Markets
Trade tensions between the U.S. and China fuel a new push for tariffs.
May
In the midst of escalating trade tensions between the United States and China, a significant move is underway within the US soybean industry. As President Joe Biden prepares to implement additional tariffs against China, a prominent US soybean commerce association is lobbying for heightened tariffs specifically targeting Chinese recycled cooking oil. Their argument? That this imported oil is undercutting American crops crucial for biofuel production.
Advocacy and Concerns
The National Oilseed Processors Association (NOPA) represents major US soybean processors, including Cargill Inc., Bunge Global SA, and Archer-Daniels-Midland Co. NOPA is advocating for tariffs exceeding the current 15.5% rate, as revealed in a Bloomberg report citing internal communication.
NOPA’s CEO, Kailee Tkacz Buller, mentioned the memo was triggered by rumors of extra tariffs on recycled cooking oil. Buller stressed the necessity of higher tariffs to ensure fairness, drawing parallels with tariffs on alternative energy sources.
Industry Concerns and Speculation
Soybean crushers worry that imported recycled cooking oil from China dampens US demand for crop-derived components crucial for renewable diesel and sustainable aviation fuel. Additionally, unconfirmed speculation suggests that Asian recycled oil lacks authenticity, potentially blending with fresh vegetable oils like palm, distorting commodity valuations and undermining US biofuel regulations.
Concerns over imported Chinese recycled oil threaten US demand for crucial renewable fuel components, according to Bloomberg Subscription.
Tariff Updates Awaited
While soy oil values have declined this year, futures in Chicago have seen an uptick in anticipation of tariff updates. President Biden is expected to announce an increase in certain tariffs initially imposed under former President Donald Trump, though it remains uncertain if recycled cooking oil will be included in this announcement. The White House officials declined to comment on the matter.
Impact on US Agriculture
The surge in recycled cooking oil imports poses a significant threat to American soy and crop farmers, especially those in renewable diesel. This escalating trade conflict forecasts tension and a nuanced dynamic between farming groups and biofuel producers profiting from Chinese imports.
Surge in Imports
In 2023, US imports of recycled cooking oil tripled, over half from China, per the US International Trade Commission. This surge exacerbates trade tensions and slashes profits for processors, leading some to downsize. Additionally, increased imports jeopardize efforts to enhance US crushing capacity, especially amid climate-focused incentives.
Next Steps
NOPA intends to address the tariff issue with its members this week and explore alternative options to mitigate the challenges posed by imported recycled cooking oil.
Amidst the evolving trade dynamics, tariff disputes broaden, affecting both conventional and renewable energy sectors. The resolution will echo through biofuel industries, shaping future US-China trade ties. These negotiations define paths for economic collaboration or contention between the superpowers.
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