The additional 25% tariff announced by the United States on Brazilian ethanol is expected to have some impact on exporting companies, but this effect is likely to be limited across the Brazilian economy as a whole. Experts consulted by [source name] "Agência Brasil" They assess that the measure has a strong political component and occurs at a time when the North American market accounts for less than 16% of the volume of ethanol exported by the country. Most of the external sales are therefore destined for other international buyers, although the US is currently the second main destination for Brazilian ethanol. “The US share of Brazilian exports had already been decreasing for years. Even before the tariff increase, this weight was already relatively small,” contextualizes Luiz Carlos Delorme Prado, professor at the Institute of Economics of the Federal University of Rio de Janeiro (UFRJ). In the opinion of the expert in economics and international trade, the chances of this tariff trend being reversed are small. “Of course, it’s something bad, especially for some specific sectors. But, truth be told, it doesn’t represent any tragedy for the country’s economy,” he added. For the UFRJ professor, the most likely scenario is that Brazil will do what it has already been doing: seek alternative markets for the ethanol produced in the country.

Lack of predictability

The search for other markets – and the help of public authorities in this search – is increasingly necessary in this scenario of unpredictability under Donald Trump's government regarding the trade policies being implemented by the US. "Of course, nobody likes to lose a market like the United States, but, under the current circumstances, at least during the current US administration, this market has become very problematic because it offers neither predictability nor rationality," argued the professor from UFRJ. According to Delorme, making investments specifically aimed at serving this market is currently extremely risky, which is why Brazil needs to seek more reliable partnerships. "There are no guarantees that it will be possible to establish minimally predictable bilateral trade policies with the US because what drives the tariff increases is not commercial gains, but their government's political agenda for Latin America," he added.

Minority stake

In 2025, Brazil exported approximately 1.6 million cubic meters of ethanol (each cubic meter equals one thousand liters), which corresponded to revenue of almost US$1 billion. During the same period, shipments to the US market totaled approximately 253,000 cubic meters, equivalent to US$163 million. According to the Brazilian Sugarcane and Bioenergy Industry Association (Unica), the United States accounted for less than 16% of the volume exported by Brazil and for about 17.5% of the revenue obtained from foreign sales of the biofuel. In short, more than 84% of the volume of ethanol exported (about 82.5% of export revenue) went to other international markets.

Competitiveness

According to researchers, Brazil's competitiveness in the sugarcane and ethanol sector represents an advantage in the search for alternative markets. These competitive advantages are structural, since the cost of production in the country is lower and productivity per hectare is higher. Professor Luis Augusto Barbosa Cortez, from the Faculty of Agricultural Engineering at the State University of Campinas (Unicamp) and coordinator of the Center for Science for Ethanol Development (CCD Etanol), explains that factors such as climate and soil significantly help Brazil. He points out that the US produces ethanol primarily from corn. Brazil, which has always produced from sugarcane, has more recently started producing from corn as well. "And the trend is for corn's share of production to become even greater," says the coordinator of CCD Etanol.

Productivity

He explains that the Brazilian climate allows for the production of corn in a second crop, something that occurs on a much smaller scale in the US, since a large part of the cultivated area is located in regions that experience the climatic limitations of a more severe winter. “The Brazilian producer can harvest soybeans until May and then plant corn for harvest in October. In this way, the same area can produce two crops per year,” Cortez detailed. Currently, about 75% of the ethanol produced in Brazil originates from sugarcane, while the remaining 25% is produced from corn. According to the researcher, the share of corn in ethanol production is growing rapidly. The expectation is that it will reach about 30% of national production by 2030 and that, around 2050, it may equal the share of sugarcane in the sector. Cortez explains that one of the reasons for the increase in corn ethanol production is associated with the integration between agriculture and livestock farming, which makes the sector even more competitive in the race for the international market. “Producing corn ethanol in Brazil is becoming increasingly advantageous. The activity can be integrated with livestock farming because its bran serves as an input for animal feed. This integration also brings environmental benefits, as it reduces the need for pasture areas,” he added. The expert also highlights advantages in the industrial process, since, in Brazil, part of the energy used in the plants is generated from bagasse biomass, both from sugarcane and corn, which further reduces production costs. “In the United States, they need to buy energy for part of the ethanol production process. In Brazil, we solve this within the plant itself. That's why their cost is higher.” In production from sugarcane, there is also the issue of productivity, which is higher than that obtained from corn. Brazil produces approximately 7,000 liters of ethanol per hectare of planted sugarcane. In the United States, productivity reaches a maximum of 5,000 liters.

The issue is political.

Professor Niels Soendergaard of the Institute of International Relations at the University of Brasília (UnB) believes that the measures adopted by the US against Brazil have an "eminently political character," despite presenting a "technical veneer." "The Trump administration, faced with the shift towards far-right governments in Latin America, stopped addressing the tariff issue technically, as the Brazilian government had done, and embarked on a posture of trying to manipulate political developments in Brazil through external economic pressure," he argued. According to Soendergaard, from a technical point of view, the US argument is unfounded. "Brazil complies with the rules of the World Trade Organization (WTO), and the drop in US ethanol imports is due to the increase in corn-based ethanol production in Brazil." He explains that it is noticeable that the Trump administration makes statements "partial or entirely divorced from concrete facts" to pressure other countries. "We see this countless times, which is why the Trump administration cannot be considered a reliable interlocutor."

Context

The United States justifies imposing additional 25% tariffs on Brazilian products based on an investigation by the Office of the U.S. Trade Representative (USTR), according to which certain practices adopted by Brazil are discriminatory or harmful to the U.S. economy. Among the points questioned are access to the Brazilian ethanol market, rules related to digital commerce and electronic payment systems, intellectual property issues, anti-corruption measures, and illegal deforestation. The Brazilian government rejects these allegations and states that the investigation has no basis in multilateral international trade norms.

Sectoral impact

The tariffs have drawn criticism from representative entities of both sugarcane and corn ethanol producers. According to the Brazilian Sugarcane and Bioenergy Industry Union (Unica), contrary to the US claims, "Brazilian ethanol policy is fully aligned with WTO rules, being applied in a non-discriminatory manner and in accordance with the multilateral commitments undertaken by Brazil." The organization argues that there is no bilateral agreement between Brazil and the US that obliges Brazil to grant differentiated tariff treatment to US ethanol. "Similarly, the reduction in US ethanol exports to the Brazilian market stems primarily from the expansion of national production, especially corn ethanol, and not from changes in Brazilian tariff policy," it added. Unica expressed confidence in the way the Brazilian government has conducted the negotiations and reiterated its support for a solution based on dialogue and respect for international trade rules.

Unem

A similar position was presented by the National Union of Corn Ethanol (Unem). According to the organization, Brazil does not adopt discriminatory practices, highlighting that the Brazilian import tariff on ethanol is applied equally and in accordance with WTO rules. "Although the application of the tariff has a limited direct impact on Brazilian ethanol exports, since the US does not currently constitute a priority market for the Brazilian product, the decision is concerning due to the precedents it may set," Unem stated in a note. The organization also attributes the reduction in imports of US ethanol by Brazil to the expansion of national corn ethanol production, as well as to gains in the sector's competitiveness. Finally, Unem reaffirms its confidence in the institutional dialogue between the governments of the two countries and advocates that any trade disputes be resolved through negotiation, preserving a strategic partnership that is fundamental to the transition towards a low-carbon economy. 

This text was translated by machine from Brazilian Portuguese.