Brazilian officials and business leaders are preparing for a possible new round of U.S. trade pressure as Washington nears the first conclusions of a Section 301 investigation that could lead to tariffs on Brazilian products.
According to Folha de S.Paulo, people involved in the process expect the Office of the U.S. Trade Representative (USTR) to publish preliminary recommendations in June, ahead of a final deadline set for July 15. Estadão reported that business figures were already watching for a possible tariff announcement at the start of this week.
The tension follows the Trump administration’s decision to designate Primeiro Comando da Capital (PCC) and Comando Vermelho, Brazil’s two best-known criminal factions, as terrorist organizations. The move has added a security dispute to an already difficult trade negotiation between President Luiz Inácio Lula da Silva and U.S. President Donald Trump.
What Washington Is Weighing
Section 301 of the U.S. Trade Act of 1974 allows Washington to investigate foreign practices it considers unfair or discriminatory and to impose retaliatory measures, including tariffs. In Brazil’s case, Folha reported that the inquiry covers subjects including digital trade, electronic payments, tariffs, anti-corruption rules, intellectual property, ethanol market access and illegal deforestation.
Brazilian negotiators had hoped that a May 7 meeting between Lula and Trump at the White House would buy time. At that meeting, the two presidents agreed to give their teams 30 days to seek terms acceptable to both sides, according to Brazilian outlets.
Valor Econômico reported earlier in May that Brazil’s development and industry minister, Márcio Elias Rosa, said the countries were “moving toward an agreement” and that any deal would likely be partial and progressive rather than broad. USTR chief Jamieson Greer said after talks with Brazilian officials that he welcomed Brazil’s “constructive engagement,” according to Valor.
But Folha reported that the Section 301 process appears to be continuing on its regular track. Estadão said Brazilian government sources had not been officially notified of any tariff change and were monitoring the situation cautiously.
Security and Compliance
The tariff threat now sits beside a separate source of strain: Washington’s classification of PCC and Comando Vermelho as terrorist organizations. PCC, born in São Paulo’s prison system, and Comando Vermelho, rooted in Rio de Janeiro, are major criminal groups with drug-trafficking and prison networks.
In an interview with BBC News Brasil, Christopher Garman, managing director for the Americas at Eurasia Group, said the designation creates a “cloud of compliance uncertainty” for private companies. Firms may need stricter controls to avoid any business that U.S. authorities could interpret as supporting groups linked to organized crime.
Garman said the risk of U.S. military action in Brazil should be dismissed, but he argued that the designation leaves Lula in an uncomfortable political position: criticizing a hard line against organized crime at a time when public security is a sensitive domestic issue.
The Political Calendar
The timing matters. Brazil is heading toward a presidential election in 2026, and the U.S. decisions are already being read through domestic politics. Senator Flávio Bolsonaro, son of former president Jair Bolsonaro and a presidential contender from the right-wing Liberal Party (PL), visited Washington shortly before the gang designation and said he had requested the measure.
Garman told the BBC that the Bolsonaro family had influence but did not originate the decision, which he said had been under discussion in Washington for months. He described the visit as a final political push rather than the sole cause.
The trade dispute may cut both ways politically. A tougher U.S. stance on organized crime may pressure Lula on security. But if tariffs hit Brazilian exporters, Lula could argue that Bolsonaro-aligned lobbying in Washington damaged Brazilian jobs and industry.
The broader question is whether Section 301 is being used as a normal trade tool or as part of a wider geopolitical strategy. The Observatory on the United States (OPEU) argued in a May analysis that the current investigation differs from older U.S. trade disputes because its complaints are diffuse and not tied to one clear business lobby.
For Brazil, that means the coming USTR findings may be more than a technical trade step. They could set the tone for a wider test of how far Washington is willing to use tariffs, sanctions and security labels to pressure Brasília during an election year.