Insight Focus
Despite heavy pressure from the US, Brazil will maintain tariffs on US ethanol imports. Brazil increased its tariff on ethanol imported from the US from 16% to 18% this year.
US Fights Back Against Brazilian Tariffs
The Renewable Fuel Association, Growth Energy and the US Grains Council said in a news release last week that it is pushing for restrictive US entry for Brazilian ethanol unless that nation permanently removes the tariff on US ethanol.
According to the Office of the US Trade Representative’s 2024 report on barriers to US trade, sales of US ethanol to Brazil were virtually duty free between 2011 and 2017. However, between 2017 and January 2022, Brazil imposed a tariff-rate quota and later a 20% Mercosur common external tariff on ethanol imports. The tariff was suspended in March 2022 but reimposed last January at 16%. As noted above, the tariff currently stands at 18%.
“Considering this significant discrepancy in our historically productive commercial relationship between countries, we would like to stress that the US industry will continue to advocate for restrictive measures to entry for Brazilian ethanol into the US in the case that the Brazilian government does not rethink the current tariff policies,” the groups said.
The US groups submitted their comments to the Brazilian Chamber of Foreign Trade (CAMEX), noting that Brazilian ethanol imports enjoy free access within the US market.
Brazil Doubles Down on Tariffs
In October 2023, ABICOM (the Brazilian association of fuel importers) formally requested a reduction in ethanol duties because the tariff reportedly raised fuel costs for domestic consumers. In anticipation of an open comment period, the three groups submitted joint comments to the Brazilian government.
The Bloomberg news agency reported that, despite pressure from the Biden Administration, Brazil will continue to apply tariffs on US origin ethanol to protect its ethanol producers. Brazil would be open to lower tariffs, however, if tariffs into the US market allowed for more Brazilian sugarcane-based ethanol for Sustainable Aviation Fuel.
“We cannot risk making things more precarious for Brazilian producers,” said Brazil’s Agricultural Minister Carlos Favaro during a recent sugar cane industry conference in Brasilia.
Source: USDA
US ethanol exports to Brazil peaked at 489.2 million gallons in 2018 but have since plummeted, according to the USDA’s Foreign Agricultural Service. The US exported 60.7 million gallons in 2022 and that number dropped precipitously, to 29.8 million gallons, in 2023.
In 2023, the US imported 89.3 million gallons of fuel ethanol from Brazil.
