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Ethanol Can Be Used as a Barter Currency Between Brazil and the USA. Possible End of Tariff Concerns Agriculture and National Economy.
Ethanol Returns to Center Stage in Negotiations Between Brazil and the United States
The ethanol has once again taken the spotlight in commercial negotiations between Brazil and the United States. According to the portal Exame, the U.S. government, led by Donald Trump, may use the biofuel as a barter currency to pressure the end of the Brazilian tariff, which is currently 18%.
The idea arose after a meeting between Chancellor Mauro Vieira and Secretary of State Marco Rubio last Thursday (16).
Although details have not been disclosed, sources in the sugar-energy sector affirm that the topic of ethanol has returned to the negotiation table.
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The possible change raises an alarm in the agribusiness and the Brazilian economy, which may feel the direct impact of a potential opening to American products.
Pressure from the United States and Trade Dispute
Since February, Trump has accused Brazil of practicing an “unfair trade” in ethanol tariffs. Currently, the Brazilian product pays 2.5% to enter the USA, while the American faces 18% tax in Brazil.
The pressure comes from corn producers, the base of American ethanol, who are facing challenges to market their harvest after losing ground in China.
According to the U.S. Department of Agriculture (USDA), the country is expected to harvest 427 million tons of corn this season. With the rise of Russia as the main supplier of the grain to the Chinese, Americans are seeking new markets — and Brazil emerges as the ideal target.
“Trump needs to resolve this impasse, which is a demand from local producers,” explained Dudu Hammerschmidt, vice president of the Potencial Group, to the portal Exame.
Tariff Reduction Could Favor the USA and Impact the Economy
If the 18% tariff falls, the United States would open a new export route to Brazil, which would strengthen American agribusiness.
The U.S. Congress is discussing increasing the ethanol blend in gasoline from 10% (E10) to 15% (E15) year-round, which would increase production and create surpluses for export.
Even with the current tariff, the USA is expected to send 650 million liters of ethanol to Brazil in the 2025/26 harvest, an increase of 160% compared to the previous cycle, according to Datagro.
The rise is driven by the increase in the mandatory ethanol blend in Brazilian gasoline, which went from 25% to 30%, and by the decline in domestic sugarcane ethanol production.
Additionally, U.S. global exports rose 35% in 2024, reaching US$ 7.5 billion, highlighting the strategic weight of the sector in the American economy.
The Impact of American Ethanol in Brazil
The elimination of the tariff would have immediate effects on the Brazilian economy. American ethanol could become up to 15% cheaper than the domestic product, especially in the Northeast, a region with a supply deficit.
The proximity to Houston, in the USA, would facilitate transportation, reducing logistics costs. This would decrease the need to transfer 1 billion liters of ethanol from the Center-South to the North and Northeast each year.
On the other hand, unfair competition with American products could pressure internal prices and weaken the national sugar-energy sector, directly affecting jobs and investments in the field.
Ethanol, Economy, and Energy Geopolitics
The debate over ethanol goes far beyond agriculture, as it involves geopolitics and the global economy. While the United States seeks to expand corn ethanol, Brazil is trying to protect its sugar production, deemed cleaner and more sustainable.
Therefore, ethanol has become a key player in diplomatic negotiations between the two countries. Moreover, the topic has already surpassed the energy sector and transformed into a contest of power and economic influence.
In light of this scenario, the Brazilian government needs to balance trade relations with the USA without compromising the internal economy. Thus, any change in the tariff could redefine the biofuel market and directly impact the country’s trade balance.
Acredito que muitos desconhecem, mas o etanol de milho cresce exponencialmente no Brasil. Em 10 anos saímos de 80 milhões de litros para 10 bilhões de litros anuais produzidos aqui. A vantagem do etanol de milho brasileiro é que é quase R$ 0,70 mais barato do que o de cana por ter co-produtos como o DDGs e óleo de milho, além disso esse combustível é produzido mais próximo do mercado consumidor. Já temos usinas usando além do milho, sorgo, triticale e trigo que não dá padrão para farinha. Isso fortalece agricultura, pecuária por ter farelo proteinado barato e temos um combustível barato e limpo.
Quer dizer que o Brasil aumentou a quantidade de álcool na gasolina e importa alcool dos EUA?Sendo que o petróleo hoje está no nível de preço mais baixo??O petróleo hoje está na metade do preço que estava na época da pandemia e com tendência de queda.
E alguma coisa ele vai ter que dá em troca e uma pena e povo brasileiro não tem cabeça para entender o que acontecendo ,o povo totalmente paralítico quando se trata de conhecimento o Brasil e um trem desgovernado sem maquinista preste a bater e pega fogo .