Insight Focus
The USTR has launched an investigation into Brazil’s trade practices. In June 2024, Brazil upheld raising ethanol tariffs from 16% to 18% despite protests from US biofuel producers. Consequently, US-Brazil ethanol trade has sharply declined amid rising tariffs and Brazil’s domestic industry growth.
USTR Launches Investigation into Brazil’s Trade Practices
On July 14, the Trump administration’s Office of the US Trade Representative (USTR) opened an investigation into Brazil over its trade practices, including duties placed on ethanol imported from the US. This action comes a week after President Trump threatened a 50% tariff on the country.
According to a USTR fact sheet, the probe will investigate Brazil’s practices and policies related to “digital trade and electronic payment services; unfair, preferential tariffs; anti-corruption interference; intellectual property protection; ethanol market access; and illegal deforestation.”
“I have determined that Brazil’s tariff and non-tariff barriers merit a thorough investigation, and potentially, responsive action,” said USTR official Jamieson Greer.
US Biofuel Producers Applaud USTR Action
In June 2024, the Brazilian government reviewed and upheld a proposal to increase the tariff on US ethanol from 16% to 18%. This decision came even after US ethanol groups joined the Brazil Association of Fuel Importers in advocating for the permanent removal of the tariff.
“We applaud the Trump administration for this important action,” Renewable Fuels Association (RFA) President and CEO Geoff Cooper said in a statement. “For almost a decade now, we have spent precious time and resources fighting back against an unfair and unjustified tariff regime imposed by Brazil’s government on US ethanol imports. What’s more ironic is that these tariff barriers have been erected against US ethanol imports while our country has openly accepted — and even encouraged and incentivised — ethanol imports from Brazil.”
Trump has blamed tariffs for a slump in ethanol shipments to Brazil. However, Brazil has drastically reduced its dependence on US biofuel imports by investing billions of dollars in corn-based ethanol, creating a domestic industry that it later moved to protect through tariffs.
“This action by USTR is a sign that the old days of Brazil enjoying unfettered access to the US ethanol market while unfairly putting a tariff on American ethanol imports could soon come to an end. On behalf of US ethanol producers across the heartland, we say it’s about time,” said Growth Energy CEO Emily Skor.
“We applaud USTR for taking this concrete step to dig further into Brazil’s unfair treatment of American ethanol and hope that it ultimately leads to a more level playing field for US farmers and biofuel producers.”
Earlier this year, Growth Energy urged the USTR to take action against Brazil in response to the country’s unfair treatment of US ethanol. According to the USTR, the investigation will examine whether the acts, policies, or practices of a foreign government are unreasonable or discriminatory and whether they burden or restrict US commerce.
US-Brazil Ethanol Trade Has Seen Steep Fall
The US and Brazil are the two largest ethanol-producing countries, accounting for 52% and 28% of global production, respectively, according to data from the RFA.
Source: RFA
US exports to Brazil averaged 3,800 barrels per day—or just 2.7% of total US ethanol exports—from January to May, according to USDA data. Exports to Brazil in 2024 were valued at USD 53 million, down from a peak of USD 761 million in 2018, according to the USTR investigation notice.
Source: EIA
The US imported just 491 barrels per day from Brazil during the first five months of the year, equivalent to 81% of total US ethanol imports.
The US currently imposes a combined 12.5% tariff on Brazilian ethanol, which includes a blanket 10% tariff announced in April and an existing 2.5% duty.
