By Brazil Stock Guide – The additional 25% US tariff on Brazilian ethanol is expected to hurt some exporters without significantly affecting Brazil’s broader economy, as the American market represents a relatively small share of the country’s overseas sales.
The US received less than 16% of Brazil’s ethanol export volume in 2025, according to industry data cited by Agência Brasil on Wednesday. Economists interviewed by the news agency said the measure carries a strong political component and is unlikely to cause widespread disruption across Brazil’s biofuel industry.
Brazil exported about 1.6 million cubic meters of ethanol last year, generating almost $1 billion in revenue. Shipments to the US totaled roughly 253,000 cubic meters and were valued at $163 million.
The American market accounted for about 17.5% of export revenue, according to the Brazilian Sugarcane and Bioenergy Industry Association, known as Unica. More than 84% of Brazil’s ethanol export volume was sold elsewhere.
“The US share of Brazilian exports had already been declining for years. Even before the tariff increase, its weight was already relatively small,” said Luiz Carlos Delorme Prado, a professor at the Institute of Economics of the Federal University of Rio de Janeiro.
The levy may create localized problems for producers with greater exposure to American buyers, Prado said. Still, Brazil’s diversified export base should contain the broader economic damage.
“Of course, it is a bad development, especially for some specific sectors. But, truth be told, it does not represent any tragedy for the country’s economy,” he said.
Exporters can seek alternative markets
Brazilian producers are likely to accelerate efforts to redirect shipments to other destinations, according to Prado. The country’s lower production costs and relatively high agricultural productivity may help exporters compete for buyers.
The economist said investing specifically to serve the US market has become riskier because President Donald Trump’s trade policies lack predictability.
“Of course, no one likes losing a market such as the United States, but under the current circumstances, at least during the current US administration, that market has become highly problematic because it offers neither predictability nor rationality,” Prado said.
He said the tariffs are driven more by the Trump administration’s political agenda in Latin America than by efforts to obtain commercial concessions.
“There are no guarantees that minimally predictable bilateral trade policies can be established with the US because what drives the tariff increase is not commercial gains, but their government’s political agenda for Latin America,” he added.
Brazil retains a cost advantage
Brazil’s ethanol industry benefits from climate conditions that allow farmers to harvest more than one crop from the same land during a year. Producers may harvest soybeans through May and then plant corn for collection in October.
That second-crop system gives Brazil an advantage over the US, where harsher winters limit agricultural activity in major producing regions.
“The Brazilian producer can harvest soybeans through May and then plant corn to be harvested in October. In this way, the same area can produce two crops per year,” said Luis Augusto Barbosa Cortez, a professor at the University of Campinas and coordinator of the Center for Science for Ethanol Development.
About 75% of Brazilian ethanol is produced from sugarcane, while corn accounts for the remaining 25%. Cortez expects corn’s share to reach about 30% by 2030 and potentially match sugarcane’s contribution around 2050.
“The trend is for corn’s share of production to become even larger,” he said.
Corn-based ethanol production can also be integrated with livestock operations. The process generates feed that can be used by cattle producers, improving margins and reducing the need to expand pastureland.
“Producing corn ethanol in Brazil is becoming increasingly advantageous. The activity can be integrated with livestock because its meal serves as animal feed. This integration also brings environmental gains, as it reduces the need for pasture areas,” Cortez said.
Brazilian mills also use biomass from sugarcane bagasse and corn residue to generate part of the energy consumed in their industrial operations. US producers, by comparison, often need to purchase power from external suppliers.
“In the United States, they need to buy energy for part of the ethanol production process. In Brazil, we solve that within the plant itself. That is why their costs are higher,” Cortez said.
Brazil produces about 7,000 liters of sugarcane ethanol per planted hectare, compared with as much as 5,000 liters per hectare for US corn-based ethanol, according to the report.
Political motivation
Niels Søndergaard, a professor at the University of Brasília’s Institute of International Relations, described the US action as “eminently political,” despite what he called its “technical veneer.”
He said the Trump administration has shifted away from a technical debate over tariff policy and is using economic pressure to influence political developments in Brazil.
“The Trump administration, amid the shift toward far-right governments in Latin America, stopped addressing tariffs from a technical perspective, as the Brazilian government had done, and adopted a position aimed at manipulating political developments in Brazil through external economic pressure,” Søndergaard said.
The researcher rejected the argument that Brazil discriminates against American ethanol. He attributed falling imports from the US mainly to the rapid expansion of Brazil’s domestic corn-ethanol industry.
“Brazil complies with World Trade Organization rules, and the decline in ethanol imports from the US is due to the increase in corn-based ethanol production in Brazil,” he said.
Søndergaard said the Trump administration has repeatedly relied on claims that are “partly or entirely detached from concrete facts” to pressure other countries. “We have seen this many times, which is why the Trump administration cannot be treated as a reliable interlocutor,” he added.
Industry groups dispute US claims
The US justified the tariff with an investigation by the Office of the US Trade Representative. The inquiry questions Brazil’s treatment of American ethanol and raises concerns about digital trade, electronic payment systems, intellectual property, anti-corruption measures and illegal deforestation.
Brazil’s government rejects the allegations and says the investigation lacks support under multilateral trade rules.
Unica said Brazil applies its import policy equally and is not required by any bilateral agreement to grant preferential treatment to American ethanol.
“Brazilian ethanol policy is fully aligned with WTO rules, applied in a non-discriminatory manner and in compliance with the multilateral commitments undertaken by Brazil,” the association said.
The decline in US shipments to Brazil resulted mainly from the growth of domestic production rather than a change in tariff policy, Unica said.
“Likewise, the reduction in US ethanol exports to the Brazilian market stems primarily from the expansion of domestic production, especially corn ethanol, and not from changes in Brazilian tariff policy,” the group added.
The National Corn Ethanol Union, known as Unem, said the direct effect on Brazilian exporters should be limited because the US is no longer a priority destination. The organization warned, however, that the decision could establish a precedent for future trade disputes.
“Although the tariff has a limited direct impact on Brazilian ethanol exports, since the US is not currently a priority market for the Brazilian product, the decision is concerning because of the precedents it may establish,” Unem said.
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