Japanese Prime Minister Shigeru Ishiba told President Donald Trump on Friday that increased U.S. ethanol exports to Japan could help reduce the U.S. trade deficit with his country, which has American growers eying the expansion of a potentially lucrative market with interest.
During a joint news conference, Ishiba told Trump Japan is planning to scale up its ethanol purchases. The prime minister was on a whirlwind 24-hour visit to Washington, D.C., to meet the new president and shore up U.S.-Japanese economic and security ties.
“We'll be able to provide it,” Trump replied. “Iowa is going to be very happy. Nebraska, all of our farm states are going to be very happy.”
Japanese Prime Minister Shigeru Ishiba (Photo: Japanese Cabinet Public Affairs Office) The Japanese market has been gradually opening to U.S. ethanol producers in recent years. Before 2018, Japan exclusively used Brazilian ethanol for on-road uses, according to the U.S. Grains Council, as the country’s Ministry of Economy, Trade and Industry excluded U.S. corn-based ethanol based on a higher carbon-intensity score.
But the Japanese government revised its emissions calculations in 2018 and 2020 and improved the scoring of U.S. ethanol, first allowing around 44% of U.S. ethanol into the on-road biofuel market, then raising access to 66%. Finally in 2023, U.S. ethanol was granted full access to the Japanese market.
Japan has very limited domestic bioethanol production capabilities, according to the Agriculture Department. But Japanese bioethanol imports for fuel and industrial use have been stalled at around 1.2 billion liters annually since 2020, in part because the gasoline blend rate has remained around 1.8-1.9%. That is about to change, however.
Last year Japan’s METI announced new blending targets as part of its push for carbon neutrality by 2050. The government aims to hit a 10% blend rate by 2030, rising to 20% by 2040.
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To hit its E10 blend target, fuel ethanol import volumes would need to rise around 55%, from around 140 million gallons today, Alicia Koch, director of global ethanol export development at the U.S. Grains Council, told Agri-Pulse.
Fulfilling the E20 blend target, as well as its goals around sustainable aviation fuel, could require ethanol imports to more than triple, according to Koch.
“Japan is an island. They're somewhat limited with their land and their resources, and so ethanol is likely going to be one of those commodities that they continue to look to import,” Koch said.
Brazil dominates Japan’s industrial ethanol imports, USDA says, but the U.S. is well placed to capitalize on the increased Japanese demand for ethanol for transport uses.
“The U.S. is in a very good position to supply Japan with their ethanol needs,” Koch said. The U.S. is currently sitting on around 2 billion gallons of excess capacity, she added. “So, we can certainly currently meet Japan's demand for ethanol. ... U.S. producers are, I think, eager to have that market open.”
Three U.S. states in the corn belt – Iowa, Nebraska and Illinois – produce more U.S. ethanol than all the others combined, according to the U.S. Energy Information Administration and would stand to gain the lion’s share of benefits from any surge in U.S. ethanol exports. As farmers grapple with multiple economic challenges, Iowa Secretary of Agriculture Mike Naig told Agri-Pulse that the announcement couldn’t come at a better time.
“The farm economy is sputteri
Iowa Agriculture Secretary Mike Naig ng,” Naig said. “These are exactly the kind of market signals that we need to see – of expanded market opportunities for us.”
During the same press conference, however, Trump said he was planning to announce a new “reciprocal” tariff this week that would apply to countries that apply duties to U.S. exports higher than the U.S. applies to theirs. He did not say whether Japan would be among the countries targeted, but Japan’s weighted average applied tariff rate to the U.S. (3.9%) is higher than the rate the U.S. applies to Japan (1.6%), according to analysis by the Economist Intelligence Unit.
Trump also signed an executive order Monday applying a new 25% duty on steel and aluminum imports. Japan was the fifth-largest provider of U.S. steel in 2023, sending more than 1.1 million net tons in 2023, according to the American Iron and Steel Institute.
Japan’s Ishiba refused to say on Friday whether his government would retaliate to future U.S. tariffs on Japan. But Naig sad he is not concerned that Trump’s tariff threats could undermine efforts to open new farm product markets.
“You can do those things simultaneously,” Naig said. “We can both have fair trade and expanding trade. And I think the president's track record actually is just that in the first term, and so we'll see this play out here as we get into the second term.”
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