An employee inspects a shoe on a production line at Brazilian footwear manufacturer Kissol, amid the imposition of new American tariffs on several Brazilian products, including the footwear industry, which has the US as its main foreign market. — Photo: Joel Silva/Reuters
Presented by Donald Trump's government as a way to protect American industry, the tariffs imposed by the United States on several countries also had the opposite effect to that intended: they made products more expensive for the country's consumers.
By February 2026, tariffs added 2.9 percentage points to the inflation of products purchased by Americans, according to a New York Federal Reserve study released this week.
The survey also estimated that the 10% global tariff on all imported products, announced in February this year, would increase consumer prices by 2.6% over a period of one year.
In Brazil, trade measures announced by the Trump administration in July established surcharges of 12.5% to 25% for different product groups.
According to the Ministry of Development, Industry, Commerce and Services (MDIC), the two measures together reach 23.1% of Brazilian exports to the USA. Of this total, 16.5% are subject to the accumulated surcharge of 37.5%. The impact, however, varies greatly depending on the sector.
🤔 But what does this mean for Brazilian citizens? Economists and industry representatives say that, in the short term, the main effect should not appear on product labels, but on company activity and employment.
Footwear: sector fears impact on employment
The footwear sector is among the most exposed to the new American tariffs. The USA is one of the main destinations for Brazilian footwear, and exports were already declining even before the new measures came into force.
Between January and August, Brazil exported 62.45 million pairs of shoes, which generated US$541.45 million. Compared to the same period in 2025, there was a 7.5% drop in volume and a 16.8% drop in revenue.
According to Abicalçados, these are the worst results for the period since 2020, a year heavily affected by the pandemic. In August alone, 7.13 million pairs were shipped, for US$70.8 million, drops of 6.6% and 8.1%, respectively.
The USA accounts for an important part of this deterioration. In the first eight months of the year, Brazil exported 7.38 million pairs to the American market, for US$120.5 million. Volume fell 4.1% and revenue fell 22.8% compared to the same period in 2025.
The drop in revenue was greater than the drop in volume. In August, the average price of footwear exported to the USA fell 35.4%, to US$17.20, according to Abicalçados.
The entity attributes the movement, among other factors, to the change in the profile of products sold to the American market and the retraction of higher-value categories, especially leather shoes.
The pressure doesn't just come from the USA. Argentina, the second main destination for Brazilian shoes, also reduced purchases. In the year to August, Brazilian exports to the country fell 51.6% in volume and 55.6% in revenue.
Given this scenario, Abicalçados now estimates a 7.1% drop in Brazilian footwear exports in 2026, compared to a previous forecast of a 3.6% decline.
At the same time, footwear imports are advancing in the Brazilian market. Between January and August, 33 million pairs entered the country, an increase of 9.6% compared to the same period in 2025.
The value of imports grew 11%, to US$429.7 million. China, Vietnam and Indonesia accounted for about eight in every 10 pairs imported.
The movement makes one of the alternatives difficult for companies affected by the tariff: selling in Brazil products that are no longer destined for the USA.
Haroldo Ferreira, executive president of Abicalçados — Photo: Disclosure
According to Haroldo Ferreira, executive president of Abicalçados, the industry faces a kind of “pincer effect”: on the one hand, the loss of the American market; on the other, competition from imported products in the domestic market.
"Companies could direct part of their production to the national market to avoid layoffs. But, with the increase in imports, it becomes more difficult to absorb these products and maintain jobs."
The entity estimates the loss of more than 5,000 direct jobs in the second half of the year if American tariffs are maintained. This, however, is a projection by Abicalçados, and not a number of layoffs already recorded.
The entity's own most recent data show that, until July, the sector still accumulated a positive balance of 1,740 jobs in the year, although it recorded a negative balance of 387 vacancies in that month alone.
Rafarillo: an example of how the tariff arrives at the factory
Footwear production at the Rafarillo factory, in Franca (SP) — Photo: Reproduction/Facebook
Rafarillo, a footwear manufacturer from Franca (SP), is an example of how change can affect a company's operation. According to André Ferreira, the company's foreign trade representative, contracts with American buyers needed to be renegotiated after the announcement of the tariffs.
The company also reorganized production lines and sought alternative suppliers to reduce costs.
“The production process had to be rethought, we had to make some adjustments, suddenly even some changes in relation to the raw material, obviously not changing the quality of the product, but looking for more alternatives on the market", he stated.
Smaller orders also began to be negotiated. The company, which currently has around 150 employees, has reduced jobs and is looking for new markets to compensate for part of the loss of sales to the USA.
The company is also trying to expand sales to other destinations, including Latin America, Europe, Africa and Asia.
Sugar and ethanol: impact depends on the product
Sugarcane plantation — Photo: GATec
In the sugar-energy sector, the effects are different from those observed in the footwear industry. Brazilian sugar is among the products subject to the additional 25% surcharge provided for in the specific measure for Brazil. Ethanol is at the center of a broader trade dispute between the two countries.
The Sugarcane and Bioenergy Industry Union (Unica) states that Brazilian biofuels policy is applied in a non-discriminatory manner and follows the rules of the World Trade Organization (WTO).
The entity also contests the American assessment that Brazil should offer preferential tariff treatment to ethanol produced in the USA. For sugar, the commercial relationship was already marked by restrictions on access to the American market, including tariff quotas. Thus, the new scenario adds to barriers that already existed.
For the Brazilian consumer, however, there is no automatic relationship between the new tariffs and the price of sugar or ethanol. If it becomes more difficult to sell a certain volume to the USA, producers can look for other markets. Part of the production can also be directed to the Brazilian market.
In theory, a greater supply on the domestic market could put downward pressure on prices or limit increases. But this depends on several factors, such as the volume redirected, international prices, exchange rates and supply and demand conditions.
On the other hand, if exports fall significantly, plants and producers may reduce revenues and investments. The effect can spread to carriers, suppliers and other links in the chain.
Machines: tariff adds to a weakened domestic market
The machinery and equipment industry faces pressure in both foreign and domestic markets. The USA is among the main destinations for Brazilian exports, while the domestic market suffers from high interest rates and low levels of investment.
In the first half of the year, the sector's revenue fell 13.6% and sales in the domestic market fell 17%, according to Abimaq. Exports, on the other hand, grew 12.7% in the period.
For José Velloso, executive president of Abimaq, the weakness of the domestic market is currently the main factor behind layoffs in the sector, with a greater impact than tariffs on exporting companies.
The sector faces a scenario of few investments in the country and lower demand for machinery and equipment. According to Velloso, revenue has fallen by around 17% in the last four years, despite the growth in exports.
Some segments mainly linked to the domestic market face even stronger contractions. According to Velloso, revenue from agricultural machinery fell 25%, while revenue from harvesters fell 40%. The scenario, he says, has already led to the closure of factories.
"We have a very important crisis here. We have an increase in exports, and that alleviates it, but we have a drop in exports to the United States", he states.
"This drop is smaller than the growth in exports that we are having in general. So, does the tariff cause layoffs? It does. But, when I look at the total sector, it is also having layoffs because of the low performance of the domestic market, and not just because of the tariff.”
The effect can reach companies that do not export
According to Abimaq, the US purchased around US$3.2 billion in Brazilian machinery and equipment in 2025.
🔍 The impact of pricing, however, can spread throughout the production chain. A manufacturer that loses orders from an American buyer can reduce production and, as a result, purchase less steel, components and services from national suppliers, in addition to reducing transportation expenses.
It's called the chain effect. Thus, even companies that have never exported directly to the USA can feel the effects of the drop in sales from their customers.
Abimaq also states that the integration between the Brazilian and American production chains could cause increased costs to affect companies in both countries.
There is, however, difficulty in measuring the impact on employment. According to Velloso, the data does not allow us to separate the layoffs caused specifically by tariffs from those resulting from the weakness of the internal market.
Therefore, any job cuts cannot be automatically attributed to American tariffs.
For the consumer, the effect is not an automatic increase in prices
But, after all, can Brazilians pay more because of the tariff?
Not necessarily. The tariff is charged upon entry of the product into the USA. Therefore, the first impact falls on the commercial relationship between the Brazilian exporter and the American buyer.
The mechanism can work in different ways:
Companies may lose margin
To maintain contracts, Brazilian exporters can accept lower prices and absorb part of the additional cost. This reduces companies' margins, but does not mean an immediate increase in prices in Brazil.
Part of production may return to the Brazilian market
If a product is no longer exported to the US, the company can try to sell it domestically. If there is a significant increase in supply, this could put downward pressure on prices.
Companies can reduce production and employment
When there is no alternative market, the solution may be to reduce production, postpone investments, suspend hiring or cut jobs.
Exchange can be an indirect channel
A worsening of the outlook for foreign trade could increase the perception of risk and put pressure on the real. A more expensive dollar makes imported products and inputs more expensive and could make it more difficult for inflation to fall.
It is on this last point that tariffs can reach the Brazilian economy more broadly.
Which weighs more: fees or interest?
For André Matos, CEO of MA7 Capital, the impact of tariffs on the Brazilian economy is mainly sectoral and concentrated in certain regions, and should not represent a major shock to GDP.
According to the MDIC, the USA represented 10.8% of Brazilian exports in 2025. From January to August 2026, the share fell to 9.6%.
Therefore, a drop in sales to the American market can significantly affect companies and workers linked to exports, even if the effect on the economy as a whole is limited.
According to Matos, the impact also depends on the ability to redirect exports to other markets. Part of the sales that stopped going to the USA were absorbed by other destinations, especially in Asia.
For the economist, however, high interest rates today represent a more comprehensive obstacle to economic activity: “If I have to order the brakes on growth, interest comes first, easily, and tariffs come later.”
The effect of the tariff, according to him, also tends to be slower. A company that loses a contract with an American buyer could take years to recover that market, even if trading conditions improve.
Why doesn't the consumer feel the tariff immediately?
For Matos, the direct impact on prices in Brazil tends to be limited because the tariff is charged upon entry to the USA and paid by the American importer.
"For the consumer, the short-term effect is neutral or even slightly favorable. His problem is not price, it is employment, if the company in his region exported there."
Thus, the impact tends to appear first on companies that export, on employment and investments. Only then, depending on the behavior of the dollar, can the prices paid by consumers be reached.
