The European Parliament is expected to approve legislation implementing a trade deal with the US on 16 June, setting zero tariffs on a wide range of US goods entering the EU, including ammonia. But the deal is unlikely to encourage an influx of duty-free ammonia imports from the US while costs associated with the EU's carbon border adjustment mechanism (CBAM) remain prohibitive.
US ammonia imports to the bloc were previously subject to a 5.5pc duty, until the EU temporarily suspended standard import tariffs across most fertilizers for one year from 30 May. Tariff-free ammonia imports for the year were capped at 300,000t for ammonia, a quota that applies only to origins previously subject to duties. The tariff removal equates to savings of around $50/t at current delivered prices to Europe, which were assessed at $900/t cfr duty-paid/free on 3 June, and at $850/t cfr duty-unpaid on the same day.
The EU-US trade deal is expected to provide for retroactive application from 1 August 2025 and will run until 31 December 2029, entitling 280,000t of ammonia imported since 1 August 2025 to be eligible for rebates.
But savings of $50/t do not cover the additional costs of CBAM for US cargoes. The EU assigned the US a country default carbon-intensity benchmark of 3.44t CO2 equivalent (CO2e)/t ammonia. The default value equates to additional import costs of $168/t against the Argus-assessed second-quarter rolling average of the EU emissions trading system (ETS) prompt price as of 3 June at $86.14/t CO2.
CBAM declarants may be able to use actual emissions data from plants with a year of past operating data, as opposed to the country default values, which could result in substantially lower costs. Some ammonia units, such as CF's Donaldsonville, are widely expected to get emission verification by early 2027. Newer plants with an operating history of less than a year, including both the Gulf Coast Ammonia 1.3mn t/yr plant and Woodside's 1.1mn t/yr Beaumont plant, are less likely to secure verification next year.
EU importers are not willing to take the risk of having to pay the high CBAM costs for importing US tonnes, which has been demonstrated by the absence of any shipments from either of the two new plants to Europe this year. Duty removals are not expected to reverse this trend. Meanwhile, the EU has imported just under 90,000t from Donaldsonville so far this year, 38,500t of which loaded in December.
Origins with lower CBAM country default values such as Algeria and Egypt, two of Europe's top suppliers, are expected to encounter CBAM costs of around $53/t and $50/t, respectively, in the second quarter, Argus estimates. But both of these countries were already duty-free prior to the tariff suspension.
Neither the standard import tariff removal or the EU-US trade deal can therefore be expected to stimulate a large increase in US ammonia shipments to Europe, at least until individual plants are able to provide verified emission data. The full impact of the trade deal is therefore unlikely to be felt before next year.
EU officials expect member states to approve the legal texts for the EU-US deal swiftly, before the end of June. The deal was initially agreed with US president Donald Trump in July last year but legislative approval was stalled earlier this year after Trump threatened to annex Greenland.
