On February 13th, Brazil's Energy and Mining Minister Alexandre Silveira expressed his concerns over the potential increase in U.S. tariffs on Brazilian ethanol. The U.S. President Donald Trump's plan to scrap low tariff rates could have significant implications for bilateral trade relations. According to Silveira, the proposed changes would be unreasonable unless they also addressed sugar import tariffs. Historically, ethanol and sugar trade negotiations between the two countries have been intertwined. While the U.S. currently imposes a 2.5% tariff on ethanol, Brazil charges an 18% tariff on U.S. ethanol imports. This discrepancy has led to imbalances in trade volumes. In response, Silveira emphasized that fair reciprocity would require eliminating import tariffs on Brazilian sugar.

The announcement by the White House pointed out the disparity in ethanol tariffs as an example of unfair trade practices. The document highlighted that in 2024, the U.S. imported over $200 million worth of ethanol from Brazil while exporting only $52 million to Brazil. Silveira argued that without allowing greater Brazilian sugar exports to the U.S., the measure would lack fairness. He further noted that the U.S. imposes a substantial $360-per-tonne tariff on sugar imports outside preferential quotas, which equates to an 81.2% tax based on current market prices. This is significantly higher than Brazil’s 18% ethanol tariff.

Brazil, one of the world's largest producers of sugar, generated approximately 35 billion liters of ethanol in 2024 but exported less than 6%, with only about 300 million liters going to the U.S. Meanwhile, Brazil imported 192 million liters of ethanol in 2024, of which 109 million liters came from the U.S. Most U.S. ethanol is derived from corn, whereas sugarcane-based ethanol dominates Brazil's production. The U.S.-set sugar import quota for Brazil was limited to 147,540 tonnes, representing just 0.4% of total sugar exports from Latin America's largest economy. This limitation makes exportation largely unfeasible for Brazil.

The head of Brazil's sugar and ethanol lobby group Unica, Evandro Gussi, commented that Brazil has struggled to export sugar to the United States except in small quotas due to prohibitively high tariffs. On the other hand, the U.S. Renewable Fuels Association praised Trump for his commitment to reestablishing a fair and reciprocal ethanol trading relationship with Brazil. Finance Minister Fernando Haddad also indicated potential for tariff negotiations with the U.S. Despite the immediate impact being minimal, the announcement could lead to higher tariffs for major trading partners by early April, initiating discussions to reduce barriers.

The potential tariff adjustments highlight the complex interplay between ethanol and sugar trade policies between Brazil and the U.S. Both nations will need to engage in constructive dialogue to address these issues and find mutually beneficial solutions. The upcoming negotiations may reshape the dynamics of their trade relationship, particularly concerning agricultural products like ethanol and sugar.