Brazil may place tariff on U.S. ethanol

Brazil may place tariff on U.S. ethanol

U.S. ethanol champions are bracing for the possibility that Brazil, the largest economy in Latin America, could soon land a devastating blow in what increasingly looks like an all-out global trade war over alternative fuels.

Wednesday, August 16, 2017

Brazil’s leaders will decide by the end of this month whether to slap a 20 percent tariff on American ethanol, a step that analysts say largely is driven by the country’s desire to freeze out foreign products for its own economic and industrial gain. The move, which appears likely, would come on the heels of China also slapping harsh tariffs on U.S. ethanol and related products earlier this year.

Brazil’s decision could represent a serious hit to domestic producers in the U.S., who ship more ethanol to Brazil than any other country, with the exception of Canada. The Renewable Fuels Association (RFA), the ethanol industry’s top trade group, says that Brazil imported nearly 21 million gallons of American ethanol in June alone.

For Brazil, the provocative step would prove that the country envisions itself as an ethanol producer capable of competing with the U.S.

“I’m starting to see more pieces and events happening that show that Brazil is doing this to build and beef up their already large ethanol industry,” said Yuan-Sheng Yu, an analyst with the research firm Lux Research who specializes in alternative fuels markets.

“From a production standpoint, it’s really Brazil and the U.S. when it comes to ethanol,” he added.

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