U.S. exempts Brazilian sugar quota from new tariff but cuts allocation

Brazilian sugar shipped to the United States under the existing tariff-rate quota will not be subject to the new 12.5% surcharge announced by Washington on a range of imported goods.

The decision preserves current market-access conditions for Brazilian mills eligible under the quota system. However, it was accompanied by a significant reduction in the volume allocated to Brazil beginning in the next U.S. fiscal year.

According to a decision by the Office of the United States Trade Representative, or USTR, sugar exported within the quota will remain subject only to the existing 25% tariff. Shipments exceeding the allotted volume will face a total tariff of 37.5% once the new surcharge is added.

The steep tariff increase imposed by the U.S. government is already weighing heavily on sugar shipments to the country. According to data obtained by Datamar, Brazilian sugar exports to the United States fell 53.2% between January and May 2026 compared with the same period a year earlier. The chart below shows the monthly fluctuation in recorded volumes:

Sugar Exports to the United States | Jan 2023 – May 2026 | WTMT

Source: DataLiner (click here to request a demo)

The most consequential change is the reduction in Brazil’s share of the tariff-rate quota. The country’s allocation will fall from 156,000 to 100,000 metric tons in fiscal year 2027, which begins in October 2026.

Brazil’s quota is currently reserved exclusively for sugar mills in the country’s North and Northeast regions. The arrangement is established under Federal Law No. 9,362 of 1996, which grants producers in those regions access to preferential markets for sugarcane products.

Renato Cunha, chief executive of the Association of Sugar, Ethanol and Bioenergy Producers, known as NovaBio, said the cut adds further uncertainty to trade relations between Brazil and the United States.

“This reduction could be lasting or temporary. The volume could be restored to Brazil or redistributed among the other 38 countries covered by the quota system,” Cunha said. “It adds to the constant back-and-forth and unpredictability that ultimately causes all kinds of disruption across the sugarcane industry. We will continue monitoring developments.”

Ethanol talks raise concerns over unequal market access

NovaBio also expressed concern about negotiations involving ethanol.

Cunha said Brazilian sugar continues to face export quotas in the U.S. market, while the United States is seeking greater access for its ethanol exports to Brazil.

“The United States has excess ethanol production and wants to change that situation by selling the biofuel to Brazil, which has no need whatsoever to import it,” he said.

In Cunha’s assessment, the situation highlights an imbalance in the countries’ trade relationship.

“The reality is that our sugar exports remain subject to quotas, while the United States still wants to export ethanol to us duty-free,” he said. “That is no longer a negotiation. It amounts to an imposition.”

The USTR decision therefore limits the immediate impact of the new surcharge on Brazilian sugar exported within the quota. At the same time, the lower allocation adds uncertainty to export planning and broader trade negotiations between Brazil and the United States.

Source: AgroRevenda

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