U.S. ethanol and corn groups are irate over Brazil's issuance of a 20% tariff on American ethanol following a breakdown in talks between the two countries.
“Brazil’s decision to impose a 20% tariff on all U.S. ethanol imports is devastating for the U.S. ethanol industry, the future of cooperation and coordination between our nations," the U.S. Grains Council, Growth Energy, Renewable Fuels Association and National Corn Growers Association, said in a statement released Wednesday. “Not only does this decision risk destroying the great progress our two nations have made as global leaders in ethanol production, it marks a dramatic turn in our bilateral trade relationship.”
Brazil first imposed the 20% tax on Aug. 31 after the expiration of its tariff rate quota that allowed 198 million gallons of U.S. ethanol annually to enter Brazil duty-free. U.S. and Brazilian negotiators tried, but failed to reach a deal that would have prevented that expiration. The two sides then reached a temporary agreement in September to suspend the tariff for 90 days while they resumed talks for a more permanent solution.
No resolution has been announced and the tariffs have gone back in place.
Sources have told Agri-Pulse the Brazilian government is seeking more access to the U.S. sugar market in return for reinstating the TRQ or lifting the tariff on all U.S. ethanol — which is what U.S. industry representatives are demanding.
“We urge the incoming Biden Administration to respond with strength, leveraging various U.S. government tools and authorities to make it clear that protectionist barriers are unacceptable,” the U.S. groups said in the Wednesday statement. “However, it seems clear from today’s decision that Brazil is more focused on keeping US ethanol out of Brazil than true two-way trade.”
The tariff, the groups say, will be “devastating,” but U.S. ethanol exports to Brazil — previously the largest foreign market — have already dropped off substantially this year. The U.S. only shipped 4 million gallons to Brazil since May. The U.S. shipped 96 million gallons for the same time frame last year.
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