Brazil's government will maintain an 18% tariff on imports of U.S. ethanol in a blow to corn growers as a record surplus leaves farmers looking to offload crops.
The Foreign Trade Chamber at Brazil’s Ministry of the Economy upheld the import duties earlier this month. Brazil had removed tariffs on ethanol imports in 2022 to counteract rising fuel prices, though reinstated the fees nine months later.
Brazil is the second-largest consumer of ethanol in the world. Around 73% of Brazil's cars can be powered by ethanol-based fuels, and the country was the first in the world to implement a national fuel ethanol policy.
Although the majority of ethanol in Brazil is derived from sugarcane, the country has begun shifting to corn-based ethanol as processors look to capitalize on higher global sugar prices, Reuters reported.
U.S. ethanol groups, who had petitioned Brazil to permanently lift tariffs earlier this year, said the country's decision to uphold duties will hurt consumers and threaten a historically productive trade relationship.
“The U.S. industry remains united in seeking parity with Brazilian exports with reciprocal market access and will seek to take additional measures to rectify this unfair tariff treatment," according to a joint statement from the Renewable Fuels Association, U.S. Grains Council and Growth Energy.
In April, the groups said they would not cooperate with Brazil on any potential partnerships around sharing technology or the burgeoning sustainable aviation fuel market unless the government rethinks its tariff policy.
Brazil, also the world's second-largest producer of ethanol, can currently export the product into the U.S. tariff-free.
