Proposed Trade Agreement Could Flood U.S. with Ethanol Imports

Concerns raised that no-till farmers may miss out on ethanol boom if deal is ratified

Apr. 18, 2026 at 6:12am

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An abstract geometric illustration using bold shapes and primary colors to conceptually represent the impact of international trade policies on the domestic ethanol market.A proposed trade deal could open the floodgates for foreign ethanol, threatening the growth of the domestic biofuel industry.Minneapolis Today

A proposed international trade agreement, the Central America Free Trade Agreement (CAFTA), could lead to a huge increase in ethanol imports into the U.S., which could prevent no-till farmers from capitalizing on the growing demand for corn-based ethanol fuel, according to a report from the Institute for Agriculture and Trade Policy (IATP).

Why it matters

Ethanol production holds significant financial promise for no-till farmers, who could see greater demand for their corn crops and potentially even their crop residue as the technology to convert residue to ethanol advances. However, the CAFTA agreement could undermine this opportunity by allowing unlimited foreign ethanol imports into the U.S. tariff-free, potentially undercutting domestic ethanol producers.

The details

The U.S. ethanol market has grown rapidly in recent years, with 84 ethanol plants currently operating in the country and another 18 scheduled to come online soon. More than half of these plants are farmer-owned. Currently, a 54 cent per gallon tariff on ethanol imports promotes the domestic ethanol industry. However, the CAFTA agreement would remove this tariff, potentially allowing a flood of foreign ethanol into the U.S. market.

  • The U.S. Senate has approved a national energy bill that would require oil refineries to use 8 million gallons of ethanol a year.
  • A House of Representatives bill would require the use of 5 million gallons of ethanol annually.
  • President Bush is expected to send the CAFTA proposal to Congress within the next few weeks.
  • Congress then will have 90 days to ratify or reject the CAFTA agreement.

The players

Institute for Agriculture and Trade Policy (IATP)

A Minneapolis-based organization that says it promotes resilient family farms, communities and ecosystems, and has raised concerns about the potential impact of the CAFTA agreement on the U.S. ethanol industry.

Central America Free Trade Agreement (CAFTA)

A proposed international trade agreement that could allow unlimited foreign ethanol imports into the U.S. tariff-free.

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What’s next

Congress will have 90 days to ratify or reject the CAFTA agreement once it is sent to them by President Bush.

The takeaway

This proposed trade agreement could have significant implications for the U.S. ethanol industry and no-till farmers who were poised to benefit from growing ethanol demand. The potential flood of cheap foreign ethanol imports could undermine domestic producers and prevent no-till farmers from capitalizing on this emerging market opportunity.