Brazil's Ethanol-Gasoline Blend Increase Could Offset US Tariffs, Says Tebet
Simone Tebet, a pre-candidate for Senator from São Paulo and former Planning Minister under President Lula, stated on Friday, May 17th, that increasing the mandatory ethanol blend in gasoline by 2% could mitigate the impact of the United States' new 25% tariff. Tebet made these remarks during a political event in northwestern São Paulo, a key sugarcane-producing region. The US cited difficulties in accessing the Brazilian ethanol market as a reason for imposing the tariffs. The National Union of Corn Ethanol (Unem) countered that Brazil's tariffs on imported ethanol comply with World Trade Organization (WTO) rules and do not violate bilateral agreements with the US. Tebet argued that the 2% blend increase would absorb more ethanol domestically than is currently exported to the US, thereby reducing the risk of job losses in the sugarcane industry. She emphasized that this measure alone could compensate for a complete halt in exports to the United States. Brazil currently imposes an 18% tariff on US ethanol while paying 2.5% on exports to the US. According to the Sugarcane Industry and Bioenergy Union (Unica), the US imported 253 million liters of Brazilian ethanol in 2025, valued at US$163 million. Brazil primarily focuses on its domestic market, exporting only 7% of its ethanol production, with just 1% going to the US, according to Unica data for the 2023/2024 harvest. Tebet assured producers that the mandatory blend increase, approved by the National Energy Policy Council (CNPE), would protect jobs and provide sector security.
The proposed increase in Brazil's domestic ethanol-gasoline blend aims to create a buffer against potential economic repercussions from US trade actions. This strategy leverages internal market demand to absorb surplus production, thereby mitigating risks of job losses and economic instability within the Brazilian sugarcane sector. The move highlights the intricate interdependence of global commodity markets and the strategic use of domestic policy to navigate international trade disputes. It also underscores the potential for renewable fuel mandates to serve dual purposes: environmental policy and economic defense. The long-term sustainability of this approach will depend on global energy prices, the evolving landscape of international trade agreements, and Brazil's capacity to maintain competitiveness in both domestic and international ethanol markets amidst technological advancements and policy shifts in major economies.
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