LatinNews Daily - 17 August 2020

Brazil: On 10 August US President Donald Trump threatened to impose reciprocal tariffs on Brazilian ethanol, in a divergence from his usually friendly relationship with Brazil’s President Jair Bolsonaro. Brazil currently allows 750m litres of US ethanol to be imported duty-free each year, and charges a 20% tariff on surplus imports above this quota, while the US currently has no tariffs in place on Brazilian ethanol. According to the US Renewable Fuels Association (RFA), imports of Brazilian ethanol in July reached a seven-year high, while year-to-date exports to Brazil are down by 15% on the same period in 2019, and by 48% compared to the same period in 2018. Speaking at a press conference, Trump said that “if they do tariffs, we have to have an equalisation of tariffs […] and you may be seeing something on that very soon”. In a letter to US trade representative Robert Lighthizer, the RFA affirmed its support for reciprocal tariffs, while calling for a return to the free trade of ethanol between the two countries that lasted from 2012-2017: “regarding ethanol trade, Brazil has chosen a path of protectionism and obstruction; unfortunately, at this point, it appears we have no choice but to respond in kind”. With Trump facing a close election race in November, he will be keen to appear supportive of struggling US ethanol producers, a key voting bloc in the Midwestern battleground states.

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