Brazil in talks to expand U.S. sugar export quota

The Brazilian government has put the expansion of its sugar export quota to the U.S. on the negotiating table. A long-standing demand from the local sugar industry—Brazil is the world’s largest producer—the issue has gained momentum in Brasília as a potential bargaining tool in response to pressure from U.S. President Donald Trump to lower Brazil’s 18% tariff on American ethanol.

Other proposals under consideration in Brasília include increasing Brazil’s beef export quota and securing market access for Brazilian lemons. These matters will be negotiated collectively at a government-to-government level rather than separately by sector, sources familiar with the discussions said. Talks also involve potential U.S. tariffs on Brazilian steel and aluminum and are being coordinated by Vice President Geraldo Alckmin.

Currently, Brazil has a preferential sugar export quota of 146,600 tonnes exempt from U.S. import taxes, allocated among 39 companies in the country’s northeastern region. For several years, the government has sought to increase this quota to between 300,000 and 400,000 tonnes but has faced resistance. It is unclear whether the latest request remains within that range.

In 2024, Brazil exported 876,700 tonnes of sugar to the U.S., generating nearly $440 million in revenue. Any amount exceeding the quota is subject to an import tax of about 80%. Produced in 26 U.S. states, sugar is considered a “highly protected” commodity, making negotiations particularly challenging, according to sources in Brasília.

Government analysts argue that sugar is directly tied to ethanol—an area where the U.S. is seeking greater access to the Brazilian market—providing a possible justification for approving the quota expansion. “In Brazil, ethanol and sugar are inseparable,” one source said, noting that most of the country’s biofuel is derived from sugarcane. In contrast, U.S. ethanol is produced from corn, which U.S. negotiators argue affects different industries when discussing an expanded sugar quota.

The matter was already discussed in a videoconference between Vice President Alckmin and U.S. Secretary of Commerce Howard Lutnick. During the meeting, Brazil proposed creating a working group to address bilateral trade relations.

“The strategy is to secure some kind of leverage in ethanol negotiations in case Brazil moves toward a tariff reduction,” a government source said. Expanding the sugar quota would serve as a form of “compensation,” the source added.

In an interview with Rádio CBN on Monday, Mr. Alckmin, who is also Brazil’s minister of development, industry, trade, and services, pointed out that sugar is one of the Brazilian products facing high U.S. tariffs. “The U.S. import tax on ethanol is 2.5%, while ours is 18%. That’s true. But when it comes to sugar, they grant a small quota for Brazil, and anything above that is taxed at nearly 90%,” he said.

The specifics of the negotiation process remain undefined. One potential solution could be a deal in which Brazil opens a duty-free quota for U.S. ethanol in exchange for an expanded sugar quota.

Source: Valor Intermational
https://valorinternational.globo.com/foreign-affairs/news/2025/03/11/brazil-in-talks-to-expand-us-sugar-export-quota.ghtml

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