Insight Focus
Despite Brazil’s decision a few months ago to eliminate an 18% tariff on US ethanol imports, the Ministry of Economy has now decided to reinstate the levy. US industry, alongside Brazilian ethanol importers, want the measure to be re-examined.
US Industry Frozen Out
The US ethanol industry voiced its frustration last month after Brazil’s Ministry of the Economy (CAMEX) on June 13 reinstated an 18% tariff on US ethanol imported into the country.
Addressing the tariff issue in a joint statement, the US Grains Council (USGC), Renewable Fuel Association (RFA), and the industry group Growth Energy, said “We remain extremely disappointed with this result and urge CAMEX and the Brazilian government to remove tariff barriers on US ethanol and use this as an opportunity to strengthen the bilateral agenda and stimulate trade cooperation between Brazil and the US.”
The statement added that the tariff places a heavy financial burden on Brazilian consumers in a misdirected effort to protect the domestic Brazilian ethanol industry, which enjoys free and increasing access to the US market.
Industry Expresses Disappointment
The US partners in the statement were supported in their position by the Brazil Association of Fuel Importers.
“The U.S. industry remains united in seeking parity with Brazilian exports with reciprocal market access and will seek to take additional measures to rectify this unfair tariff treatment,” the groups said. “We are committed to striving for fair and balanced trade in ethanol with Brazil.”
What added to the frustration for the US groups was the action by CAMEX on April 13 to temporarily eliminate the 18% tariff.
At that time, US Grains Council president Ryan LeGrand, in a joint statement with RFA and Growth Energy, said they were pleased with the temporary elimination of the tariff. He said the elimination of the tariff would “improve access for Brazil’s ethanol consumers as well as help meet its own decarbonization goals.” He added that the USGC and its ethanol industry partners see this decision as an opportunity to continue discussions with Brazil in expanding the global use of ethanol.
Brazil Doubles Down
US ethanol exports to Brazil peaked at 499.6 million gallons in 2018 but have since plummeted, according to USDA’s Foreign Agricultural Service (FAS). The US exported 59.4 million gallons in 2022 and that number dropped precipitously to 29,779 gallons in 2023.
Source: USDA
Brazilian Agriculture Minister Carlos Fávaro told attendees of a sugar cane conference in April that Brazil would maintain its tariffs on US ethanol imports to avoid “making things more precarious for Brazilian producers.”
