US ethanol producers say Trump's proposed port fees would hurt exports

US ethanol exports would take a hit from the Trump administration's plan to impose high new fees on Chinese ships arriving at US ports, fossil fuel and agriculture groups said March 26 during a hearing in Washington.

Under the US Trade Representative's proposal, ships built in China or operated by Chinese companies calling at US ports could face fees of up to $3 million. The measure aims to reduce China's commercial and military shipping footprint. However, critics warn it could backfire on farmers, miners, and others that the Trump administration had hoped to support because it would make US exports more expensive overseas, potentially causing up to $30 billion in losses over the next decade.

"My guess is a lot of the burden on shipowners is going to be passed on to shippers, [which] clearly makes US barrels less competitive in the global space," a US-based ethanol trader said. "Between now and firm guidance, [ship]owners are going to be hesitant on fixtures, especially out forward."

A second US-based trader said: "We'll have to see what the final policy is and when it actually becomes enacted."

The impact on US exporters will likely be worse the sooner the proposed fees get implemented, the second trader said.

The US has exported an average of 141,000 b/d of fuel ethanol in the first quarter of 2025, up nearly 25% compared to Q1 2024, according to US Energy Information Administration data released March 26. In 2024, the US set an annual record for fuel ethanol export volumes, totaling 1.92 billion gallons.

Growth Energy, a US biofuel trade association, urged the USTR in March 24 comments to revise the proposed rules.

"The noted fees and costs of compliance with the proposed requirements to use US-flagged and operated vessels will be significant and result in higher, less-competitive prices and decreased demand for US exports while also increasing the price of imported inputs for ethanol's production," said Chris Bliley, Growth Energy's senior vice president of regulatory affairs.

"This will upend domestic supply chains while increasing port consolidation, port congestion, costs, other compliance requirements, and clearance time by customs that will add to the burden and cost of producing and exporting US ethanol."

Growth Energy added that Brazil is taking action to ease the cost of trade and expand ethanol exports to Europe through a negotiated trade agreement. "The new requirements would cause a significant upheaval that American producers can ill afford," Bliley said.

The port fee proposal comes amid growing uncertainty around tariffs in the US ethanol export market, a third US-based trader said. Even if the Trump administration rolls back on some tariffs, "the tariffs won't be zero," the trader said.

European-based traders do not expect the EU to impose reciprocal tariffs on US ethanol as the EU is reliant on US imports. A market participant said it depends on how harsh a stance Europe decides to take. If the EU removed existing tariffs on US goods to avoid being slammed by US tariffs in a similar move to Vietnam, that would probably lead to increased US ethanol flows to Europe.

The Chicago Argo ethanol benchmark fell 2.25 cents to $1.7190/gal on March 26, the fourth consecutive trading day of decreases. The benchmark began falling on March 21.