A US Supreme Court ruling found President Trump’s IEEPA tariffs illegal, leading to tariff relief for Brazil. IEEPA tariffs of up to 50% on Brazilian products were replaced by a temporary 15% universal tariff under Section 122.
If current exemptions remain, Brazil’s effective tariff rate is expected to drop to about 10%, from over 20% before the ruling. The earlier effective rate was below 50% because exemptions covered over 35% of exports and substitution effects.
Impact On Brazilian Exports
Lower tariffs are expected to support a recovery in Brazilian exports to the US in the coming months. However, Brazil-US trade is not expected to return to the conditions in place before “Liberation Day”.
Other US trade tools may still affect Brazil. Section 232 tariffs, applied by sector on national security grounds, may affect parts of Brazil’s manufacturing and mining.
Brazil could also face Section 301 tariffs linked to concerns about BRICS alignment. The article was produced using an AI tool and reviewed by an editor.
We see the recent US Supreme Court ruling on tariffs as a clear, short-term positive for Brazilian assets. The drop in the effective tariff rate from over 20% to around 10% should directly boost the profitability of Brazilian exporters. This creates an opportunity to look at bullish derivative positions on companies with high US sales exposure.
This news should provide a tailwind for the Brazilian Real, and we anticipate a potential move towards 4.80 against the US dollar. Data from the last quarter of 2025 showed exports to the US were down 12% year-over-year, so any recovery will significantly improve Brazil’s trade balance. The options market is currently pricing in a moderate appreciation, suggesting call options on the BRL could be a valuable play.
Options And Hedging Approach
For equities, we are looking at call options on the iShares MSCI Brazil ETF (EWZ) for broad exposure. Specifically, we see potential in the materials sector, which includes major exporters of steel and other industrial goods that were hit hard by the IEEPA tariffs last year. Recent trading volume in these names has already ticked up, indicating growing market interest.
However, we must remain cautious, as the threat of new US trade actions has not disappeared. The potential for Section 232 tariffs on national security grounds or Section 301 tariffs linked to BRICS politics introduces significant uncertainty. This lingering risk means any rally could be fragile.
Given this, we think traders should hedge their bullish bets. Purchasing out-of-the-money put options on key industrial and mining stocks can provide cheap insurance against a sudden reversal in trade policy. The memory of the market swings during the initial tariff announcements in 2025 should serve as a warning against complacency.
