Reports indicate the Bush administration will be making changes to the ethanol tariff in its budget to Congress scheduled for release on Monday. Energy Secretary Sam Bodman said in an address at the U.S. Chamber of Commerce that the White House's 2009 budget will start to address whether the 54-cent-a-gallon import tariff should be allowed to expire at the end of this year or whether it should be renewed.
Energy experts claim the U.S. ethanol industry can compete with Brazil and other ethanol importers without the tariff. Bodman was quoted as saying the ethanol industry is "pretty close to being able to stand on its own" without domestic subsidies or protective tariffs. U.S. ethanol blenders get a separate 51-cent-a-gallon tax credit through 2010.
Senate Finance Committee ranking member Chuck Grassley criticized the move, saying it would end up subsidizing Brazilian ethanol. "The United States already provides duty-free treatment for Brazilian ethanol that is merely dehydrated in the Caribbean Basin Initiative countries," Grassley says. "Brazil has yet to make full use of this program. I don't see why we should bend over backwards to provide yet more duty-free treatment for Brazil's ethanol producers."