A sweeping court ruling Wednesday against President Donald Trump's emergency tariffs could make foreign biofuel feedstock imports, which have wavered this year, more attractive.
A three-judge panel on the US Court of International Trade struck down tariffs Trump set under a little-used economic emergency law, including bilateral tariffs on China, "reciprocal" tariffs on nearly every country, and levies on some Canadian and Mexican products to combat drug trafficking. The tariffs upended global trade flows, including by making recently fast-rising inputs for renewable diesel production like Chinese used cooking oil and Brazilian beef tallow more expensive.
The trade court gave the government ten days to comply, though the Trump administration has asked for a pause on the ruling and pledged to appeal. Tariffs enacted under other laws, including sectoral tariffs on steel and aluminum imports, would remain intact. Trump could also still eye different authorities to revive his broader tariffs, which he sees as a crucial negotiating tool to counter what he has called unfair trade practices abroad.
But the court's decision, if it holds, would still be a significant barrier to Trump's efforts to rewire global trade. The US could even be required to offer refunds of emergency tariffs that have already been paid. US levies on Chinese products imposed under the emergency law at one point reached 145pc, raising fears of a protracted trade war and global economic slowdown.
Fewer options for foreign biofuel feedstocks because of tariffs also helped increase the price of domestic alternatives like US soybean oil, where futures were down 2pc in early trading Thursday, and compounded the pain for refiners struggling with major changes to biofuel tax credits. Biomass-based diesel production in the US has been down sharply this year because of all the policy shifts.
Formerly fast-rising flow
Before this year, renewable diesel and sustainable aviation fuel producers along the US Gulf and west coasts were expanding capacity and increasingly looking abroad for inputs. Waste feedstocks like used cooking oil and beef tallow are considered lower-carbon feedstocks than crops and thus generally fetch larger government subsidies — even if sourced from abroad. The US imported nearly 5.4bn lbs of used cooking oil in 2024, a record-high and with more than half that total coming from China.
But Trump's tariffs sharply reduced the incentive to import foreign feedstocks. Duties on Chinese products have varied significantly but were last at 30pc before the court ruling, adding to existing 15.5pc charges on Chinese used cooking oil. Reciprocal tariffs of 10pc on nearly every country added new costs to Australian and Brazilian tallow too.
US import data is only available through March, before Trump imposed his most far-reaching tariffs as part of an April "Liberation Day" announcement. But global feedstock traders more recently have said that the tariffs — and the unpredictability of future policy — have made global inputs riskier. While some tariffs are eligible for duty drawbacks, creating options for biofuel producers targeting foreign markets, US imports of Chinese used cooking oil were down 27pc in the first quarter compared to the same period last year.
Other barriers remain
Even if the court ruling holds, other policies could deter US biorefineries from relying too heavily on foreign feedstocks. For one, current government guidance around a new US clean fuel tax credit prevents refiners from claiming any subsidy for road fuels derived from foreign used cooking oil. Those rules also pin the carbon intensity of canola-based fuels as too high to claim any subsidy, choking off interest in Canadian canola oil imports that had been rising significantly before this year.
And farm groups, worried that foreign feedstocks are hurting demand for US crops, are lobbying regulators and lawmakers for more severe limits. A party-line budget bill that passed the House this month would restrict clean fuel tax credit eligibility to fuels derived from North American feedstocks, a win for US oilseed crushers but a major blow to refiners reliant on foreign tallow.
While that bill still needs Senate approval and changes would only kick in next year, the proposal is a clear signal from Republicans that refiners should start looking closer to home for renewable diesel inputs.
