US enacts 10% tariff on Canadian biofuels, Canada weighs retaliatory tariff on biodiesel
The U.S. imposed a 10% tariff on Canadian biofuels, prompting potential retaliatory tariffs. Canada may target U.S. biodiesel, while China and Mexico have also announced countermeasures. Canada is the top importer of U.S. biodiesel and ethanol, making trade tensions critical for the biofuels industry. Farmers and industry leaders urge negotiations to protect agricultural exports.
The U.S. government on March 4 implemented new tariffs on a variety of goods from Canada, Mexico and China, including a 10% tariff on biofuels entering the U.S. from Canada. Future retaliatory tariffs could also impact U.S. biofuel exports.
The government of Canada on March 4 announced it would move forward with retaliatory tariffs. Biofuels are not yet on that list, but the Canadian government has indicated it will consider a tariff on U.S. biodiesel imports. The country included biodiesel and biodiesel blends containing less than 70% petroleum in a list of goods it will consider including in a second round of retaliatory tariffs. That list is subject to a 21-day public comment period.
China has also issued retaliatory tariffs on a variety of U.S. goods, and Mexico has signaled its intent to do so by next week.
Canada is a top U.S. trading partner for both ethanol and biodiesel, and Mexico was the top destination for U.S. distillers grains exports last year.
According to data published by the USDA, the U.S. exported more than 1.91 billion gallons of ethanol last year at a value of $4.31 billion. Exports to Canada accounted for 35% of that volume, with approximately 4% of exports destined for Mexico.
U.S. exports of distillers grains reached 12.22 million metric tons in 2024 at a value of $3.2 billion. Mexico and Canada accounted for 21% and 5% of that volume, respectively.
Canada also accounted for 88% of the 585,324.4 metric tons of biodiesel and biodiesel blends of B30 exported last year. The value of biodiesel exports to Canada was estimated at $743.77 million for the year.
Canada accounted for 25% of U.S. ethanol imports and 31% of U.S. biodiesel imports in 2024, at 32.16 million gallons and 430,526.5 metric tons, respectively. The value of those imports was $116.48 million and $563.78 million, respectively.
The U.S. and Mexico to not have any significant trade related to biodiesel, and the U.S. imported only nominal volumes of ethanol from the country in 2024.
The U.S. does not currently have any significant ethanol or biodiesel trade with China, but did export 331,394 metric tons of distillers grains to the country last year at a value of $79.91 million. That volume accounts for less than 3% of total U.S. distillers grains exports for 2024.
The USDA does not currently report trade data on renewable diesel or sustainable aviation fuel (SAF).
In addition to biofuels and coproducts, the emerging trade war could impact biofuel feedstocks, such as corn and soybeans.
“For years now, Canada and Mexico have been among the best trading partners for the U.S. renewable fuels industry,” said Geoff Cooper, president and CEO of the Renewable Fuels association. “Over a third of our ethanol exports went to Canada in 2024, putting it clearly on top. Mexico was likewise the No. 1 market for the ethanol industry’s top coproduct—distillers grains—taking in more that 20 percent of total exports. For 2024, the combined value of ethanol industry exports to these two countries is estimated at $2.5 billion. For this reason—and to secure a stronger continental economy overall that benefits all countries—we urge all parties to work together to maintain the fair and efficient flow throughout North America of lower-cost, lower-carbon ethanol and valuable high-protein feed for livestock and poultry.”
“In any trade war, U.S. farmers and agriculture are going to be targets for retaliation,” said Paul Winters, director of public affairs and federal communications at Clean Fuels Alliance America. “Canada had already targeted or threatened retaliatory tariffs on biodiesel and feedstocks like soybean oil, distillers corn oil, and canola. Competing countries know that biofuel production is essential to farm security.
“The low RFS volumes set for 2023-2025 have spurred an increase in exports of biodiesel and renewable diesel – with Canada as a primary destination,” Winters continued. “Setting timely, robust RFS volumes is increasingly critical.
“Farmers are facing a troubling economic landscape due to rising input costs and declining corn prices,” said Kenneth Hartman, Jr., president of the National Corn Growers Association. “We ask President Trump to quickly negotiate agreements with Mexico, Canada and China that will benefit American farmers while addressing issues important to the United States. We call on our trading partners to work with the president to resolve these issues so that that we can restore vital market access.”
“Farmers are frustrated,” said Calab Ragland, president of the American Soybean Association. “Tariffs are not something to take lightly and ‘have fun’ with. Not only do they hit our family businesses squarely in the wallet, but they rock a core tenet on which our trading relationships are built, and that is reliability. Being able to reliably supply a quality product to them consistently.”
To read more about Ethanol Industry & Bio Energy News, continue reading Agriinsite.com
Source : Ethanol Producer Magazine
