A Sourcing Manager's Guide to Who Pays the Tariff
Washington finalized a 25% tariff on most Brazilian goods. Whether you pay it or the exporter does comes down to how much slack is left in US capacity.
You signed the Brazil contracts back in the first quarter, priced in dollars, delivery running through the back half of the year. Then mid-July arrived and Washington finalized a 25% Section 301 tariff on most Brazilian goods, announced July 15 and effective July 22, with the exemption annex sparing chemical lines only where they feed pharmaceutical uses.
So the question sitting on your desk this week is easy to ask and hard to answer.
"Who actually pays the tariff?"
The reflexive answer is that you do, because the importer of record cuts the check to Customs.
That is true as a matter of cash flow and mostly wrong as a matter of economics. The check clears at the border, and the cost gets distributed somewhere else entirely.
Where it lands depends on a variable most of the tariff coverage ignores. Our read is that the variable is US capacity.
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