part of that cargo to other destinations, mainly Asia. Practical effects on logistics are:

• reduced scale on some US routes, with potential increase in unit freight cost for those who remain;
• greater demand for routes to China and other Asian markets, if the Mercosul–China agreement advances and opens tariff space;
• pressure on terminals, bonded warehouses and carriers serving Asia–Southern Cone traffic.

The indirect impact is already appearing in Brazilian industry that competes with Asian imports, with requests for quotas as a form of protection in the face of the new US tariff scenario (C-Level / Folha).

6. Customs procedures in Brazil

So far, there is no news of changes to Brazilian export tariffs directly linked to this measure. Agência Brasil reports that the government focused on support for exporters (credit lines, incentives) through the Plano Brasil Soberano and other initiatives, and on diplomatic consultations with the US (Agência Brasil).

For the operational foreign trade area this means:

• no structural change in the DU-E, inspection channels or export taxes;
• heightened attention to shipping instructions and commercial invoice (description, HS/HTS code agreed with the customer);
• monitoring acts by MDIC/CAMEX for possible countermeasures or specific programs for the most affected sectors.

TMLOG's take

1. Interests behind the move

On the US side, the measure is wrapped in a discourse of combating forced labor and "unfair practices," but it also protects domestic sectors in a year of intense political contest. The use of Section 301 is a classic instrument to negotiate with pressure (USTR).

On Mercosul's side and, in particular, Brazil's, the message is clear: deepening the axis with China reduces dependence on a partner that can, at any time, impose a unilateral tariff shock. The Mercosul summit in Asunción and the Lula–Xi connection function as a political signal to accelerate this plan (Mercosul; Folha de S.Paulo).

2. Where the press exaggerates

It is true that Folha reports Mercosul moving to "turn attention" to a China agreement after the tariffs (Folha de S.Paulo). But turning that into a short-term solution for exporters or importers is, in our view, an exaggeration:

• there is still no timeline, agreement text or list of concessions disclosed;
• negotiations of this magnitude take years and require approval in partner Parliaments.

In other words, for operations, the Mercosul–China agreement today is more a medium-term strategic planning vector than an immediate tool to offset the US tariff shock.

3. What really changes for the client now

Over the coming months, what matters is:

• the 12.5% surcharge in the US for affected products, already in force;
• the need to renegotiate prices, Incoterms and tax-variation clauses with American buyers;
• the risk of volume decline on US routes and greater concentration of commercial effort in other markets;
• domestic pressure for protective measures (such as quotas against Asian imports) that may, ultimately, also change import flows into Brazil (C-Level / Folha).

4. What to do in the coming weeks

Practically, our view is that Brazilian companies with significant exposure to the US should:

• Map HS/NCM of all products shipped to the US and check line by line in the Federal Register annexes whether the additional tariff applies;
• Run margin scenarios (with and without passing on the 12.5%) for each customer/product;
• Review contracts to include tax-variation clauses and renegotiation triggers;
• Reprioritize markets: where there is a real alternative outside the US, start commercial discussions now, especially for Asia, in line with the Mercosul–China political movement;
• Adjust logistics planning: assess cargo consolidation, alternative routes and the impact of a possible drop in US volume on unit freight and storage costs.

The Mercosul–China agreement, if it advances, can open important doors in terms of tariffs and predictability. But the short-term operational agenda remains managing the 12.5% cost shock in the US and gradually repositioning the market portfolio.

Sources

• Fact Sheet: USTR Section 301 Action in Response to the Failure of 60 Economies to Ban Imports Produced with Forced Labor
• USTR Section 301 Determination on Brazil’s Unreasonable Acts, Policies, and Practices
• Lula fala com Xi sobre início de tratativa China-Mercosul
• Mercosul: Acordo com a China pode ser próximo passo
• Comunicado Conjunto dos presidentes dos Estados Partes do MERCOSUL
• EUA impõem nova tarifa de 12,5% a produtos brasileiros
• Public Inspection Document – Federal Register 2026-15181
• Federal Register, Volume 91 Issue 137 (Monday, July 20, 2026)
• Indústria pede cotas contra Ásia para enfrentar tarifas
• Brazil Section 301 Actionability and Proposed Action FRN 6-1-26 Final