Brazil’s decision to add tariffs to ethanol imports is the latest step in a “troubling global trend” towards protectionist policy and other actions against the US biofuels industry, according to the US industry’s main trade group.
The Renewable Fuels Association (RFA), as well as Growth Energy and the US Grains Council have now asked US President Donald Trump to intervene. The president has repeatedly espoused protectionist policies for the US economy.
The organisations are calling upon the US federal government to develop an “immediate response” to Brazil’s newly implemented tariffs, a trade barrier that they say threatens more than US$750 million in US exports and American jobs. Brazil is the largest export market for American ethanol producers.
On August 23, Brazil’s Chamber of Foreign Trade imposed an immediate and stringent two-year tariff-rate quota (TRQ) system for ethanol imports. Under the system, a 20% tariff will be applied to purchases from the United States after a 600 million-litre (158.5 million gallon) quota has been met.
This year, fuel US ethanol exports to Brazil reached 1.17 billion litres by July, according to Census Bureau trade data. The US Department of Agriculture (USDA) notes that 99% of Brazil’s ethanol imports in 2016 were sourced from the US with sales of almost US$470 million.
“It is vital that the [Trump] Administration take immediate action and consider all avenues to encourage Brazil to either revoke the TRQ or substantially increase the tariff-free quota level to better reflect the current ethanol market and trade realities,” the groups said in a joint statement.
“Unfortunately, Brazil’s recent protectionist actions are turning back the clock to an era of isolationism and inefficient global trade,” said Renewable Fuels Association President and CEO Bob Dinneen. “In the end, Brazil’s new trade policy not only harms US ethanol producers, but also penalises Brazilian consumers who will be forced to pay more for their fuel.”
Growth Energy CEO Emily Skor added: “Brazil’s actions undermine the zero-ethanol tariff arrangement between our two countries that has been in place for several years and that damage the potential cooperation between our two countries to expand global ethanol demand and trade. President Trump has been a strong supporter of America’s biofuels producers, and decisive action to defend this crucial domestic industry will be a clear reminder of the Administration’s continued commitment to strengthen the American economy.”
However, similar policies have also been enacted much closer to home. In August, the US Department of Commerce proposed duties on biodiesel imported from Argentina and Indonesia, with the Trump Administration claiming that both countries are supporting supplies via unfair state subsidies. Argentina is currently trying to negotiate a settlement with the US.
Elsewhere, relations are warming. Earlier in September, the European Union said it would significantly lower its four-year tariffs on Argentine biodiesel by September 28.