Trump government demands 'satisfactory proposal' not to punish Brazil in sugar quota

The statement was made by United States Undersecretary of Agriculture, Stephen Vaden, during a symposium of the American Sugar Alliance, on Monday (3). Vaden's speeches were recorded in an urgent statement sent to Brasília by the Ministry of Agriculture's attaché at the Brazilian embassy in Washington, Ana Lucia Viana. The document was obtained by the report.

The USA opens an import quota of 1.1 million tons of raw cane sugar annually, based on commitments made to the WTO (World Trade Organization). Those who enter the country within this amount pay a reduced tariff, while those who remain outside are affected by a barrier of approximately US$340 per ton. According to the sector, this has a strong impact on the competitiveness of the product.

When announcing the quotas for the next cycle, the Trump administration reduced the Brazilian share from 155.9 thousand tons to 100 thousand tons, a drop of 35.9%.

According to the report from the representative of the Ministry of Agriculture, during the event Vaden said that the volume previously destined for Brazil could be transferred to other exporters.

"Vaden expressly stated that Brazil will be able to recover the volume removed from its allocation if it presents commercial proposals considered satisfactory to the United States," says the report.

"In the absence of understanding, the 55,993 MTRV [metric tons in gross value] could be redistributed to other countries. The exact coincidence between the reduced volume of the Brazilian quota and the quantity not yet allocated reinforces the perception that the measure is being used as a commercial negotiation instrument."

In the same document, the Agriculture official says she contacted the USTR (Office of the US Trade Representative) to find out if the cut in the Brazilian quota was permanent or if there was the possibility of recomposition, even if partial.

She argued to the USTR that Brazil has fully filled the current quota of almost 160 thousand tons, "demonstrating supply capacity, reliability and demand from the North American industry." According to the report, the American side did not provide additional details to those publicly announced.

The agricultural attaché's statement does not specify what would be a satisfactory trade proposal in the US' view. But Washington has been pressuring Brazil for years to reduce the tariff charged for purchasing American ethanol, currently at 18%.

Different Brazilian governments have signaled in the past that they would agree to discuss reducing this barrier if the US included a trade opening for sugar in the talks. There was never an agreement on this aspect.

When contacted by the report, the Ministry of Agriculture and the US Department of Agriculture did not respond until the publication of this report.

The new American tariff quotas will come into force from October, lasting one year.

The largest amount was allocated to the Dominican Republic, which will be able to export around 189 thousand tons of cane sugar under more advantageous conditions.

In second place are the Philippines, with 145 thousand tons. Brazil has the third largest allocation.

Last year, Brazil exported 292.4 thousand tons of raw sugar to the USA, according to data from Unica (Union of the Sugarcane and Bioenergy Industry).

The quota is filled by producers from the Northeast, while the volume exported above it is mainly supplied by the Southeast, where harvesting is more mechanized.

If the tariff applied to exports outside the quota already made it difficult for Brazilian sugar to access the American market, the situation became even worse with the successive tariffs imposed by Trump on Brazil.

In addition to the US$340 per ton, the product that enters the American market outside the quota will also be subject to cumulative surcharges of 37.5%, applied based on two commercial investigations conducted by the USTR.

Those within the quota, in turn, will pay an extra fee of 25%, referring to one of the USTR assessments.

Vaden's threat is yet another chapter in the diplomatic and commercial crisis between the Lula and Trump governments, which worsened even further with the revocation of the visa of the Brazilian ambassador in Washington, Maria Luiza Viotti.

Weeks earlier, the Lula government had denied visas to State Department officials who, according to the PT's aides, intended to interfere in the Brazilian elections. Itamaraty also did not issue authorization for Daniel Perez, ambassador appointed by Trump, to begin his mission in Brasília.

In the commercial field, Brazil was the target of tariffs of up to 50% last year, under the justification that the Lula government and the Judiciary were promoting a "witch hunt" against former president Jair Bolsonaro (PL). Most of these surcharges were declared illegal by the US Supreme Court, but in July, Trump imposed new sanctions (of 25% and 12.5%), now supported by the USTR.

When asked about the topic, Unica said that Brazil is a reliable partner for the USA, "capable of ensuring a regular and consistent supply of high quality sugar".

"The entity hopes that negotiations will progress constructively, avoiding the adoption of measures that could create new barriers to trade between the two countries."