Ethanol Blog

LINCOLN, Neb. (DTN) -- As President Joe Biden meets with Brazilian President Luiz Inacio Lula da Silva on Friday in Washington, a group of 10 Midwest senators asked Biden to go to bat for the U.S. ethanol industry and ask for an elimination of Brazil's ethanol import tariff.

The Brazilian Foreign Trade Chamber reinstated the tariff on Feb. 1, for U.S. ethanol shipped to Brazil. The new tariff rate is set at 16% for 2023, rising to 18% in 2024.

In a letter to Biden on Thursday, the senators said the tariff will hurt U.S. ethanol producers and make exporting to Brazil costly.

"Before this announcement, Brazilian tariffs on ethanol had been at zero since March 2022, which helped to reduce fuel costs for Brazilian drivers and decrease inflationary pressures," the senators said.

"The 0% tariff, matching the United States' 0% tariff on Brazilian ethanol levels the playing field for bilateral ethanol trade. Brazil's import tariff will have detrimental effects on American agriculture and ethanol producers."

The senators said U.S. biofuel production supports about 555,000 jobs across the country and the U.S. ethanol industry produces about 16 billion gallons annually.

Currently, the U.S. exports about 9% to 10% of its ethanol production totaling 1.4 billion gallons per year. Brazil is one of America's largest ethanol-trading partners and "a tariff of 16% or 18% on ethanol is unnecessary and counterproductive given the United States duty-free access for Brazil," the senators said.

"There are also non-tariff barriers that further complicate our bilateral ethanol trade with Brazil. Brazilian ethanol producers have access to our Renewable Fuels Standard and California's low-carbon fuel standard program, which recognize the inherent value of low-carbon biofuels. This treatment is not reciprocated by Brazil, where U.S. ethanol producers after two years have yet to have one approved pathway for Brazil's biofuel program.

"We believe this imbalance in tariffs and access to Brazil's biofuel program is unwarranted and unfair, and we urge you to discuss this issue with President Lula directly. Our American ethanol industry should not be subject to prohibitive tariff and non-tariff barriers while Brazilian ethanol producers enjoy duty-free access to our market and biofuel programs."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

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