U.S. tariffs leave Brazil searching for new ethanol markets, StoneX says

Brazil will need to find new overseas markets for its ethanol after the United States imposed additional 25% tariffs on a range of Brazilian goods, StoneX said in an analysis released on Wednesday, July 22.

Ethanol is expected to be among the products hit hardest by the new duties. Despite recent talks between industry groups in both countries, U.S. producers cited Brazil’s existing 18% tariff on imported ethanol as grounds for the measure.

At the same time, U.S. lawmakers are considering allowing year-round sales of E15, gasoline blended with 15% ethanol. StoneX estimates that the change could reduce the amount of U.S. ethanol available for export by roughly 76% by 2027, as more production would be absorbed by the domestic market.

Taken together, the proposed E15 expansion and the tariff revision amount to greater protection for the U.S. corn ethanol industry, the consultancy said.

Brazil needs new outlets for rising production

Over the medium term, Brazil is likely to seek additional export destinations as ethanol production continues to grow to record levels while domestic demand fails to keep pace.

The mismatch is particularly relevant for hydrous ethanol, which is sold directly as a vehicle fuel in Brazil and competes for mill capacity with anhydrous ethanol, the variety blended into gasoline.

StoneX identified existing trade partners such as South Korea, the Netherlands and the Philippines as possible destinations for additional Brazilian supply.

Brazilian exports to South Korea and the Philippines have fallen substantially so far in 2026. The Netherlands has moved in the opposite direction, nearly doubling its purchases from Brazil over the period.

Brazil’s ethanol trade balance with U.S. has already reversed

Even before the latest tariffs, the bilateral ethanol trade balance—historically favorable to Brazil—had begun shifting toward the United States.

Brazil posted a surplus of 202,000 cubic meters in 2024, but that figure fell 44% to 113,000 cubic meters in 2025. The decline reflected an 18.5% drop in Brazilian exports and a 28.1% increase in imports of U.S. ethanol, according to data from Brazil’s Secretariat of Foreign Trade, or Secex.

A major turning point came in August 2025, when Brazil raised the mandatory share of anhydrous ethanol blended into gasoline from 27% to 30%. The increase absorbed a significant portion of domestic inventories.

In the same month, imports of U.S. ethanol surged to 35,000 cubic meters, compared with only 200 cubic meters in August 2024.

The trend intensified in early 2026, before the start of the sugarcane harvest in Brazil’s Center-South region. With inventories below historical averages, demand for imported ethanol increased.

Brazil imported 248,000 cubic meters of U.S. ethanol between January and March, the highest volume for the period since 2020.

The imbalance became more pronounced over the first half of 2026. Imports from the United States reached 250,800 cubic meters, up from 96,600 cubic meters in the same period last year.

Nearly all of those purchases were concentrated in the first quarter, before the price arbitrage that made imports commercially attractive closed in March.

Brazilian ethanol exports to the United States, meanwhile, fell to 66,400 cubic meters from 160,900 cubic meters in the first half of 2025.

The result was a bilateral deficit of approximately 184,400 cubic meters, reversing Brazil’s historically positive ethanol trade balance with the United States.

Source: Globo Rural

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