Tariffs, Trust, and Trade: How US Tariffs Are Reshaping Brazil’s Global Role

Executive Summary

• The United States’ decision to impose steep tariffs on Brazilian beef has disrupted global trade flows, pushing Mexico into the role of Brazil’s second largest export market and prompting Brazil to seek new trade partners.
• While Brazil has responded with domestic policy support and industry adaptation, its diversified export base means the broader economy remains resilient, with growth forecasts largely intact.
• In contrast, the US faces higher beef prices at home, particularly for ground beef and hamburgers, adding inflationary pressures to an already strained consumer market.

Historic Relationship

• Brazil and the US have had a friendly relationship for the last 20+ years. In fact, Brazil is one of the few countries with which the US has had a trade surplus, which is precisely how Trump prefers US trade policies.

The Tariff Shock

• In early August, the United States threw an additional 50% tariff on Brazilian beef, coffee, seafood and cocoa, raising the total duty to nearly 76%. This sudden escalation has disrupted traditional trade flows, with Mexico surpassing the US as Brazil’s second largest beef market.
• Between the first and twenty fifth of the month, Mexico imported 10,200 metric tons worth nearly $59 million, while US volumes fell to 7,800 tons worth $44 million. Mexico and Argentina may act as intermediaries, re-routing Brazilian beef back into the US market to soften the impact of tariffs, while Brazil has begun negotiations with Japan to open up potential export avenues.
• Coffee accounts for 17% of Brazil’s exports to the US, while beef accounts for 10%, cocoa for 13 %, and seafood for 56%.

Brazil’s Domestic Strategy

• Brazil has adapted well and found luck in increased domestic demand for beef tallow, particularly from the biodiesel sector. Until now, 98% of Brazil’s beef tallow exports were destined for the US, but producers are redirecting supplies to meet local needs. On the policy front, Finance Minister Fernando Haddad has indicated that Brazil may legally challenge the tariffs in US courts, while also urging for greater use of local currencies in trade to reduce dependency on the dollar and reinforcing Brazil’s commitment to BRICS.
• The government introduced its “Sovereign Brazil” support package on August 13th, a BRL 30 billion initiative offering credit lines, tax deferrals, SME tax credits, and insurance for cancelled export contracts, as well as incentives to stimulate domestic procurement.
• Brazil, in response, has begun to seek alternative trade partners; however, this has been more challenging due to stricter specifications and sanitary standards compared to those of the US. However, one friend Brazil has leaned towards is China. On July 3rd, China approved 180 new Brazilian coffee companies to export there, likely to encourage further trade deals between the two BRICS members.

Economic Resilience

• Despite the severity of Washington’s tariffs, Brazil’s broader economy is expected to weather the storm. The country’s diversified export profile, with China absorbing 28% of its trade, provides some protection from US pressure.  Analysts at Goldman Sachs maintain a 2.3% growth forecast for 2025, while XP estimates the overall impact of the tariffs at just a 0.15 percentage point reduction in GDP.
• That said, regional vulnerabilities remain, particularly in Brazil’s Northeast, where jobs and local industries are more reliant on export flows. Additionally, the US Beef market is not easy to replace, given its stable, high demand and premium prices paid.

The US Fallout

• While Brazil adapts and diversifies, the US faces domestic consequences. The tariffs will push up beef prices for American consumers at a time when the national cattle herd is already at historic lows. Importers will be forced to turn to more expensive alternatives, increasing costs across the supply chain and pushing up supermarket prices at the ground level. 
• Ground beef, hamburgers, and coffee, staples of US households, as well as fast food and coffee shop franchises, are expected to be among the hardest hit by inflationary pressures at the consumer level. In effect, these tariffs could produce domestic price instability within the US.
• US consumers may face higher grocery bills as tariffs drive up the cost of beef, coffee, and cocoa, with fast food and coffee chains squeezed by rising input costs. Brazil, however, remains resilient thanks to diversified exports, government support, and stronger BRICS ties, particularly with China. The real outcome is a reshaping of global supply chains, with US households paying the price more while Brazil deepens its role in emerging trade networks. After years of positive relations between Brazil and the US, analysts are left wondering about the real intentions Trump has with these new tariffs and why these two buddies have fallen out.

Bottom line

• At Cordoba, we see this as more than a temporary trade fallout. The tariffs leave US consumers paying more at the checkout and fast food chains facing losses, while Brazil grows more wary of Washington and more committed to BRICS. Rather than weakening Brazil, the pressure is likely to accelerate its shift toward a broader, more diversified export base, one that leans further into emerging markets and solidifies its position in a trade bloc the US would rather keep at arm’s length.