Leaders in the US ethanol industry are expressing disappointment after the Brazilian government imposed a 20 percent tariff on all US ethanol imports.
Earlier this week, Brazil allowed its current tariff rate quota (TRQ) to expire and replaced it with the 20 percent tariff. Calling the move devastating for US ethanol, Renewable Fuels Association President and CEO Geoff Cooper says the two countries are now at risk of destroying the great progress both nations have made as global leaders in ethanol production, marking a dramatic turn in a bilateral trade relationship.
?We are extremely disappointed in this news that Brazil and US trade negotiators have failed to reach a deal that would have averted Brazil?s implementation of a 20 percent tariff on all US ethanol imports,? Cooper said.
A joint statement from RFA, US Grains Council, Growth Energy, and the National Corn Growers Association said, ?Through repeated dialogue with local industry and government, the U.S. ethanol industry actively sought to illustrate the negative impacts of increased tariffs on Brazilian consumers and the Brazilian government?s own decarbonization goals. However, it seems Brazil is more focused on taxing imports to protect their national industry than reducing carbon emissions and developing a global industry.?
?For the past few years,? said Cooper, ?there was a tariff-free quota that allowed us to get some US ethanol into Brazil duty free, but the Brazilians let that quota expire in the last few days. Now, all gallons going into that market are subject to that 20 percent tariff. It will be incredibly disruptive. It will have an immediate and severe impact on US exports to Brazil. Brazil has been our top market the past few years. If this tariff remains in place, we certainly expect that to change.?
Cooper says RFA and the aforementioned groups and organizations are urging the incoming Biden Administration to respond with strength by leveraging various US government tools and authorities to make it clear that protectionist barriers are unacceptable. However, ethanol leaders believe this week?s decision shows Brazil is more focused on keeping US ethanol out of Brazil than true two-way trade.
?It?s been incredibly frustrating that a deal couldn?t be reached,? Cooper said. ?Especially because the Brazilian producers enjoy free and unfettered access to our market. And not only that, regulations like California?s LCFS ? and even the federal RFS ? actually incentivize the use of imported sugarcane ethanol over the use of US produced corn ethanol. We are hoping to work with the new USDR and the rest of the new administration ? once they get settled ? to address this issue.?
Since May, RFA says US exports to Brazil have fallen to less than four million gallons. Over that same period, Brazil has exported nearly 96 million gallons of fuel ethanol to the US.
