WASHINGTON (DTN) -- When the Office of the U.S. Trade Representative launched a Section 301 investigation into Brazil's trade practices in July 2025, U.S. corn growers and ethanol organizations urged the agency to respond with retaliatory measures.
Now, as USTR moves toward a final determination on proposed 25% tariffs, ethanol producers argue Brazil's barriers to U.S. biofuels extend well beyond tariffs and include discriminatory policies that have steadily eroded American exports.
During follow-up hearings this week, representatives from the National Corn Growers Association, Growth Energy and the Renewable Fuels Association urged USTR to finalize the proposed tariffs while expanding its findings to address additional barriers facing U.S. ethanol.
"Since 2011, Brazilian ethanol has also enjoyed full participation in our national biofuels policy, the Renewable Fuel Standard or RFS. However, beginning in 2017, Brazil unilaterally imposed a tariff rate quota followed by straight tariffs on U.S. ethanol exported to Brazil and we've continued to see other actions and policies toward U.S. ethanol that are unfair, restrictive and discriminatory," said Chris Bliley, senior vice president of regulatory affairs for Growth Energy, in his testimony.
USTR's preliminary findings largely agreed, concluding Brazil's ethanol tariff represents an unwarranted departure from bilateral cooperation -- not without Brazil defending its ability to legislate higher blends and better domestic production coordination.
EXPORT COLLAPSE
According to USTR, U.S. ethanol exports to Brazil peaked at $762 million in 2018 before falling to just $96 million in 2025 -- an 87% decline.
Since 2023, Brazil has maintained an 18% tariff on ethanol with the ability to change it monthly. But Brazilian ethanol producers dispute that tariffs are responsible.
Andrea Almeida of the Brazilian Corn Ethanol Association (UNEM) argued the decline reflects Brazil's rapidly expanding domestic corn ethanol industry rather than protectionist policies.
"The reason is structural, not tariff driven. Brazil's corn ethanol industry grew 58-fold over that period at roughly 57% a year, because corn can be stored and processed year-round, filling the seasonal gap," she said during her testimony.
Brazil currently blends ethanol at 30% nationwide using corn and sugar cane, creating growing domestic demand that has reduced imports. By contrast, the United States has not adopted a nationwide higher ethanol blending requirement.
Brazil also argues its 18% ethanol tariff is applied equally to countries without preferential trade agreements and remains below its World Trade Organization bound tariff.
According to UNEM, roughly 30% of all transportation fuel is blended with ethanol, supported by widespread fueling infrastructure. About 85% of light-duty vehicles are flex-fuel, with approximately 10 billion liters (2.64 billion gallons) of ethanol distributed annually.
RENOVABIO UNDER FIRE
Beyond tariffs, U.S. ethanol groups urged USTR to address the exclusion of U.S. producers from RenovaBio, Brazil's low-carbon fuel program, arguing it functions as a non-tariff trade barrier.
"We would call attention to Brazil's refusal to allow U.S. ethanol producers to obtain approval for their domestic biofuels program," said Matt Frostic, first vice president of the National Corn Growers Association and a Michigan farmer.
Although Brazil highlighted the certification of one U.S. ethanol plant under RenovaBio, Growth Energy noted less than 1% of that facility's production qualifies for the program, compared to an average of 86% for Brazilian producers.
Eligible feedstocks in the RenovaBio program requires extensive farm-level verification that is "insurmountable in the United States" due to operations not being vertically integrated, NCGA said.
The industry argues Brazil has failed to establish a transparent approval process or an alternative compliance pathway for foreign producers, effectively denying U.S. ethanol access to the low-carbon fuel credits available to Brazilian competitors.
Brazil counters that RenovaBio is designed to reward verified carbon reductions and that its environmental standards apply equally under Brazilian law. Before the announcement of the Section 301 investigation, one U.S. company was granted partial participation in the program.
NCGA advocates for a zero-tariff relationship in which Brazil eliminates its tariff on U.S. ethanol.
COMPETING CLIMATE CLAIMS
Brazilian representatives defended the country's environmental record, pointing to the Brazilian Forest Code, which requires landowners to preserve significant portions of native vegetation, including 80% in the Amazon. Brazilian representatives argued it is the only environmental protection requirement of its kind in the world that is implemented without subsidies.
Brazil's Sugarcane and Bioenergy Industry Association (UNICA) representative Welber Barral argued Brazilian ethanol benefits U.S. consumers because of its low carbon intensity.
"Brazilian sugarcane ethanol has a low carbon density profile and is used by U.S. refiners and lenders to meet clean fuel requirements." If tariffs were applied, he said, "it would raise cost and increase pressures on U.S. consumers."
One argument made by Growth Energy, questioned by the panel of government agencies, was that U.S. ethanol producers are charged a land use change penalty by regulators both here and abroad for deforestation occurring in Brazil.
When asked to elaborate on those claims during the hearing, American ethanol representatives were unable to explain how increased U.S. ethanol production could be directly linked to land clearing or deforestation in Brazil, while maintaining that U.S. producers are nonetheless penalized under carbon accounting systems for emissions they argue are occurring outside the United States.
Growth Energy also urged USTR to pursue equivalent market access for U.S. ethanol in Europe.
They said Brazil now enjoys a competitive advantage under the EU-Mercosur trade agreement through duty-free and reduced-duty quotas, while U.S. ethanol continues to face significantly higher European Union tariffs.
The organization requested remedies include the USTR working with the Environmental Protection Agency to remove Brazilian ethanol's eligibility to generate Renewable Fuel Standard credits until U.S. producers receive comparable treatment under Brazil's RenovaBio program.
The administration is expected to issue a final Section 301 determination before the statutory deadline of July 15, which could authorize 25% tariffs on covered Brazilian products.
Also read, "Brazil's Ethanol Trade Barriers Cost US Producers Billions: USTR Responds With 25% Tariff Threat,"
DTN Headline News
DTN Blogs & Forums
