Brazil’s ethanol market won’t lose much sleep over US tariff threats

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Why Brazil’s ethanol market won’t lose much sleep over US tariff threats

Brazil is the world’s second-largest ethanol producer. Most of it is made from sugarcane. Photo: Tridsanu Thopet/Shutterstock

Brazil’s ethanol industry is facing a mix of promising opportunities and looming threats.

On the one hand, the sector is bracing for the possibility of new US tariffs on its fuel exports. On the other, the Brazilian government has just announced a proposal to increase the share of ethanol blended into gasoline — a move that could significantly boost domestic demand.

The news comes as ethanol production and consumption are reaching historic highs. According to Unica, the country’s main industry group, Brazil produced over 36 billion liters of ethanol in 2024 — its largest output on record.

This milestone comes despite significant setbacks. Wildfires damaged thousands of hectares of sugarcane fields last year, leaving lasting scars on production. But growing output from corn-based ethanol helped offset those losses, Unica said.