How tariffs on Brazil are reshaping procurement strategies

On July 9, 2025, the U.S. government announced a sweeping 50% tariff on all goods imported from Brazil, effective August 1. This measure threatens to impact trade across multiple sectors, from pulp and paper to wood products, metals, agriculture, and manufacturing. For procurement professionals managing global supply chains, the scale and immediacy of this decision have created a strategic and operational crisis requiring rapid response and adaptation. Below, you’ll learn more about how this has reshaped procurement strategies for the better.

Want to learn more about how to mitigate risks in supply chain management? Download our strategic risk guide today. Having access to actionable strategies and expert insights is critical for building resilience and safeguarding profitability. You can learn more in the full report.

Brazil is a critical trade partner for the U.S., exporting approximately $31 billion in goods annually. According to the Brazilian Tree Industry Association (Ibá), North America accounted for 20.2% of Brazil’s forest product exports by value in the first quarter of 2025, totalling approximately $817.7 million. Hardwood pulp alone represented $375.1 million of these exports, accounting for 13.5% of Brazil’s overall share of exports to the U.S. The potentially more severe exposure lies in wood products – lumber, mouldings, panels, and construction framing components – where more than 50% of Brazilian exports by value go directly to North American markets. 

Product	$ million FOB	Share of total exports
Pulp	375.1	13.5%
Paper	129.5	21.8%
Wood panels	49.2	43.4%
Plywood	73.8	34.7%
Lumber	102.2	54.3%
Other	87.9	53.0%
Total	817.7	20.2%

Source: Ibá 

Brazil is a major supplier of hardwood pulp (specifically bleached eucalyptus kraft pulp) to the United States, shipping approximately 2.8 million tonnes annually, which represents 84% of all U.S. hardwood pulp imports. About 75% of that pulp is used to make tissue products, making this a critical and highly exposed supply chain. 

Before the tariff, Brazilian pulp was cost-competitive, priced at approx $1,280 per tonne, only slightly more expensive than other sources. The tariff instantly added $320–355 per tonne to landed costs, making Brazilian pulp economically unviable and forcing buyers to scramble for alternatives. 

“We found ourselves trying to make decisions without knowing whether the tariff would be enforced for three months or three days.” 
— Procurement Director, North American paper company 

“US trade policy has once again unilaterally injected uncertainty into the global economy, with specific ramifications for pulp markets.” 
— Pat Cavanagh, Senior Economist, Fastmarkets (World Pulp Monthly, July 2025) 

Procurement teams had to quickly: 

• Assess exposure to Brazilian supply 

• Requalify alternate suppliers 

• Renegotiate contracts and freight lanes 

• Model various sourcing and cost scenarios under high uncertainty 

This event illustrates how volatile trade policy – even when targeted at a single country – can destabilize entire global supply chains, pushing procurement organizations into high-stakes decision-making with incomplete information. It also reinforces the need for geopolitical intelligence and scenario planning within sourcing frameworks. 

Five key lessons from procurement leaders 

The 2025 Brazil tariff shock highlights the increasingly volatile nature of global trade and underscores the importance of strategic resilience. These are the five lessons to take from this: 

1. Policy risk integration: Procurement functions must integrate geopolitical and tariff-related risks into supply chain models, alongside traditional considerations such as pricing and logistics. “We now treat trade policy like currency fluctuations – it’s central to our risk management approach,” said a procurement lead from a major packaging firm. 

2. Supply diversification: Over-reliance on single sourcing now poses a significant strategic risk. Firms must diversify sourcing geographically and by product origin to mitigate sudden disruptions. “This tariff reinforced the necessity of having alternative suppliers qualified and ready. Without diversification, we’re too exposed,” said a sourcing executive at a global hygiene products company. 

3. Flexible contract structures: Tariff passthrough clauses, flexible volume terms, and policy-triggered renegotiation rights should become standard in contracts to protect firms from future trade volatility. “We’ve updated our agreements to include tariff adjustment clauses – this crisis proved that static contracts don’t work in today’s trade environment,” noted a procurement manager at a multinational consumer goods firm. 

4. Continuous scenario planning: Leading procurement teams must regularly model multiple scenarios – tariff enforcement, potential reversals, or escalation – to ensure quick responses under rapidly evolving trade policies. “We never stop scenario planning now. It’s an ongoing process, updated quarterly, because things change quickly,” explained a procurement executive at a major North American retailer. 

5. Sustainability and efficiency measures: Companies reducing packaging intensity and raw material dependency through sustainability initiatives have successfully mitigated tariff-induced costs, underscoring sustainability as a key resilience strategy. “Reducing packaging weight was initially driven by sustainability goals. But now, it’s a core part of managing supply risk,” said a procurement executive from a multinational food company. 

Procurement as strategic resilience 

The comprehensive U.S. tariff on Brazilian exports has profoundly reshaped the global sourcing landscape. It is no longer enough to focus procurement strategies solely on price and quality. Modern procurement strategies must incorporate geopolitical risk, policy agility, contractual flexibility, and sustainability-driven operational efficiencies.  

In such an environment, procurement expertise is a critical strategic assets, central to organizational resilience in an unpredictable global market. 

Want to learn more about how to mitigate risks in supply chain management? Download our strategic risk guide today. Having access to actionable strategies and expert insights is critical for building resilience and safeguarding profitability. You can learn more in the full report.