Friday, July 17, 2026.
Brazil: Political Uncertainty, Economic Pressure and a Growing International Role
Brazil enters the second half of 2026 at an important political and economic crossroads. As the country moves closer to its October presidential election, public attention is increasingly focused on inflation, government spending, public security and the future direction of Brazil’s foreign policy. President Luiz Inácio Lula da Silva remains at the center of the political landscape, while conservative movements continue reorganizing amid the legal and political difficulties surrounding former President Jair Bolsonaro. The result is an increasingly polarized environment that is likely to shape national debate throughout the coming months.
Economically, Brazil continues to demonstrate resilience, although growth is slowing and inflation remains above the Central Bank’s preferred target. Rising food prices and the continued cost of essential goods are placing pressure on Brazilian households, while relatively high interest rates continue to affect borrowing, investment and consumer confidence. At the same time, Brazil is facing new uncertainty in its commercial relationship with the United States, following the announcement of possible tariffs affecting a wide range of Brazilian exports. These tensions may encourage Brasília to strengthen its relationships with China, India and other emerging economies through BRICS and additional international partnerships.
Brazil also continues to promote its position as a global leader in renewable energy, agriculture and natural-resource development. Recent changes to the country’s ethanol requirements reflect its efforts to reduce dependence on imported fuel while supporting domestic production. Nevertheless, serious challenges remain, particularly organized crime, public security, fiscal pressure and the need to balance economic development with environmental protection. Together, these developments make Brazil one of the most important countries to watch in Latin America as the political campaign intensifies and the government responds to growing domestic and international pressures.
Brett Mikkelson
Founder, B.M. Investigations, Inc. – Private Investigations in Panama
The United States Imposes a 25% Tariff on Brazilian Products
The U.S. government issued a resolution on Wednesday night (July 15) imposing a 25% tariff on products exported from Brazil. The measure, adopted under Section 301 of the U.S. Trade Act, will take effect next Wednesday (July 22).
As reported by Valor, although the administration of President Luiz Inácio Lula da Silva viewed a new across-the-board tariff increase as virtually inevitable and considered the process led by the Office of the United States Trade Representative (USTR) to be ideologically driven, it believes the United States may still expand the list of products exempt from the new 25% tariff.
Lula’s administration has sought to demonstrate to the White House that it remains willing to negotiate.
Exemptions
The USTR measure exempts more than 2,000 products from the new tariff. These are in addition to items that had already been excluded, including certain types of meat, coffee, fruit, iron, and aircraft parts.
Newly exempt products include pig iron, unflavored instant coffee, organic honey, aluminum hydroxide, iron and steel scrap, certain seafood products, leather, selected wood products, medicines and pharmaceutical inputs, as well as antiques, works of art, and used clothing.
The Office of the United States Trade Representative (USTR) stated that these products are important inputs for U.S. industry, have limited domestic availability, or are difficult to replace with supplies from other countries. As a result, imposing the additional tariff could increase costs and disrupt U.S. supply chains.
In several cases, the agency argued that the United States depends on Brazilian supplies or that imposing the tariff would cause greater harm to the U.S. economy than it would exert meaningful pressure on Brazil.
Exemption Requests Rejected
Not all exemption requests were approved. The U.S. government rejected requests from sectors including agricultural and industrial machinery, apparel, footwear, electrical equipment, gardening tools, paper, organic sugar, and various manufactured goods.
Although companies warned of higher costs and difficulties in replacing Brazilian suppliers, the USTR concluded that these products could be sourced from other markets or that the economic consequences did not justify exempting them from the tariff.
The final resolution also tightened certain aspects of the original proposal. The agency removed high-purity cellulose from the exemption list after receiving complaints alleging that Brazilian producers benefited from practices linked to illegal deforestation.
It also limited exemptions for certain chemical products to pharmaceutical applications, maintaining the tariff when those products are used for other industrial purposes.
Industry Response
Brazilian industry groups expressed concern after the United States announced the new tariff.
The National Confederation of Industry (CNI) stated that it is closely monitoring the 25% tariff confirmed by the United States on Wednesday. According to the CNI, the additional tariff intensifies the pressures already affecting Brazilian exports and creates greater uncertainty for businesses in both countries.
“The effects of higher U.S. tariffs are increasingly being felt across Brazilian industry: 20 of the country’s 27 states reduced their exports to the U.S. market during the first half of the year. Following today’s announcement, the situation is likely to worsen, further eroding the competitiveness of Brazilian industry. We must do everything possible to reverse this trend and restore the relationship that Brazil and the United States have built,” said Ricardo Alban, President of the CNI.
The tariffs adopted by the United States since 2025 have already affected bilateral trade. Brazilian exports to the U.S. market fell 13%, equivalent to approximately US$2.6 billion.
The decline was partly driven by an 8.7% decrease in industrial goods exports, particularly semi-finished iron and steel products, pig iron, chemical wood pulp made from non-coniferous materials, petroleum oils, and semi-finished products made from other steel alloys.
Despite the decline, the United States remained the largest destination for Brazilian manufactured exports during the period.
The impact of the tariffs introduced since 2025 is also reflected at the state level. During the first half of this year, 20 of Brazil’s 27 states, as well as the Federal District (Brasília), recorded lower exports to the United States compared with the same period in 2025.
Competitive Pressure
The Federation of Industries of the State of Minas Gerais (FIEMG) also expressed deep concern over the U.S. government’s decision.
According to FIEMG, the measure places Brazilian companies at a significant competitive disadvantage compared with suppliers from other countries competing for the same customers. The ultimate impact will depend on the products affected, the tariff classification of each item, and the treatment granted to international competitors.
The federation warned that potential consequences include the replacement of Brazilian suppliers, pressure to reduce prices and profit margins, and the renegotiation of contracts, delivery schedules, and commercial terms.
“The 25% tariff significantly changes the conditions for Brazilian products to access the U.S. market. It will be essential to clarify which products will be affected, the implementation timeline, and how existing contracts will be treated, thereby reducing uncertainty for exporting companies,” said Verônica Winter, Coordinator for International Business Facilitation at FIEMG’s International Business Center.
FIEMG called for intensified negotiations between Brazil and the United States and for clear rules regarding signed contracts, cargo already in transit, and the implementation of the measure, in order to prevent a prolonged loss of competitiveness for Brazilian industry.
Ecopetrol Clears the Way for the Acquisition of Brava in Brazil Following Regulatory Approval
Ecopetrol S.A. has issued an official update regarding the status of its Voluntary Public Tender Offer (OPAV) in Brazil for the acquisition of Brava.
According to the company’s material information disclosure, Brazil’s Comissão de Valores Mobiliários (CVM) has ruled in favor of its subsidiary, Ecopetrol Investimentos do Brasil, in an administrative appeal, allowing the acquisition process—which had been suspended since last month—to resume.
Timeline of the Regulatory Suspension
The acquisition process, originally announced on May 25, 2026, encountered a regulatory hurdle on June 16, 2026.
On that date, Ecopetrol announced that the tender offer auction had been temporarily suspended due to a series of technical adjustments requested by the CVM, Brazil’s securities market regulator.
The decision to suspend the tender offer was made to implement the necessary technical modifications and comply with the conditions set out in the original offer document published on Brazil’s B3 Stock Exchange.
During the suspension, the company emphasized that the measure did not represent the cancellation of the transaction but rather a necessary pause to ensure full compliance with the applicable regulations in the Brazilian market.
Appeal Decision and New Timeline
Following the filing of an administrative appeal by its subsidiary Ecopetrol Investimentos do Brasil, the CVM’s Board of Directors met in a regular session on July 14, 2026. As a result, on July 15, the company was formally notified through Official Letter No. 160/2026/CVM/SRE/GER-1 that the previously imposed suspension had been declared ineffective.
The Brazilian regulator has granted Ecopetrol Investimentos until July 22, 2026, to complete the final adjustments and publish the revised tender offer document.
The updated document must include the new date for the auction in the Brazilian market. Ecopetrol stated that it will continue to keep investors informed about the outcome of the auction and any further developments related to the transaction.
Company Profile and Scope of the Transaction
Ecopetrol is currently Colombia’s largest company and one of the leading integrated energy companies in the Americas, employing more than 19,000 people.
In Colombia, the company accounts for more than 60% of the country’s hydrocarbon production and operates most of its transportation, logistics, and refining infrastructure.
Internationally, Ecopetrol maintains exploration and production operations in strategic basins, including the Permian Basin and the Gulf of Mexico in the United States, as well as in Mexico and Brazil.
Following the acquisition of a 51.4% stake in ISA, Ecopetrol also diversified its portfolio into power transmission, real-time systems management, and toll road concessions in countries such as Chile, Peru, and Bolivia.
The Brava acquisition represents the continuation of Ecopetrol’s expansion strategy in Brazil, a market where the company already has an established presence and where its shares—listed in Colombia, Brazil, and New York—are closely monitored by international investors.
Deforestation in Brazil’s Amazon Falls to a 10-Year Low
From January to June, 1,295 square kilometers of the world’s largest tropical rainforest were cleared, marking the lowest level recorded since 2016, when Brazil’s National Institute for Space Research (INPE) began satellite-based monitoring.
This represents a 38% decrease compared with the first half of 2025.
Left-wing President Luiz Inácio Lula da Silva, who is seeking re-election in October, has pledged to eliminate illegal deforestation by 2030.
For comparison, vegetation loss in the Brazilian Amazon exceeded 3,998 square kilometers during the first half of 2022, the final year of former far-right President Jair Bolsonaro’s administration—more than three times the area cleared during the same period this year.
After reaching a peak of 10,278 square kilometers in 2022, deforestation in the Brazilian Amazon was nearly cut in half in 2023, the first year of Lula’s current term, with the downward trend continuing in the following years.
In the Cerrado, the vast biodiversity-rich savanna located south of the Amazon, 3,142 square kilometers were deforested, the lowest level since 2021.
With less than three months remaining before the elections, Lula aims to showcase a strong environmental record as he seeks a fourth presidential term, following his previous administrations from 2003 to 2010.
However, environmental groups have criticized him for supporting a large-scale offshore oil exploration project along the Amazon coast.
Operation in Rio de Janeiro Dismantles a Money Laundering Network for Comando Vermelho and the PCC, While Investigating Alleged Links to Al-Qaeda
A joint operation conducted by the Rio de Janeiro Civil Police and the State Public Prosecutor’s Office resulted in the arrest of 10 individuals on Wednesday, July 15, as part of an investigation into a money laundering network that allegedly operated on behalf of organized crime groups. Authorities executed 10 arrest warrants and 37 search warrants across Rio de Janeiro, São Paulo, Minas Gerais, and Foz do Iguaçu (Paraná State), while 22 individuals have been charged with participating in the criminal organization.
According to investigators, the network laundered at least R$100 million (approximately US$20 million) between 2021 and 2024, providing financial services to Terceiro Comando Puro (TCP) while concealing funds for Comando Vermelho (CV) and the Primeiro Comando da Capital (PCC). Among those under investigation is a man allegedly linked to an Al-Qaeda financing network, who had previously been sanctioned by the U.S. Office of Foreign Assets Control (OFAC). Police stated they will continue investigating this alleged connection based on evidence seized during the operation.
Investigators believe the organization used newly created shell companies to introduce illicit funds into the financial system through methods such as structured cash deposits (“smurfing”), the use of nominees (straw men), and the assistance of accountants. The investigation began after authorities identified a store in the São Carlos Complex that was linked to the leadership of TCP and was allegedly selling counterfeit goods while receiving stolen electronic devices.
Prosecutors identified Bárbara Luzia Souza de Carvalho as one of the network’s principal financial operators, alongside a group of businessmen of Lebanese origin—the Zayoun brothers: Reda, Yasser, and Kassem—who are suspected of expanding the movement of illicit funds through the tri-border region. Judge Alexandre Abrahão Dias Teixeira accepted the charges and ordered the freezing of the suspects’ assets. Police have not stated whether those arrested have legal representation.
