Articles · Internationalization

Exporting Is No Longer Internationalizing

October 19, 2026 · Luiz Bandeira

Exporting to the US is no longer a strategy

Many Brazilian SMEs still treat the American market as a destination for containers. Since July 22, 2026, that has stopped being an internationalization strategy.

On that date, an additional 25% tariff on most Brazilian products took effect under Section 301. Two days later, a second Section 301 action, tied to forced labor, added another 12.5%. For products without an exemption, the additional duty reaches 37.5% (Alston & Bird).

Furniture, footwear, machinery, apparel and ethanol are on the list. The Brazilian government and the National Confederation of Industry (CNI) estimate that between US$7 billion and US$11 billion in exports are exposed (GMK Center).

The question has changed. It is no longer how much to export to the US. It is where to produce in order to sell in the US.

For those still in Brazil deciding whether to take the step, this changes the business plan from the very first line. For those already selling in the US, it changes the margin on every order from now on.

Custom furniture: Brazil has already won the customer, now it is losing at customs

In Florida, Brazilian custom furniture already competes with Italian and German brands for high-end clients. The market exists; the problem is where the product comes from.

The brands are already there. Dell Anno has a showroom in the Miami Design District. Florense has a store in Miami and a collection designed with Pininfarina. Marel operates in Miami and Orlando. Sierra and Uultis have opened showrooms in the region.

The advantage has always been price. But all of these brands manufacture in Brazil.

Kitchen cabinets and bathroom vanities are subject to the Section 232 tariff, which applies to every country of origin. Europe negotiated a cap. Brazil did not.

Origin of the cabinet	Additional tariff today
Brazil	25%
European Union (Italy, Germany)	Total cap of 15%
Made in the US	None

Sources: EY, Thomson Reuters, Greenberg Traurig.

The ten-point disadvantage may widen in less than three months. The increase to 50% on cabinets was postponed and is now scheduled for January 1, 2027, unless a country reaches an agreement with the US (Sullivan & Cromwell; Livingston). If it takes effect, European producers remain at the 15% cap.

Brazilian brands have lost ground precisely to the competitors they had been beating on price. Only one thing removes that gap: the product being made in the US.

Portobello: proof that the path exists

One Brazilian company has already made this move, and the path took decades. Portobello, the country's largest ceramic tile manufacturer, opened its American factory in Baxter, Tennessee, in 2023.

The planned investment was about US$160 million, with an estimated 220 local jobs (Stone World). The announcement, in December 2018, was attended by the Governor of Tennessee; it was the largest manufacturing investment ever made in Baxter (Ceramic World Web). The state offered incentives to attract the plant (Floor Trends).

The detail that matters for an SME is a different one. Portobello was already in the US in the 1990s, as a distributor (FCNews). The factory was the last step, not the first.

The reasoning of its American CEO is at the heart of this article. According to him, the goal was to balance the risk of exporting, which includes exchange rates and who governs the country. The company also said it built the factory for flexibility and to serve customers well, not for mass production.

No SME will invest US$160 million. But the logic is the same at any scale: producing where the customer is reduces exposure to decisions the company does not control.

Footwear: when opening a factory is not the answer

Not every sector should produce in the US, and footwear shows why. The sector was left off the exemption list and, with both Section 301 actions combined, pays 37.5% more. The Brazilian Footwear Industry Association (Abicalçados) revised its 2026 export projection to a 7.1% decline, an estimate made before the additional 12.5% tariff and therefore likely to worsen (DGABC).

The same association notes that the US consumes more than 2 billion pairs a year and produces about 20 million. The demand exists. What does not exist is an industrial base or a workforce at a competitive cost to produce at scale.

In my view, a full footwear factory in the US rarely makes the numbers work for an SME. The more likely path is different: brand, design, distribution and local finishing, with production wherever it is still viable.

That is exactly what planning is for. Before asking how to open a factory, a company needs to ask whether a factory makes sense.

The ladder: three steps, one decision at a time

Planning internationalization means knowing which step the company is on and when to move up to the next. The factory is the top of the ladder, not the starting point.

1. Commercial presence. A showroom, a distributor or a sales team, with imported product. This is where most custom furniture brands are today. It proves that American customers will buy.
2. Local value added. Cutting, assembly, finishing or customization in the US. One warning: for cabinets, the Section 232 tariff also covers parts and components. Assembling imported parts does not escape the tariff; this step only works with American inputs.
3. Full production. A company-owned factory, like Portobello's. It requires volume, capital and years of market already won.

Three numbers decide the move from one step to the next: the margin left after the tariff, the annual volume in the US and the delivery time the customer accepts.

The structure also has to come before the American company, not after. The nationality of whoever will run the operation matters too: Brazil has no treaty that gives access to the E-2 visa, but Spain and Italy do. A partner with dual citizenship changes the whole design.

Questions of American law and taxation are always handled with attorneys licensed in the US.

The bet is not on the tariff, it is on the direction

Tariffs change every quarter. The direction does not. The US is uneasy about its industrial dependence on China, and reindustrialization already spans administrations from both parties.

The numbers confirm the trend. The Reshoring Initiative projects about 309,000 manufacturing jobs announced in 2026, combining reshoring and foreign investment. Among manufacturers, 36% have already brought production back or are in the process of doing so, up from 29% in 2025 (Trade & Industry Development; Automation.com).

There is an honest counterweight. Kearney showed that US imports of manufactured goods reached a four-year high in 2025, despite record investment. Production left China, but it went mostly to other low-cost Asian countries.

The same report cites a European Investment Bank survey: American SMEs have begun to cut investment in new capacity. And 57% of the companies surveyed by the Reshoring Initiative name policy uncertainty as their main obstacle (Trade & Industry Development).

This is the point for policymakers in Washington and in the states. SelectUSA gathered more than US$56 billion in investment commitments and plans in 2026, of which US$2.5 billion were announced during the summit, but the major instruments were designed for large companies. An SME that wants to move from the first step to the second needs something else: stable rules, a simple state-level entry point and an immigration path for whoever will run the operation.

For Brazilian or European SMEs, the decision is concrete. Those who already have customers in the US should calculate now how much of their margin the tariff consumes and what it would cost to move up a step. Those still deciding should plan their entry with production there in mind, not just exports.