01Details of the tariff
The Office of the US Trade Representative (USTR) has imposed a new Section 301 tariff on imports from 60 countries, affecting biofuel feedstocks including tallow and used cooking oil (UCO), as well as finished biofuels including biodiesel and ethanol.
The tariff was implemented following an investigation that began in March into whether affected countries had taken adequate measures to prevent the production of goods made with forced labour.
"The rollover of the tariff justification from Section 122 to 301 was expected based on the 150-day lifespan of the Section 122 measures," said Advanced Biofuels Canada president Fred Ghatala.
02Who is affected and who is exempt
The tariff does not apply uniformly. Rates, exemptions, and product coverage vary by region, and the details matter for feedstock sourcing decisions.
Biofuel feedstocks and biofuels originating from Mexico and Canada are exempt under the US-Mexico-Canada Agreement (USMCA). Canadian energy, biofuels, and feedstocks remain unaffected. However, as Ghatala noted, "the escalation of a trade war between two deeply integrated economies remains unfortunate and introduces risk into a sector which already has its fair share of political risk."
Brazil faces the sharpest impact. The new 12.5% forced-labour tariff is layered on top of a separate 25% Section 301 tariff on Brazilian goods that took effect on July 22, bringing the total duty on Brazilian ethanol and beef tallow to 37.5%.
The US has been importing approximately 30,000 to 35,000 metric tons of Brazilian tallow per month, the majority of which is destined for renewable diesel production. At a combined 37.5% tariff, that volume is expected to redirect significantly towards European and Asian buyers who face no equivalent burden.
Brazilian ethanol imports were already under pressure. During 2025, imports fell 37% relative to 2024 levels under a previous round of tariffs. The new tariff structure formalises and deepens that barrier. Brazil has announced it will contest the tariffs at the World Trade Organisation.
Palm oil imported from Indonesia, Malaysia, and other Asian and American countries is exempt from the tariff according to USTR's Federal Register notice. Sources indicate that palm oil's exclusion is already generating additional interest from US feedstock buyers looking for alternatives to tariff-affected supply.
However, used cooking oil from China is subject to a 12.5% rate. Chinese UCO has been a growing import category for US renewable fuel producers, and the tariff adds a new cost layer to that supply chain.
Rapeseed oil and biodiesel imported from EU member states face a 10% duty. Biodiesel and rapeseed oil from the United Kingdom are also subject to 10%. For US producers who source European feedstocks or import finished biodiesel, this represents a new cost that did not exist under the previous Section 122 regime at the same level of permanence.
03What producers should be doing now
Review feedstock sourcing by origin.
The impact varies significantly by country and product. Palm oil from Southeast Asia is exempt; UCO from China is not. Brazilian tallow faces 37.5%; Canadian canola faces nothing. Producers should identify where their exposure sits and reassess forward purchasing accordingly.
Factor tariffs into credit economics.
For producers generating RINs, LCFS credits, or claiming the 45Z Clean Fuel Production Credit, feedstock cost is a direct input into per-gallon margins. The tariff changes the math on which feedstock-pathway combinations remain viable.
Monitor for further escalation.
The shift from Section 122 to Section 301 authority suggests this is not a temporary measure. Additional tariff actions could follow.
