Officials in the U.S. Trade Representative’s office are raising concerns about whether Brazil is doing enough to prevent deforestation as they pursue a Section 301 investigation into the South American nation’s trade practices that could result in penalties. 

It's one of several facets of the U.S.-Brazil trade relationship where USTR will decide whether retaliatory actions, including tariffs, are justified.

In a Federal Register notice, USTR general counsel Jennifer Thornton said “evidence indicates that Brazil's lack of effective enforcement of its environmental laws and regulations has contributed to illegal deforestation in Brazil,” and further charged that violators have used affected land for crop and livestock production. 

"Conversion of illegally deforested land for agricultural production provides an unfair competitive advantage to agricultural exports by lowering costs and expanding availability of land inputs,” Thornton said.

While Thornton acknowledged that deforestation rates have declined in recent years, she said the rate in 2024 was estimated to be about 3,403 hectares per day. She said, “evidence indicates that up to 91 percent of such deforestation could be illegal.” 

She also said Brazil’s enforcement efforts “have not stopped illegal deforestation, and previously deforested land has not been restored, despite some efforts by Brazil recently to strengthen its environmental laws as well as enforcement of those laws."

Thornton said Brazil’s position as a major U.S. competitor in beef, corn and soybean sales allows it to “readily backfill” Chinese orders when China “engages in economic coercion and restricts or prohibits U.S. agricultural exports.” She also noted that the U.S. trade deficit with Brazil for agricultural products grew from $3 billion in 2020 to $7 billion in 2024, despite the U.S. having an overall trade surplus with Brazil in goods and services.

Joe Glauber, a former USDA chief economist, told Agri-Pulse the Trump administration likely sees the 301 investigation as a way to give legal backing to 50% tariffs it placed last month on around a third of Brazilian exports to the U.S. 

“Really, this is all, to me, kind of a papering-over of a decision that was made to raise tariffs on Brazil,” Glauber said.

In a comment to USTR, Brazilian Minister of Foreign Affairs Mauro Vieira pushed back on the USTR allegations, writing that Brazil’s surplus with the U.S. for trade products “is not attributable to goods linked with deforestation.” More than 70% of the total trade value of Brazil’s agricultural exports to the U.S. are tropical products like coffee, orange juice and sugar, which Vieira said “are not, and have never been, linked to deforestation.”

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Mauro Vieira (Brazilian government photo)

"Any trade imbalance in agricultural products therefore is unrelated to any alleged environmental harms that the USTR contends provide an unfair competitive advantage,” Vieira said. 

Vieira said the Brazilian government offers producers who are found to adhere to sustainable practices discounts of up to 0.5% on financing and tracks the use of these practices through a digital platform. He added that both Brazil’s soy and cattle industries have signed agreements to reduce Amazon deforestation and noted that producers who use deforested land can lose subsidies and be subject to embargoes.

Vieira said Brazil’s agricultural success comes from “significant productivity gains achieved through technological innovation and enhanced efficiency, rather than an expansion of agricultural land via deforestation.” 

But American Sugarbeet Growers Association President Luther Markwart and U.S. Beet Sugar Association President Cassie Bladow argue that Brazil’s sugar industry has “benefitted from the lax and ineffective policies on protection of tropical forests and related environmental measures." They point to a 2019 decision to lift a 10-year ban on the cultivation of sugarcane in the Amazon rainforest and central wetlands. 

In their comment, Markwart and Bladow said only 8% of recent growth in Brazilian sugarcane production stems from improved yields, while 92% comes from land expansion, 19% of which is linked to deforestation. They also warned agricultural expansion could continue in South America through 2050, citing a 2023 McKinsey study. 

"Even when sugarcane expansion displaces other crops, the crops and feedstock displaced by sugarcane in turn push soybean acres and cattle ranching into the forest with documented losses of virgin and secondary forests as a result,” they wrote.

Caleb Ragland, the president of the American Soybean Association, also warned in a comment that guidelines for a 2006 soy memorandum that aims to prevent further deforestation by restricting sales of soybeans grown on land deforested after July 2008 are set to “either end or significantly relax in January 2026.” He said this is due to a court ruling allowing officials in Mato Grosso — a Brazilian state — to end tax deductions and incentives for participating companies.

Caleb Ragland (American Soybean Association photo)

"In essence, Mato Grosso officials are pressuring Brazilian soybean exporters not to participate in Amazon biome protection plan by withdrawing tax benefits if they do participate in the Soy Moratorium,” Ragland wrote, further adding that without those tax benefits, soybean traders “will have little incentive to ensure soybeans are grown on deforested versus non-deforested land.” 

"The lax regulations paired with rising soybean demand from China as it seeks alternative sources to U.S. soybeans are likely to incentivize Brazilian producers to expand soybean acreage into the Amazon rainforest in 2026,” Ragland said. 

Citing projections by USDA's Foreign Agricultural Service, Ragland said 5.5 million acres of new deforestation could occur in Matto Gross if the state’s legislature passes a law reducing mandatory vegetation preservation from 80% to 35%. 

"Brazilian soybean production continues to grow and threaten the viability of U.S. soybean exports on the global market,” Ragland told USTR. "U.S. soybean crops are produced with fewer fertilizers, pesticides and acres compared to Brazil while maintaining higher yields. Not only can U.S. soybean farmers produce a higher-quality product, but they can do it with fewer environmental impacts than their Brazilian counterparts."

A comment submitted by the Brazilian Confederation of Agriculture and Livestock said Brazilian producers “strictly adhere to legal and sustainability standards, guaranteeing full compliance with international market requirements, including those of the United States.” The comment also said “there are no acts, policies or practices in Brazil associated with illegal deforestation that bring any disadvantages to American businesses."

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