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(Corrects to say sugarcane-based ethanol, not sugar-based ethanol, in paragraph 9)
BRASILIA/SAO PAULO (Reuters) -Brazil's Energy and Mining Minister Alexandre Silveira said on Thursday that a potential U.S. tariff on Brazilian ethanol would be unreasonable, emphasizing that the two countries have historically negotiated ethanol and sugar trade together.
His remarks came after U.S. President Donald Trump moved to scrap decades-old low tariff rates, raising them to match those of other countries. A White House fact sheet on the plan pointed to Brazil's ethanol tariffs as an example of unfair trade practices.
"The U.S. tariff on ethanol is a mere 2.5%, yet Brazil charges U.S. ethanol exports an 18% tariff. As a result, in 2024, the U.S. imported over $200 million in ethanol from Brazil while exporting only $52 million in ethanol to Brazil," the document said on Thursday.
Silveira argued that for Trump's plan to be fair and reciprocal, as the Republican advocates, the world's largest economy would need to eliminate import tariffs on Brazilian sugar.
"The measure adopted by President Trump is unreasonable, as there is no mention of allowing greater Brazilian sugar exports to the U.S.," he said in a statement.
Trump's announcement has no immediate impact but could result in higher tariffs for major trading partners by early April, sparking negotiations with dozens of countries to reduce tariffs and trade barriers.
Brazilian Finance Minister Fernando Haddad said on Thursday he saw potential for tariff negotiations with the U.S.
Brazil, one of the world's largest sugar producers, produced some 35 billion liters of ethanol in 2024, but exported less than 6%, of which only some 300 million liters went to U.S., a report from BTG Pactual showed.
Meanwhile, Brazil imported 192 million liters of ethanol in 2024, 109 million of which came from the U.S., according to BTG Pactual, noting most of U.S. ethanol comes from corn, while sugarcane-based ethanol still holds the lead in Brazil.
In the statement, Silveira argued the U.S. imposes a $360-per-tonne tariff on sugar imports outside preferential quotas, equating to an 81.2% tax considering current market prices - far higher than Brazil's 18% ethanol tariff.
He noted U.S.-set sugar import quota for Brazil last harvest was 147,540 tonnes, or about 0.4% of total sugar exports from Latin America's largest economy.
"For a long time now... Brazil has not been able to export sugar to the United States, except in small quotas, because their tariffs make exportation unfeasible," the head of Brazil sugar and ethanol lobby group Unica, Evandro Gussi, told Reuters.
On the other hand, in a statement, U.S. Renewable Fuels Association, an ethanol trade group, thanked Trump "for his commitment to reestablishing a fair and reciprocal ethanol trading relationship with Brazil."
(Reporting by Marcela Ayres and Andre Romani; Additional reporting by Lisandra Paraguassu in Brasilia; Editing by Sarah Morland and Michael Perry)
