Global trade flows have been reshaped since last year following the announcement of reciprocal U.S. tariffs on various trading partners.
In the feedstock market, these measures notably affected Brazilian tallow exports to the U.S., diverting volumes to Europe. As a result, increased supply has pressured local European prices, which were already under strain due to weak demand from biofuel producers.
A similar situation occurred in China, where tariffs reached as high as 150%, effectively halting all UCO exports to the U.S. These volumes were subsequently redirected to Europe, which is a net importer of UCO.
However, tariffs and anti‑dumping duties are not the only tools used to discourage the import of materials. Legislation has become an increasingly important trade barrier, and the European Union has relied heavily on it in recent years.
Examples include:
- ISCC certification requirements: Only certified material can contribute toward RED III mandates, creating a compliance barrier for non‑certified imports.
- Germany’s new requirement for onsite inspections at biofuel facilities to allow their output to count toward mandates.
- EUDR implementation, which goes far beyond simply requiring non‑GMO documentation. It mandates physical segregation of beans, ensuring that only genuinely non‑GMO beans enter Europe.
The United States has adopted similar non‑tariff measures. Under the new 45Z tax credit, the benefit is available only to producers using North American feedstocks (U.S., Mexico, Canada). As a result, imported feedstocks receive no such tax advantage, creating a powerful economic disincentive even in the absence of tariffs.
Therefore, even with the U.S. Supreme Court striking down IEEPA‑based tariffs (including last year’s reciprocal duties announced in May–June) and Trump replacing them with a temporary 10% tariff limited to 150 days, this does not necessarily guarantee an immediate rebound in Brazilian tallow flows to the U.S. Other trade barriers, particularly the 45Z credit, may continue to weigh on trade decisions and reduce the attractiveness of imported material.
Given that Connex holds a significant share of the European animal‑fat market, our traders and analysts remain closely engaged. When major global players frequently revise trade rules, the entire structure of global flows can shift rapidly, requiring continuous monitoring and rapid strategic adaptation.
