By Devika Madhusudhanan Nair and Shubham Kalia
July 15 (Reuters) - The U.S. has announced 25% duties on most imports from Brazil, reviving a trade war that could embroil dozens of countries around the world as the Trump administration reworks its tariffs policy, one of its signature diplomatic tools.
The new tariffs, announced late on Wednesday, could eventually ensnare countries from India and China to the EU, Japan and South Korea as President Donald Trump seeks a trade reset after the U.S. Supreme Court struck down a previous round of global levies.
The new program is based on investigations into unfair trade practices under Section 301 of the U.S. Trade Act and close to 80 cases involving dozens of countries have been opened by the U.S. Trade Representative.
The investigations include probes into excess industrial capacity and trade in goods made with forced labor.
Wednesday's announcement by the USTR office follows a proposal by the Trump administration in June to impose a tariff of 25% on many imports from Brazil after deciding its practices were unfair on a range of issues from digital trade to illegal deforestation.
"Extensive negotiations with Brazil over the past year have not resolved these issues, but we remain open to continuing negotiations with Brazil to bring about long-needed changes to the problems identified in this investigation," U.S. Trade Representative Jamieson Greer said in a statement.
Brazilian President Luiz Inacio Lula da Silva said the U.S. decision was without any justification.
Brazil would immediately begin proceedings to invoke instruments provided for under the "Reciprocity Law" and revisit the matter within the framework of the WTO dispute settlement mechanism, he said on X.
Joe Brusuelas, chief economist at the RSM US consultancy, said the U.S. move was possibly the precursor to a round of trade negotiations with the "maximalist negotiating tactics that are the hallmark of the Trump administration."
"It likely is the kickoff of a round of bilateral negotiations that will result in a trade framework that involves tariffs and ongoing negotiations rather than part of a comprehensive overall trade policy."
India, one of the biggest trading partners of the U.S., has struggled to sign a trade deal with Washington at least partly because of the Section 301 investigations.
“The Brazil case...is a warning for India," said Ajay Srivastava, founder of the Global Trade Research Initiative think tank. "It shows that Washington can use trade action not only over tariffs and market access, but also against any policy it sees as unfair to U.S. business."
'LULA HAS PUT HIS OWN EGO AHEAD OF MAKING A DEAL'
Secretary of State Marco Rubio, who was accused by Lula of being anti-Latin America when the U.S. tariffs were proposed in June, blamed the Brazilian president and said "Lula and his government have not negotiated with the US in good faith."
"For the past year, Lula has put his own ego ahead of making a deal for the welfare of the Brazilian people, and these tariffs are the price for that," Rubio said in a strongly worded post on X.
The Brazil tariffs would apply to thousands of imports, including sugar, agricultural machinery, apparel, electrical machinery, paper and steel.
The U.S. said it would exempt all the products proposed for exemption in the June notice, except high-purity dissolving pulp and non-pharmaceutical applications of certain products.
The exemptions include beef, coffee, rare earths, energy products, aircraft and aircraft parts.
The U.S. also added organic honey, pig iron, unflavored instant coffee and some other products to the list of exemptions on Wednesday.
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 rejected all the allegations.
Brazil has also been included in a separate Section 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%.
(Additional reporting by Shivangi Acharya, Rocky Swift, Akanksha Khushi and Joao Manuel Mauricio; Writing by Raju Gopalakrishnan; Editing by Muralikumar Anantharaman, Christopher Cushing and William Mallard)
