Brazil is bracing for the United States to impose a new 25% tariff on thousands of its imports after months of intensive but largely unproductive negotiations, three people familiar with the matter told Reuters.

Trade Tensions Escalate

The announcement from the administration of U.S. President Donald Trump, expected this Wednesday, may affect more than 4,000 products, from sugar to pig iron, exported from Brazil to the U.S. market, representing about $15 billion in annual trade.

Brazil would be the first country targeted under the Trump administration’s new tariff strategy, which relies on Section 301 of U.S. trade law, a provision that authorizes investigations into alleged unfair trade practices.

The investigation into Brazil, opened last July, cited several alleged unfair practices, including illegal deforestation and Brazil’s instant payment system, Pix, which the U.S. government argues disadvantages credit card companies.

Brazil vehemently refuted all the allegations. In a letter sent to U.S. Trade Representative Jamieson Greer, Brazil’s Minister of Foreign Affairs Mauro Vieira said the U.S. has not confirmed its allegations.

Potential Retaliation

According to Brazilian government sources, the country may retaliate once the U.S. tariffs are in place, depending on their impact.

Brazil has also been included in a separate 301 investigation by the USTR, due to conclude on July 24, into connections to forced labor in the supply chains of dozens of countries.

The probe is expected to result in an additional 12.5% tariff, bringing the total burden for Brazilian products to 37.5%.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.