The exemptions in Trump’s latest Brazil tariffs reveal contradictions at the heart of pro-tariff trade policy

Last week, the Trump administration imposed a new 25 percent Section 301 tariff on many imports from Brazil. The administration argued that the tariffs were necessary to address a range of concerns, including digital trade restrictions, ethanol access, and illegal deforestation.

The move adds to the administration’s growing list of problems it believes tariffs can solve, such as preventing Canadian wildfires. Yet the final action was far from a blanket tariff. It includes a lengthy list of exemptions covering major Brazilian exports, including coffee, aircraft, orange juice, beef, and certain energy products. Those carve-outs are more than a technical detail; they reveal the contradictions inherent in pro-tariff policy.

While tariffs are promoted as a way to protect domestic industries or pressure foreign governments, these import taxes create real costs. Importers face higher expenses, manufacturers that rely on imported inputs face higher production costs, and consumers often pay higher prices.

The administration’s exemptions suggest it understands those consequences. Sparing products deemed too economically or politically important from new duties is an implicit recognition that tariff costs can outweigh the benefits policymakers seek.

CEI Senior Economist Ryan Young’s recent paper on tariffs provides a useful explanation. He argues that tariffs suffer from a knowledge problem because governments cannot know in advance where the greatest economic disruptions will occur.

Complex supply chains make it impossible to predict every consequence of higher import costs. Exemptions represent an effort to avoid the most visible harms, but they do not eliminate the tradeoffs. They just recognize that those tradeoffs exist, even if policymakers disagree about who should bear them.

While exemptions can reduce some economic pain, they introduce another cost: complexity. Every carve-out requires businesses to determine which products are covered, which are excluded, and whether changing classifications or sourcing decisions affects tariff liability. That process consumes time and resources that could otherwise be spent investing, hiring, or expanding production.

Cato Institute trade policy expert Scott Lincicome describes this process as a “death by a thousand paper cuts.” Compliance requires navigating a litany of product classifications, customs guidance, overlapping tariff authorities, and exclusion lists.

Complexity also favors firms with the resources to navigate it. Securing exclusions often requires legal or lobbying expertise that many smaller businesses lack. Cato Institute research during the first Trump administration found that politically connected firms were more likely to receive exclusions.

This research suggests that exemption systems can reward companies with greater access to policymakers instead of those facing the greatest economic harm. In this sense, exemptions complicate tariff policy by changing who benefits from it.

Each of these may seem manageable on an individual level. Collectively, they make international trade more expensive and less predictable. The Brazil exemptions reduce some tariff costs, but they do so by adding yet another layer to an already complex trade regime.

The exemptions reveal another important contradiction: policymakers understand the economic harm, but they cannot eliminate those costs without undermining the tariff itself. Products still covered by the Brazil duties will still face higher import costs, affecting the businesses and workers connected to those supply chains.

As I documented when discussing the effects of tariffs on employment, tariffs can provide concentrated benefits to protected industries while imposing wider economic costs that result in net job losses. The Brazil tariffs may spare some industries, but they leave others facing the same tradeoffs that have accompanied tariffs throughout history.

These tradeoffs become even harder to evaluate when tariffs are used to pursue objectives beyond traditional trade concerns. Historically, Section 301 investigations focused on specific trade practices, such as intellectual property theft, forced technology transfer, and industrial subsidies in China. The Brazil tariff action illustrates a broader shift in how tariff authorities are being used.

The administration’s Section 301 investigation into Brazil extended into areas such as digital trade, electronic payments, environmental policies, anti-corruption enforcement, and ethanol.

That breadth reflects a larger trend CEI has examined across tariff authorities: the expanding use of tariffs for purposes far removed from traditional trade remedies. When tariffs become a tool for addressing almost any international dispute, policymakers risk imposing economic burdens without a clear connection to the desired outcome.

The irony of the Brazil tariffs is that the exemptions meant to make them more manageable reveal why tariffs are so difficult to administer in the first place. Tariffs create costs, and no amount of exemptions can eliminate them.

Congress should reclaim its tariff authority and require a more transparent debate over when trade restrictions are worth their economic consequences. Otherwise, the US will end up with a trade policy in which the first question is not whether a tariff can withstand scrutiny, but which industries can secure an exemption.