The office of the U.S. Trade Representative (USTR) is scrutinizing Brazilian tariffs on U.S. ethanol imports as part of a Section 301 investigation into the South American nation's trade practices.
USTR announced the investigation last month, listing ethanol market access as a primary focus. In a Federal Register notice, Jennifer Thornton, general counsel for the agency, said Brazilian tariffs and “imbalanced trade” from the country’s decision to “abandon the reciprocal, virtually duty-free treatment that promoted the development of both of our industries” have hurt the U.S.
She said the situation dates back to September 2017, when Brazil imposed a tariff-rate quota of 600 million liters annually with an out-of-quota rate of 20% on ethanol imports.
"Since then, U.S. ethanol producers have, at times, faced steep and unfair Brazilian import tariffs on their products,” Thornton wrote.
Brazil's tariff-rate quota on ethanol imports was expanded to 750 million liters annually in September 2019 but expired in 2020. After that, U.S. ethanol faced 20% tariffs, though these were lowered to 18% in 2021.
Brazil's tariff rates have had “demonstrable impacts” on U.S. ethanol exports, Thornton said. The U.S. exported $761 million worth of ethanol to Brazil in 2018, but by 2023 exports were worth only $140,000. Last year, Brazil imported $53 million in U.S. ethanol, which Thornton said suggested “that U.S. ethanol producers are at a significant disadvantage under the current tariff system."
Section 301 of the Trade Act allows USTR to retaliate by imposing tariffs, if it finds a country is engaging in unfair trade practices or violating trade agreements.
“It’s a pretty durable tool. It’s one that has withstood scrutiny in the courts,” Everett Eissenstat, a former top Trump economic aide, told Agri-Pulse.
Ron Lamberty, the chief marketing officer for the American Coalition for Ethanol, said at the organization's annual conference in South Dakota on Friday that “if nothing else happens,” USTR’s investigation will likely point out that “we have a tariff on our fuel that they don’t have on theirs.” He said further U.S. tariffs are one likely outcome of the investigation.
Ron Lamberty (LinkedIn photo)“Ideally, it would be nice if they just dropped it and we could sell ours for the same as they sell theirs,” Lamberty told Agri-Pulse of Brazil's 18% tariff. “But I’m guessing that’s probably not the way it’ll go."
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In a comment to USTR, Brazilian Minister of Foreign Affairs Mauro Vieira said his country's 18% ethanol tariff applies to all countries, not just the U.S. While Brazil currently has an 18% tariff on U.S. ethanol, he said the U.S., now has 52.5% tariffs impacting Brazilian ethanol imports. He said the disparity “considerably limits reciprocal opportunities for Brazilian ethanol producers to access the U.S. ethanol market.”
The tariffs have been raised 50 percentage points since Donald Trump became president. Trump objects to the country's prosecution of former President Jair Bolsonaro for trying to overturn the results of Brazil's 2022 election.
Vieira contended that “because the Brazilian tariff is not discriminatory with respect to U.S. imports and is below Brazil’s bound rates, it is in full compliance with Brazil’s obligations” under articles I and II of the World Trade Organization’s general agreement on tariffs.
Most Brazilian ethanol exports to the U.S. go to California as a result of the state’s Low Carbon Fuel Standard, Vieira said. Brazilian ethanol exports to the U.S. fell from $664 million in 2019 to $203 million in 2024, he noted.
“Current trade trends already show declining exports from Brazil without the need for remedial measures under Section 301 or through any other trade authority,” Vieira wrote.
In a comment to USTR, National Corn Growers Association President Kenneth Hartman Jr. also criticized Brazil’s National Biofuel Policy, which is called RenovaBio. He contended that the program penalizes U.S. corn-based ethanol producers in applications and that Brazil refuses to recognize the U.S.’s “aggregate” compliance model in assessing deforestation.
“At a minimum, the fact that no U.S. corn-based ethanol exports have ever been approved to participate in RenovaBio strongly suggests Brazil’s program, and its eligibility and certification requirements, are overly trade-restrictive,” Hartman wrote.
Kenneth Hartman Jr. (NCGA photo)Hartman also said U.S. exporters “face unnecessary and discriminatory barriers” to participation in Brazil’s Sustainable Aviation Fuel Program, which he said also disadvantages U.S. corn-based ethanol. He urged USTR to remove Brazil’s Generalized System of Preferences Designation, press Brazil to remove U.S. barriers to RenovaBio, and seek compensatory payments to U.S. ethanol producers or corn growers to offset “the damages to lost export sales from Brazil’s programs.” He also said NCGA supports the 50% tariffs the Trump administration enacted in late July until Brazilian trade barriers are removed.
Neil Herrington, the senior vice president of the U.S. Chamber of Commerce’s Americas division, warned that U.S. biofuels exports to Brazil, including sustainable aviation fuel, “could face mounting challenges” if the country were to raise its tariffs beyond 18%.
“The tariffs could disrupt the emerging SAF trade, complicating efforts to build a global clean fuel supply chain,” Herrington wrote to USTR. “Overall, these measures threaten to reduce export volumes, increase costs and undermine competitiveness for U.S. biofuel companies in one of Latin America’s largest markets."
Herrington urged USTR to work with Brazil to reform the nation’s environmental standards to recognize current U.S. models.
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