A US Supreme Court ruling found President Trump’s IEEPA tariffs illegal. This brought tariff relief for Brazil. The IEEPA tariffs of up to 50% on Brazilian goods were replaced with a temporary 15% universal tariff under Section 122.
If the current exemptions stay in place, Brazil’s effective tariff rate is expected to fall to about 10%, down from over 20% before the ruling. The earlier effective rate was below 50% because exemptions covered more than 35% of exports, and because exporters could switch to other markets.
Impact On Brazilian Exports
Lower tariffs should help Brazilian exports to the US recover in the coming months. However, Brazil-US trade is not expected to fully return to the conditions that existed before “Liberation Day”.
Other US trade tools could still hurt Brazil. Section 232 tariffs, which target specific sectors on national security grounds, may affect parts of Brazil’s manufacturing and mining industries.
Brazil could also face Section 301 tariffs tied to concerns about BRICS alignment. This article was created using an AI tool and reviewed by an editor.
We view the recent US Supreme Court tariff ruling as a clear short-term positive for Brazilian assets. The effective tariff rate dropping from over 20% to around 10% should improve profit margins for Brazilian exporters. This may create an opportunity to consider bullish derivatives on companies with heavy US revenue exposure.
This development should also support the Brazilian real. We see a potential move toward 4.80 per US dollar. In the last quarter of 2025, exports to the US fell 12% year over year, so even a partial rebound would help Brazil’s trade balance. Options markets are pricing in a moderate appreciation, which suggests BRL call options could be attractive.
Options And Hedging Approach
For equities, we are considering call options on the iShares MSCI Brazil ETF (EWZ) for broad exposure. We also see potential in the materials sector, which includes major exporters of steel and other industrial goods that were hit hard by IEEPA tariffs last year. Trading volume in these names has already increased, which may signal rising investor interest.
Even so, caution is still needed because the risk of new US trade actions remains. Possible Section 232 tariffs on national security grounds, or Section 301 tariffs linked to BRICS politics, add meaningful uncertainty. Because of this, any rally could be unstable.
For that reason, we think traders should hedge bullish positions. Out-of-the-money put options on key industrial and mining stocks can offer low-cost protection against a sudden policy shift. The sharp market moves during the first tariff announcements in 2025 are a reminder not to get complacent.
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