Canada May Hit U.S. Ethanol With Retaliatory Tariffs

By Ryan Hanrahan

Reuters’ Jarrett Renshaw and Arathy Somasekhar reported Tuesday that “Canada could impose non-tariff measures such as restricting its oil exports to the U.S. or levying export duties on products if a trade dispute with the U.S. escalates further, Canada’s energy minister Jonathan Wilkinson said on Tuesday.”

“‘When we are talking about non-tariff retaliation, it could be about restricting supply, it could be putting our own export duties on products. It could be energy and minerals, it could be broader than that,’ Wilkinson said in an interview with Reuters,” according to Renshaw and Somasekhar’s reporting. “He also raised the possibility of using non-tariff measures on critical minerals, which could force the U.S. to rely even more heavily on China. ‘Everything is on the table,’ he said.”

“Wilkinson told Reuters Canada is considering imposing tariffs on U.S. ethanol as part of a second tranche of trade penalties if Trump continues to escalate the trade war,” Renshaw and Somasekhar reported. “U.S. ethanol, a crucial trade product for U.S. farmers, is ‘absolutely on the list of things’ that could be included if Trump, for example, moves forward with plans to impose 25% tariffs on Canadian goods in April, Wilkinson said.”

“Canada has threatened retaliatory tariffs on $155 billion of U.S. imports. Officials identified an initial tranche of $30 billion of goods that would face tariffs but said the remainder of the list is under consideration,” Renshaw and Somasekhar reported. “U.S. ethanol exports to Canada hit record highs in recent months to help Canada meet its clean fuel program. It is cheaper than Canadian ethanol, Wilkinson said, due to subsidies in the U.S. Renewable Fuel Standard.”

“U.S. farmers sent a record 1.54 million gallons of ethanol to Canada in September of last year, roughly double the figure three years prior, according to the U.S. Energy Information Administration,” Renshaw and Somasekhar reported.

Current U.S. Tariffs Include Canadian Biofuels

Ethanol Producer Magazine’s Erin Voegele reported that “the U.S. government on March 4 implemented new tariffs on a variety of goods from Canada, Mexico, and China, including a 10% tariff on biofuels entering the U.S. from Canada.”

“Canada accounted for 25% of U.S. ethanol imports and 31% of U.S. biodiesel imports in 2024, at 32.16 million gallons and 430,526.5 metric tons, respectively. The value of those imports was $116.48 million and $563.78 million, respectively,” Voegele reported. “In addition to biofuels and coproducts, the emerging trade war could impact biofuel feedstocks, such as corn and soybeans.”

There is some uncertainty around those tariffs on Canadian ethanol, however, because “President Donald Trump has paused until April 2 tariffs on Mexican and Canadian imports that are compliant with the agreement which governs trade in North America,” NBC News’ Spencer Kimball reported. “It’s unclear, however, how much of the oil, gas, and other energy that the U.S. imports from Canada is compliant with the United States-Mexico-Canada Agreement [USMCA]. (Energy Secretary Chris) Wright declined to provide specifics when CNBC asked how much of those imports are USMCA compliant.”

“‘I’m going to avoid the details for now,’ Wright said. The energy secretary said, ‘We can get to no tariffs or very low tariffs but it’s got to be reciprocal’ in an interview with CNBC’s Brian Sullivan,” Kimball reported.

EU Hits U.S. With Retaliatory Tariffs Wednesday Morning

The Associated Press’ Lorne Cook and David McHugh reported Wednesday morning that “the European Union on Wednesday announced retaliatory trade action with new duties on U.S. industrial and farm products, responding within hours to the Trump administration’s increase in tariffs on all steel and aluminum imports to 25%.”

“The EU measures will cover goods from the U.S. worth some 26 billion euros ($28 billion), and not just steel and aluminum products, but also textiles, home appliances, and agricultural goods. Motorcycles, bourbon, peanut butter, and jeans will be hit, as they were during President Donald Trump’s first term,” Cook and McHugh reported. “The EU duties aim for pressure points in the U.S. while minimizing additional damage to Europe. The tariffs — taxes on imports — primarily target Republican-held states, hitting soybeans in House speaker Mike Johnson’s Louisiana, but also beef and poultry in Kansas and Nebraska. Produce in Alabama, Georgia, and Virginia is also on the list.”

“The (European) commission also said that steel and aluminum products would be hit in return, but also textiles, leather goods, home appliances, household tools, plastics, and wood. Agricultural products will also be impacted — including poultry, beef, some seafood, nuts, eggs, sugar, and vegetables,” Cook and McHugh reported.

Canada May Hit U.S. Ethanol With Retaliatory Tariffs was originally published by Farmdoc.