The grievance that could be the undoing of Trump’s Brazil trade probe

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On July 15, the Trump administration opened a Section 301 investigation into Brazil’s trade practices. 

The probe targets Brazil’s “acts, policies and practices” across six wide-ranging areas: digital trade, preferential tariffs, anti-corruption, intellectual property protection, ethanol market access and illegal deforestation.

Some of these grievances are longstanding, like the one about ethanol. Deforestation is of more recent vintage.

Bundling all six into a big sprawling case will make it harder to negotiate targeted solutions. But the one about Brazil granting Mexico and India preferential tariff treatment could end talks before they even begin. 

Before turning to why, consider what’s at stake in this investigation.  

U.S. digital service providers face a wide variety of subtle and not-so-subtle barriers to doing business in Brazil. They need fair market access. U.S. ethanol exporters also need relief from Brazil’s on-again, off-again tariffs. They’ve been put through the wringer.

Then there’s America’s innovators, who have waited patiently for this probe for decades. 

The U.S. Trade Representative has long raised concerns about Brazil’s failure to adequately protect and enforce intellectual property. Since 1999, every single U.S Trade Representative Special 301 Report has called out Brazil for excessive patent pendency. The average delay is nearly seven years; for pharmaceuticals, it’s almost a full decade.

This keeps cutting-edge treatments developed by U.S. firms on the outside looking in on Brazil, waiting for proper intellectual property protection.  

Also, Brazil’s lack of regulatory data protection for confidential pharmaceutical test data is a violation of the country’s international commitments, and discriminatory. Indeed, Brazil provides regulatory test data protection for veterinary, fertilizer and agrochemical products.  

Other concerns about Brazil’s intellectual property regime persist as well, including inconsistent copyright enforcement, the widespread availability of pirated and sale of counterfeit goods and opaque procedures related to the recognition of geographical indications, for example. 

These issues alone warrant a Section 301 investigation. But they, like digital trade and ethanol concerns, risk being overshadowed by the ill-defined complaint about Brazil’s “partial scope” agreements. 

Here’s the issue. Brazil, alone and as a member of the Mercosur trade bloc (which includes Argentina, Paraguay and Uruguay), has several partial scope agreements, including one with Mexico and another with India.

Congress doesn’t like these deals because they fall short of the World Trade Organization’s requirement that bona fide free trade agreements are supposed to cover “substantially all trade.”  

Both Brazil-Mexico and Mercosur-India want to get there. 

As Brazil explained to the U.S. and others in attendance at a World Trade Organization “transparency exercise,” the plan for its pact with Mexico is that it will include “commitments in all areas that made a modern trade agreement.” 

Likewise, Article 2 of Mercosur-India sets out that the parties are committed to evolving the pact into a fully-fledged free trade area. 

It’s important to note that neither Brazil-Mexico nor Mercosur-India was mentioned in the 2025 National Trade Estimate Report. In fact, the U.S. Trade Representative didn’t raise any questions about either deal in Brazil’s 2022 World Trade Organization Trade Policy Review. 

So, what exactly is this grievance? Is it that these transitions aren’t credible? Or that they’re not sufficiently ambitious? 

If it’s about the timelines, this will hurt U.S. trade relations with developing countries more generally. 

There are 27 partial scope agreements in today’s global economy. Demanding that they turn into free trade deals on Washington’s clock, backed by threats of punitive tariffs, would drive poor nations further into China’s arms. Indeed, Beijing is giving them zero tariffs whereas Congress can’t seem to renew the Generalized System of Preferences. 

If it’s about “substantially all trade,” the U.S. will have an even bigger fight on its hands. The WTO doesn’t define what this means. The closest it comes is to say it’s “not the same as all trade” but “considerably more than merely some of the trade.” 

The Trump administration can ask tough questions, but to dictate benchmarks and back them up with enforcement actions would pit America against many — if not all — of its trade partners. 

Finally, regardless of which way this grievance goes, Brazil can’t address it on its own. Mexico, India and Mercosur have skin in the game. This will further distract Brazil from the other five issues. 

Trump’s Section 301 investigation of Brazil is big, brash, and too clever by half. U.S. exporters need a more focused, clearly defined action if they’re to benefit. No one has more on the line than America’s innovators. 

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service, Georgetown University.