Normal duty
US$111
US$100 of goods, US$8 of freight and insurance and US$3 of duty.
Trade and investment · Article
A 37.5% surcharge lifts landed cost by about 34%: when producing in the U.S. starts to make sense
Exporting remains the simplest route until the tariff eats into the margin. We show what changes in cost, what the 2026 numbers already reveal and which factors separate companies that should keep exporting from those that should assemble or produce close to the U.S. customer.
37.5%
maximum combined surcharge on Brazilian goods (25% + 12.5%)
USTR, Jul 2026
+34%
in the landed cost of a product with a 3% normal duty, in our illustration
Marroffino & Partners
−25.4%
in exports to the U.S. of goods under the 25% to 37.5% surcharges, January to September
Amcham Brasil, Oct 2026
US$36.92
average hourly earnings in U.S. manufacturing, September 2026
BLS
Executive summary
- The tariff changes the math. For a product with a 3% normal U.S. duty and freight and insurance at 8% of its value, the 37.5% surcharges lift landed cost in the U.S. by about 34%.
- The market has already reacted. From January to September, Brazilian exports of goods under the 25% to 37.5% surcharges fell 25.4%, about US$1.4 billion less, while total exports to the U.S. fell 6.5%.
- Producing locally removes the import duty on the finished product, not on imported components, and requires capital, permits and a team. Average hourly earnings in U.S. manufacturing reached US$36.92 in September 2026.
- There are intermediate routes. Reviewing classification and contracts, using foreign-trade zones to defer duty or assembling in the U.S. with substantial transformation can come before a full plant.
What the surcharge does to cost
In a typical shipment, U.S. duty is charged on the value of the goods, without international freight. With a 3% normal duty, a US$100 product reaches the U.S. at about US$111, including freight and insurance of 8%. With the 37.5% surcharges, the same product costs about US$148.50.
Our reading: few supply chains absorb an increase of this size without losing share. The question is no longer whether the price changes, but who pays the difference.
Exhibit 1
Landed cost in the U.S. of a US$100 FOB product (US$)
Illustrative calculation by Marroffino & Partners. Assumptions: freight and insurance at 8% of FOB value; duty charged on FOB value; 3% normal duty.
With surcharges
US$148.50
Duty rises to US$40.50 per US$100 of goods.
Difference
+34%
Increase in landed cost before any importer or retail margin.
What the 2026 numbers already show
Exports to the U.S. fell 6.5% from January to September. For goods under the highest surcharges, the drop was 25.4%. Over the same period, Brazilian manufacturing sales to other markets grew 6.3%.
Our reading: part of the exporters has already chosen to redirect volume. For those who want to keep the U.S. customer, the path runs through price, logistics and, in some cases, local production.
Exhibit 2
Brazilian exports to the U.S., January to September 2026 against 2025 (%)
Source: Amcham Brasil, Brazil–U.S. Trade Monitor, from Comexstat (Oct 2026).
Other markets
+6.3%
Growth in Brazilian manufacturing sales outside the U.S. over the same period.
Share
15.7%
U.S. share of Brazil's manufacturing exports.
Balance
US$4.3bn
Brazil's deficit in trade with the U.S. from January to September.
What it costs to produce in the U.S.
Producing locally swaps the tariff for other costs. Average hourly earnings in U.S. manufacturing reached US$36.92 in September 2026, up 3.4% in a year, and industrial electricity averaged 9.64 cents per kWh in August, with wide differences between states.
Our reading: the cost of producing depends more on the choice of state, automation and scale than on national averages. That is where the decision is made.
Exhibit 3
Average hourly earnings in U.S. manufacturing (US$)
Source: U.S. Bureau of Labor Statistics, Current Employment Statistics, all employees, seasonally adjusted (series CES3000000003, via FRED).
Wages
+3.4% in a year
From US$35.70 to US$36.92 per hour between September 2025 and September 2026.
Power
9.64 cents per kWh
U.S. industrial average in August 2026; on the mainland, from 5.08 in New Mexico to 24.12 in California.
Origin
Substantial transformation
Assembly changes the origin only when it substantially transforms the product.
The routes, from simplest to most structural
Each route demands a different level of capital and time. The choice depends on the margin, volume and horizon of each operation.
Weeks
Adjust the current operation
Review tariff classification, Incoterms and adjustment clauses, and share the surcharge along the chain.
Months
Assemble in the U.S.
Completing in the U.S. the steps that substantially transform the product can change its origin. Imported components remain dutiable.
Years
Produce in the U.S.
Removes the duty on the finished product and brings the company closer to the customer, with capital, permits, a local team and state incentives tied to targets.
What to do now
- Calculate landed cost product by product under the tariffs in force, not with the average of the basket.
- Separate the items whose margin absorbs the surcharge from those whose margin does not.
- For the latter, compare assembling, producing and redirecting, with the time and capital of each route.
Export, assemble or produce in the U.S.? We compare the three routes with your numbers.
Speak with a partner about the margin, volume and timing of your operation.
About this article
Prepared by the Marroffino & Partners team of specialists in strategy and U.S. market entry.
To discuss these findings for your company, write to us or book a conversation with a partner.
Methodology and sources
Figures come from official notices, Amcham Brasil (Comexstat data), the BLS and the EIA, checked on October 23, 2026. The landed-cost example is an illustration with stated assumptions.
- Federal Register: USTR Notice of Action, Section 301 Brazil (Jul 20, 2026)
- EY Tax News: Section 301 tariffs on Brazil, including foreign-trade zones (2026-1530)
- Amcham Brasil, Brazil–U.S. Trade Monitor, via Revista Cultivar (Oct 13, 2026)
- BLS, average hourly earnings in manufacturing (CES3000000003), via FRED
- EIA, Electric Power Monthly, Table 5.6.A (industrial prices by state)
This article is for information only and reflects public data available on October 23, 2026. It is not legal, customs, tax or investment advice. Projections are shown as published by their sources.