Brazil to Import More U.S. Ethanol Tariff-Free, But Not Much

Ethanol Imports and Brazil 090419

Brazil will start to import more U.S. ethanol tariff-free. However, excess gallons to the country will still come at a price. The Renewable Fuels Association says the announcement is disappointing and not as good of a deal as it seems.

Brazil is increasing the quota cap for ethanol, allowing more U.S. ethanol imports to the country tariff-free before enacting a 20 percent tariff on the U.S.

“We don’t see it as a positive step,” said Geoff Cooper, the Executive President of the Renewable Fuels Association. “We were hoping for the altogether elimination of the tariff in Brazil.”

Brazil will soon let the U.S. export nearly 200 million gallons to the country tariff free for one year. Any more will have a 20 percent tariff. Previously, the tariff-free quota was nearly 160 million gallons of ethanol annually for 2 years. President Trump praised the news on Twitter over the weekend, not mentioning a 20 percent tariff after amounts will be reached.

“In 2018, we exported almost 500 million gallons of ethanol to Brazil,” said Cooper. “You can see we were well in excess of that duty-free quota. We had more than half of our volume going to Brazil paying that 20 percent tariff.”

The news comes during a time when the Environmental Protection Agency granted 31 small refinery waivers to companies who claim they don't have the resources to blend ethanol at certain locations.

The President hinting a compromise deal will be unveiled later in the month.