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Michigan corn growers may benefit from new ethanol deal between Trump administration and the UK

The Inflation Reduction Act contains billions of dollars in tax incentives to increase production of ethanol from refineries like this one in the Midwest, which will lead to significantly larger corn harvests.
J. Carl Ganter
/
Circle of Blue

Many Michigan corn growers will be busy this weekend planting their crops.

An industry spokesperson says only about a quarter of corn acreage in the state has been planted this year due to cold, wet weather.

But state corn growers learned this week they may be getting a boost from an unlikely source — the recent announcement of a framework for a new U.S. trade deal with the United Kingdom.

As part of the deal, the United Kingdom is to buy more American ethanol, produced using corn.

Under the framework announced this week, the U.S. will receive a new tariff-free quota for ethanol, on the first 1.4 billion liters. Until now, American ethanol imports to the United Kingdom were subject to a tariff of up to 50%.

According to White House documents, the agreement may mean more than $700 million in new ethanol exports.

Scott Piggott is the executive director of the Michigan Corn Growers Association. He said roughly a third of the corn grown in Michigan is earmarked for ethanol production.

Piggott said he expects the new trade deal with the U.K. will have a positive effect on ethanol prices.

“The movement of more products to places like the United Kingdom, especially ethanol, are good for our economy and good for our farmers,” said Piggott.

Piggott is hopeful the ethanol deal worked out with the U.K. may lead to similar trade deals with other nations.

The U.S. and the U.K. have been aiming to strike a bilateral trade agreement since British citizens voted in 2016 to leave the European Union, allowing the country to negotiate independently of the rest of the continent. Then-Prime Minister Boris Johnson touted a future deal with the U.S. as an incentive for Brexit.

Negotiations started in 2020, during Trump’s first term. But the talks made little progress under President Joe Biden, a Democrat and a critic of Brexit. Negotiations resumed after Trump returned to office in January and intensified in recent weeks.

The U.S. ran a $11.9 billion trade surplus in goods with the U.K. last year, according to the Census Bureau. The $68 billion in goods that the U.S. imported from the U.K. last year accounted for just 2% of all goods imported into the country.

The U.S. is far more important for the U.K. economy. It was Britain's biggest trading partner last year, according to government statistics, though the bulk of Britain’s exports to the U.S. are services rather than goods.

The Associated Press is an independent global news organization dedicated to factual reporting.
Steve Carmody has been a reporter for Michigan Public since 2005. Steve previously worked at public radio and television stations in Florida, Oklahoma and Kentucky, and also has extensive experience in commercial broadcasting.
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