Brazil’s Tariff Hit City Bets on EU Deal

BRAZIL · TRADE

Piracicaba, a São Paulo state city that builds machinery for US factories, is turning to Europe and other markets. US duties of up to 37.5% have made it the face of Brazil’s tariff pain.

Piracicaba, an industrial city in São Paulo state, is betting on new export markets as US tariffs hit its machinery makers. In August, Brazilian media called it the city in Brazil most affected by the duties.

Since 22 July the US has charged 25% on Brazilian goods under Section 301, a trade law against alleged unfair practices. A separate 12.5% duty over forced-labour import bans, from 24 July, makes 37.5% on goods covered by both.

Why Piracicaba Is Exposed

Piracicaba and nearby towns export machinery and parts used in US industry. In August the local union Simespi said the duties touched about 50 firms that employ roughly 10,000 direct workers.

Simespi is the metalworking employers’ union of Piracicaba, Saltinho and Rio das Pedras, led by Paulo Estevam Camargo. Brazil’s Vice President Geraldo Alckmin called it to a meeting set for Friday, 7 August.

The US notice has no general machinery exemption, and its trade office declined to exempt farm, electrical, mining or construction machinery. Some lines, like civil aircraft parts, are excluded.

What Brazil Is Offering Exporters

ApexBrasil, the federal export-promotion agency, runs a plan worth 210 million reais (about US$38 million at 5.49 reais per US$, 3 November). It says it can support about 5,300 of the roughly 5,600 companies it counts as directly hit.

Hit firms pay no ApexBrasil participation fees, and the agency reimburses certification costs up to 40,000 reais (about US$7,300) per company. That cap covers certification only, not the full cost of winning a new market.

The plan lists 36 priority markets, among them Canada, Mexico, Germany, Turkey, South Africa, Indonesia, India and China. Companies apply through ApexBrasil or its 29 partner sector associations and must give their product code.

Where the EU-Mercosur Deal Stands

The EU and Mercosur, the trade bloc of Argentina, Brazil, Paraguay and Uruguay, signed their agreements on 17 January 2026. The European Commission says the interim trade agreement has applied provisionally since 1 May 2026.

That trade-only text is to be replaced by the wider partnership agreement once all sides fully ratify it. The Commission’s page gives no tariff schedule, so the gain for Piracicaba’s machinery lines is not confirmed.

Our explainer on the EU-Mercosur interim agreement sets out what is in force and what is still pending. It covers the farm quotas too.

What It Means for US Readers

US importers of Brazilian machinery and parts pay these duties at the border, so landed costs rise unless a product is excluded. US machine makers could meet Brazilian rivals chasing the same buyers in Europe and Latin America.

Brazil’s trade minister has said the government expects a written US tariff proposal in November, as our earlier report explains. Washington has not confirmed a date or announced any cut.

More on the economy is on the Brazil hub, with guides to who runs the economy and who holds power. The nearest city page is São Paulo.

What Is Not Known

No official figure shows how many Piracicaba jobs have been lost since 22 July. The August estimate of 50 firms and 10,000 workers measures exposure, not layoffs.

A union study released on 3 November, ranking Piracicaba first, could not be checked against customs data. Its export totals are left out until a public source confirms them.

Whether the EU deal cuts duties on Piracicaba’s machinery, and how soon, is not shown on the Commission’s page. No company has said it has won a new European order.

Frequently Asked Questions

Why is Piracicaba called the hardest hit by US tariffs?

The city exports machinery and parts used in US industry, and the US duties reach goods of that kind. Its employers’ union says about 50 firms and 10,000 direct jobs are exposed.

How high are US tariffs on Brazilian goods?

A 25% duty applies from 22 July and a separate 12.5% duty from 24 July, making 37.5% on goods covered by both. Some products, such as civil aircraft parts, are excluded.

Is the EU-Mercosur trade deal in force?

Its interim trade agreement has applied provisionally since 1 May 2026, says the European Commission. The wider partnership agreement still has to be fully ratified.

What help does Brazil give exporters hit by US tariffs?

The plan, worth 210 million reais (about US$38 million), offers fee waivers, trade-fair slots and certification refunds. ApexBrasil, the federal export agency, runs it.

Does this matter to US buyers?

Yes, if they import Brazilian machines or parts. They pay the extra duty at the border unless the product is excluded.

Sources: Office of the US Trade Representative, Section 301 action on Brazil, Federal Register notice of 20 July 2026 and forced-labour Section 301 action, notice of 23 July 2026 (12.5% on Brazil from 24 July); European Commission, EU-Mercosur agreement page; ApexBrasil (export diversification plan of August 2026); Simespi (statements of 5 August 2026); Banco Central do Brasil (PTAX rate of 5.4935 reais per US$, 3 November 2026).