Bolsonaro has until Monday to decide whether he will renew or terminate a 20% tariff on ethanol imposed on every gallon after the country after imports a tariff-free quota of 198 million gallons (750 million litres).
While U.S. diplomats and corn producers push for a zero-duty exemption for American ethanol from tariffs, Brazilian congressmen tied to the sugarcane industry have lobbied for the end of the quota and the reinstating of a 20% tariff on all imported ethanol.
“We have a great appreciation for the U.S., a country we share values and ideals with, but American interests can not come before Brazilian ones,” the 39 congressmen from 13 mostly right-wing and center-right parties across a wide ideological spectrum wrote in a letter sent to Bolsonaro.
Ethanol negotiations are currently a central piece in the trade relationship between the two countries.
In a letter sent last week to Trade Representative Robert Lighthizer, 20 American lawmakers urged the Trump administration to press Brazil to lift its tariffs.
“Brazil’s inequitable treatment of U.S. ethanol creates economic strain throughout the U.S. ethanol industry, especially during a year in which COVID-19 is devastating fuel demand in our country”, they argued in the letter dated from August 20.
They said in the letter Brazil was the largest U.S. ethanol export market last year, purchasing $493 million in American ethanol.
Ambassador Todd Chapman has also pressed for Brazil to lift tariffs on ethanol, on at least one occasion mentioning it could influence Iowa’s vote in the U.S. presidential election, according to a person who spoke with Chapman and told The Associated Press on condition of anonymity.
Chapman’s lobbying on ethanol, which was reported last month without attribution by two local newspapers, prompted the Democratic chairman of the House Foreign Affairs Committee to demand Chapman provide written assurances he isn’t urging the Bolsonaro government to support Trump’s re-election. Rep. Eliot Engel, in a July 31 letter to Chapman, said that such actions would potentially violate the Hatch Act of 1939, which bars executive branch employees from partisan politics.
Chapman has vehemently denied crossing any lines.