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Brazil is set to advocate for an increase in tax-exempt sugar exports to the United States during upcoming discussions in Washington. This initiative is part of the South American country’s strategy to safeguard its sugar sector in light of impending U.S. tariff increases on ethanol, a significant renewable fuel produced primarily from Brazilian sugarcane.
Historically, Brazil’s sugar industry has sought to expand its quota for tax-free sugar exports to the U.S. but has encountered limited success in these efforts. Furthermore, the renewal of existing tax-exempt quotas is far from guaranteed. The urgency of the matter has intensified as Brazil faces possible repercussions in its agricultural trade relationship with the U.S. due to proposed tariff changes involving ethanol.
In February, shortly after Donald Trump assumed the presidency, the White House indicated that Brazilian ethanol could be targeted as part of reciprocal tariffs aimed at countries imposing taxes on U.S. goods. Although no tariffs have been implemented yet, the U.S. is expected to unveil a package of new taxes on April 2, which may include these tariffs.
Currently, Brazil is allowed to export 147,000 metric tons of sugar to the U.S. without incurring import taxes; exports exceeding this threshold face an average tax of approximately 80% per ton. In the last year alone, Brazil shipped 1.1 million tons of sugar to the U.S., according to government data. By increasing the tax-free quota, Brazilian producers could enhance sugar production, particularly if a decline in ethanol demand occurs as a result of newly imposed tariffs.
Initial discussions surrounding potential tariffs took place last week between Brazil’s Vice President Geraldo Alckmin and U.S. Secretary of Commerce Howard Lutnick. This was followed by a meeting featuring Brazil’s Foreign Minister Mauro Vieira and U.S. Trade Representative Jamieson Greer. During these discussions, both parties recognized the need for technical groups to initiate negotiations on tariff-related issues, with expectations for the inclusion of new products in future talks.
The push for U.S. sugar exports coincides with a period of rapid expansion in Brazil’s corn ethanol industry, which is projected to nearly double its annual production to around 16 billion liters by 2032, according to a recent report from investment bank Citi. Additionally, attempts will be made to enhance a separate quota for U.S. meat exports, as Brazil continues to navigate its complex trade relationships.
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