Ethanol off the Table in Brazil-US Tariff Talks

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July 14, 2026

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by Maria Lígia Barros and Denise Cathey (Argus Media) A lowering of Brazilian tariffs against ethanol is off the table in current US-Brazil trade negotiations, Brazil trade minister Marcio Elias Rosa said ahead of a 15 July deadline for a new set of US Section 301 tariffs against Brazil.

Brazil charges a 18pc rate on ethanol imports, regardless of origin.

Ethanol market access in Brazil is among concerns that could warrant the return of a 25pc tariff on Brazil goods to be decided by 15 July, the US Trade Representative's office (USTR) has said.

The added tariff would bring the total US rate on Brazilian ethanol to 37.5pc, up from the baseline tariff of 2.5pc prior to US president Donald Trump's Liberation Day.

US industry groups in last week's hearing urged USTR to go beyond just applying a 25pc tariff, arguing the government should also remove barriers for crediting US ethanol imports under the Renovabio program.

But Brazilian president Luiz Inacio Lula da Silva Rosa does not want ethanol to be in the agenda this time around, nor does he want it to be discussed without sugar tariffs being addressed too, Rosa said.

"It is unfortunate that some want a parity regime so that US ethanol can enter [Brazil] with ease," he told reporters. "Opening the market to US ethanol would put ethanol production in Brazil's northeast at risk in particular. We need to take a very careful approach to this industry, which has already been struggling with declining prices."

Brazil exported around 50 b/d of ethanol to the US in January-May, according to US Department of Agriculture data. The US exported 11,420 b/d of ethanol to Brazil over the same period.

The minister added that Brazilian sugar faces additional tariffs of up to almost 100pc in the US, adding that it is impossible to separate the discussions because they are all linked to the same production chain.

The US barriers against Brazilian sugar were also mentioned by Brazil regional sugarcane and bioenergy association Unica as an "asymmetry in bilateral trade".

Unica — one of the groups present in the USTR hearings last week — also said the current 18pc ethanol tariff is compatible with World Trade Organization rules, applied on a non-discriminatory basis to all countries that do not have a preferential agreement with Mercosur, the trade bloc of Brazil, Argentina, Uruguay and Paraguay. There is no bilateral agreement requiring Brazil to grant preferential tariff treatment to US ethanol, it argued.

The decline in US ethanol exports to Brazil is primarily the result of structural market changes, namely the expansion of corn-based ethanol production in the country filling seasonal gaps, rather than tariff policy, Unica added. READ MORE

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Excerpt from Reuters: U.S. demands included exclusive lower tariffs on some of its exports, concessions that Brazilian law does not allow the government to grant unilaterally to a single country, ⁠officials said.

Brazil would be the first country targeted under the Trump administration's new tariff strategy, which relies on Section 301 of U.S. trade law, a provision that authorizes investigations into alleged unfair trade practices.

...

The approach gained prominence after the U.S. Supreme Court struck down its global tariff policy in February.

With close to 80 trade investigations opened by the U.S. Trade Representative, Brazil appears poised to become the first test case for a new wave of tariffs that could eventually be applied to dozens of countries.

The investigation into Brazil, opened last July, cited several alleged unfair practices, including illegal deforestation and Brazil's instant payment system, Pix, which the U.S. government argues disadvantages credit card companies.

Brazil vehemently refuted all the allegations. In a letter sent to U.S. Trade Representative Jamieson Greer, Brazil's Minister of Foreign Affairs Mauro Vieira said the U.S. has not confirmed its allegations. He added the investigation was "arbitrary" and part of "widespread economic pressure imposed by the U.S."

According to the Brazilian National Industry Confederation, the tariff increases affect products for which Brazil is a leading supplier to the United States, including pig iron, wood moldings, cane sugar, ethanol, and tobacco.

This tariff increase, the group's president, ‌Ricardo Alban, ⁠said in a statement, "harms companies in both countries."

'SHOOTING THEMSELVES IN THE FOOT'

The proposed Section 301 tariffs are expected to exempt several categories of Brazilian goods, such as beef, coffee, rare earths, and aircraft parts, that make up the majority of the country's exports to the U.S.

Those products had already been exempted from the previous 40% tariffs the Trump administration imposed on Brazilian goods, which were politically motivated by the arrest of former Brazilian President Jair Bolsonaro, a Trump ally who is now serving time under house arrest for attempting to overthrow democracy after he lost the 2022 election.

Relations between Trump and Brazilian President Luiz Inacio Lula da Silva, ⁠one of Latin America's most prominent leftist leaders, have improved since then, easing political tensions.

The tariffs are expected to kick in less than three months before Brazil's presidential election, when Lula is expected to run against Bolsonaro's son, Senator Flavio Bolsonaro. READ MORE

Excerpt from Reuters:

Dozens of countries could be hit by new US trade strategy
Brazil tariffs take effect on July 22, USTR says
Exemptions include beef, coffee, rare earths, energy products, aircraft and aircraft parts

BRASILIA/WASHINGTON, July 15 (Reuters) - The U.S. will hit Brazil with new 25% duties on its furniture, ethanol, machinery, footwear, sugar and other goods, launching a new wave of tariffs that could affect dozens of countries as President Donald Trump's administration seeks to rebuild its leverage on major trading partners after legal setbacks.

The late-night announcement by U.S. ‌Trade Representative Jamieson Greer made Brazil the first country targeted under Trump's new tariff strategy, which relies on Section 301 of the Trade Act of 1974, an unfair trade practices statute. Trump's previous global tariffs under an emergency law, including duties of up to 50% on Brazilian goods, were struck down by the U.S. Supreme Court in February.

The new tariffs are scheduled to take effect on July 22, two days before Trump's temporary 10% global tariff is scheduled to expire.

...

Wednesday's announcement by the USTR office follows months of fruitless negotiations between U.S. and Brazilian officials after the Trump administration proposed new tariffs in June, ⁠saying Brazil's practices were unfair on a range of issues from digital trade to illegal deforestation.

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Brazilian President Luiz Inacio Lula da Silva, who is expected to run for reelection in October, said the U.S. decision lacks justification. Brazilian officials have long suggested, in private conversations, that the motives for the new tariffs were political, making negotiations fruitless.

Brazil would immediately begin proceedings to invoke instruments provided for under the "Reciprocity Law" and revisit the matter within the framework of the WTO dispute settlement mechanism, he said in a statement.

The new levies are likely to alarm U.S. trading partners around the world, including India, which has struggled to sign a trade deal with Washington at least partly because of the Section 301 investigations into lax enforcement of forced labor bans and excess industrial capacity.

...

Dan Anthony, executive director of a coalition of more than 1,200 U.S. small businesses called We Pay The Tariffs, called the import taxes "a blunt tool with a weak connection between the practices at issue and the American companies that will bear the costs."

The investigation into Brazil, opened in July 2025, cited several alleged unfair practices, including illegal deforestation and Brazil's instant ⁠payment system, Pix, which the U.S. government argues disadvantages credit card companies.

Brazil vehemently rejected all the allegations.

Brazil has also been included in a separate Section 301 investigation by the USTR, due to conclude on July 24, into connections to forced labor in the supply chains of dozens of countries.

The probe is expected to result in an additional 12.5% tariff, bringing the total burden for affected Brazilian products to 37.5%. Rosa said the government anticipates the new tariffs to be confirmed. READ MORE

Excerpt from Renewable Fuels Association/Energy.AgWired.com: U.S. Trade Ambassador Jamieson Greer took final action this week under Section 301 of the Trade Act of 1974 by imposing a 25% tariff on certain goods of Brazil, including ethanol.

Renewable Fuels Association President and CEO Geoff Cooper welcomed the action. “Over the past several years, Brazil has gone out of its way to block lower-cost U.S. ethanol through a complicated framework of tariffs and marketplace barriers,” said Cooper. “After Brazil rebuffed numerous attempts by the U.S. to negotiate a return to free and fair ethanol trade between our two nations, our leaders were left with no choice but to establish reciprocal treatment. It is our sincere hope that this action will motivate Brazil to come back to the negotiating table for good-faith discussions on improving ethanol trade between our two countries.”

The action follows a yearlong investigation by USTR that determined that certain Brazilian trade measures related to various goods and services, including ethanol market access, “are unreasonable and burden or restrict the commerce of American farmers, workers, innovators, and exporters.” The Office of the United States Trade Representative (USTR) held two public hearings, received over 360 public comments, and negotiated intensively with the Government of Brazil to seek resolution of U.S. concerns.

During a hearing on July 6, RFA General Counsel and Vice President, Government Affairs Ed Hubbard presented testimony on the impacts of Brazil’s implementation of tariffs on U.S. ethanol in 2017.

“Prior to the implementation of punitive trade barriers, Brazil and the United States enjoyed an open and efficient two-way trading relationship in ethanol, which resulted in our two nations experiencing a dramatic increase in bilateral ethanol trade,” said Hubbard. “As a result of this newly applied tariff regime, the value of U.S. fuel ethanol exports to Brazil fell to zero in 2023, just $43 million in 2024 and $68 million in 2025.”

Hubbard also pointed to Brazil’s implementation of its “RenovaBio” national biofuels policy, which is designed to reduce the carbon intensity of Brazil’s transportation fuel matrix, as another example of Brazil’s discriminatory trade practices. The RenovaBio program is expected to generate 5 billion gallons of new biofuel demand in Brazil through 2030. However, after five years of implementation, not a single U.S. ethanol plant has received a full certification from the Brazilian government to generate credits under the RenovaBio program. READ MORE

Excerpt from Reuters/Successful Farming: Brazil’s ethanol and sugar producers on Thursday despaired at the imposition of new 25% tariffs on Brazilian goods by the U.S. government, lamenting a rollback in cooperation between the two countries.

According to the Union of the Sugarcane and Bioenergy Industry (UNICA), the U.S. accounted for 253 million liters of ethanol exports in 2025, worth $163 million, making the North American country the sector’s second-most important foreign market after South Korea.

In the same year, the U.S. also accounted for 420,000 metric tons of sugar exports from Brazil, the world’s top sugar producer, representing a significant drop from the 1.12 million tons Brazil exported to the North American country in 2024.

“The decision disregards significant asymmetries in the trade relationship between the two countries,” UNICA said in a statement. “Brazilian sugar exports remain subject to tariffs and market access restrictions imposed by the United States, whereas Brazil maintains a non-discriminatory policy regarding ethanol.”

U.S. Trade Representative Jamieson Greer justified the new 25% tariffs — which are expected to take effect on July 22 — on thousands of Brazilian products by citing what he called unfair trade practices, an accusation rejected by Brazil.

Among the reasons given by Greer was current U.S. access to Brazil’s ethanol market. Brazil’s imports of ethanol from the U.S. have declined significantly over the past several years, USTR data show.

...

With its new tariffs, the U.S. is demonstrating it wants better access to the Brazilian ethanol market without making concessions for sugar imports from Brazil, Renato Cunha, executive president of Brazilian sugar and bioenergy association NovaBio, said in an interview.

“They want to export ethanol to a country that has no need to import it,” Cunha said. “That isn’t negotiation, it’s imposition — they are different things.” READ MORE

Excerpt from Reuters: A new 25% U.S. tariff will hit a range of Brazilian goods on Wednesday, including farm machinery, wood products, ethanol and apparel, escalating tensions in an already strained relationship between ‌the two most populous countries in the Western Hemisphere.

The tariff is the first levied under the Trump administration's new strategy of using the Trade Act of 1974 to investigate what it considers unfair trade practices. The White House's blanket assertion of emergency powers to levy high tariffs against most global partners was struck down by the U.S. Supreme Court earlier this year.

...

Washington has argued tariffs are necessary to counter what it calls unfair trade practices, from electronic payment services to ethanol market access and illegal deforestation.

The tariffs take effect just two days before a temporary 10% global tariff expires and after a Supreme Court ruling struck down previous 50% U.S. duties on Brazilian goods that forced exporters to seek new markets. READ MORE

Excerpt from Argus Media:

Brazilian and US representatives will meet this week to discuss US tariffs on Brazilian imports imposed in July, following a phone call between the presidents of both countries last week.

The US' trade representative Jamieson Greer reached out to the Brazilian government shortly after presidents Luiz Inacio Lula da Silva and Donald Trump spoke on the phone last week, according to Brazilian officials. Lula told Trump then that the US' 25pc tariffs on Brazilian products were "unfounded".

Brazil's trade minister Marcio Rosa and representatives from the foreign affairs ministry will meet with the US' Office of Trade Representative (USTR) this week, the Brazilian government said, but a specific date was not disclosed.

The USTR imposed the tariffs as a result of a year-long "Section 301" investigation into unfair Brazilian trade practices, citing a restrictive ethanol market as one of the reasons for the probe. Other factors included concerns over organized crime, corruption, deforestation and unfair competition from Brazil's digital payments system, Pix.

Although many products — such as pig iron, iron ore, rare-earth metals, crude, coffee and beef — are exempt from the tariffs, many others, such as ethanol, sugar and beef tallow, are not. READ MORE