In July 2025, the United States announced a 50% tariff on products imported from Brazil — an unprecedented decision that heightened trade tensions between the two countries. The new tariffs significantly increased import costs, prompting Brazilian companies with a strong presence in the U.S. market to explore supply chain adjustments in order to mitigate the financial impact of these measures.
In this new context, it is crucial to understand the relationship between international trade, transfer pricing, and customs valuation, particularly in agreements between related entities involving cross-border transactions.
Impact of Tariffs on Transfer Pricing
Customs valuation and transfer pricing share a common objective: ensuring that prices applied between related companies are consistent with those that would be negotiated between independent entities.
However, tariffs directly affect the customs value of imported goods, influencing the profits reported by multinational companies. Taxpayers, tax authorities, and customs authorities may have conflicting interests when evaluating transfer pricing and customs values.
For instance, a company may seek to declare a lower import value to reduce customs duties, while simultaneously reporting a higher acquisition cost for tax purposes in order to reduce its income tax base. This misalignment increases the risk of challenges by both customs and tax authorities, highlighting the need for pricing policies that are consistent, technically substantiated, and compliant with applicable legislation.
Transfer pricing documentation, required for tax compliance purposes, often provides support for the values applied in related-party transactions.
What Actions Should Companies Consider in the Current Environment?
Given the rise in U.S. import tariffs, strategic adjustments in the supply chain may generate sustainable gains, though they involve complexity and additional costs. Companies may consider relocating production stages to countries with more favorable trade agreements or using structures that modify the customs origin of goods, always in compliance with applicable rules of origin.
Additionally, it is essential to reassess transfer pricing policies to absorb tariff impacts without compromising profit margins. Strategies such as reducing intercompany prices may preserve the distributor’s margin, but require close attention to customs valuation rules to avoid challenges by U.S. customs authorities.
Reviewing the chosen transfer pricing method can also ensure realistic comparability with companies not subject to the same tariffs, helping mitigate audit risks in an increasingly scrutinized environment.
Finally, it is worth noting that related-party transactions must be reported annually on U.S. income tax returns, and abusive practices may lead to severe penalties.
Written by Adriana Lemos, Team Leader – Tax Planning and Research Team