Today, July 22, 2026, a tough new reality sets in for the North American biofuels industry.

The United States has enacted a 25% tariff on a vast array of imports from Brazil under Section 301, targeting what Washington's identified as unfair trade practices. While high-profile exceptions were made to protect major consumer goods (such as exempting raw beef and coffee so consumers don't face immediate supermarket price hikes), the crosshairs have landed directly on industrial processing inputs.

For the US Sustainable Aviation Fuel (SAF) sector, the collateral damage is swift: Brazilian tallow, a critical feedstock for Hydroprocessed Esters and Fatty Acids (HEFA) production, is hit with the full 25% tariff.

Compounding this North American trade shock, President Donald Trump signed executive proclamations under Section 338 of the Tariff Act of 1930, threatening a 50% tariff on a wide range of Canadian exports including motor vehicles, dairy, and consumer goods to take effect in 30 days. While vital energy, potash, canola, and CUSMA-compliant biofuels remain exempted from this initial wave, the looming threat leaves Canadian agricultural and clean fuel producers in a state of intense anxiety. Operating in the shadow of a 30-day tariff clock highlights just how fragile cross-border trade really is.

The HEFA Squeeze and the Threat to FIDs
Before diving into the numbers, it's important to say that we want all SAF developers to be successful. The global aviation sector needs every single drop of clean fuel it can get to reach net zero, and the team at SUSTAERO stands in full support of developers across all technological pathways.

That's why it's so heartbreaking to see what's happening to HEFA developers right now. Bringing a major clean energy project across the finish line is already an uphill battle. Having the rug pulled out from under your feedstock supply line right when you're trying to reach a Final Investment Decision (FID) is a nightmare scenario. For many promising HEFA facilities, this sudden surge in feedstock costs won't just squeeze operating margins; it's likely to delay or outright prevent a successful FID as lenders and equity partners re-evaluate project economics. The industry can't afford to lose these projects, and our hearts go out to the development teams currently scrambling to re-work their financial models.

The Real-World Math of the Squeeze
While Brazilian imports represent roughly 5% to 8% of total U.S. industrial fat consumption, they account for roughly 40% of all imported tallow (the exact low-carbon-intensity volume that U.S. HEFA refiners rely on at the margin).

On first glance, a 25% tariff on that import tranche might look like a manageable cost bump. However, commodity markets rarely behave in a vacuum. In physical commodity markets, losing 5% of your total supply doesn't result in a gentle 5% price rise; it forces refiners into an aggressive bidding war for remaining domestic fats, driving spot prices up non-linearly across the entire sector due to two compounding factors:

The Squeeze on Domestic Tallow: As 40% of the U.S. imported supply becomes heavily taxed or diverted, U.S. buyers will instantly try to substitute it with domestic tallow. This sudden, massive rush of demand onto the local domestic supply pool's going to drive domestic spot prices upward.
The "Tariff Umbrella" Effect: Domestic renderers will likely raise their own pricing to sit just below the new, tariff-inflated cost of Brazilian imports. Consequently, the average cost of all low-CI tallow in the U.S. will rise well beyond the basic tariff math as local suppliers capitalize on the lack of cheap foreign competition.

The Global Re-Routing: Starving the US Market
A common macroeconomic assumption is that when a major tariff is erected, the exporting country will simply lower its prices to stay competitive. In the global biofuels market, that's a dangerous miscalculation.

Brazil isn't going to sit on its surplus tallow or slash its margins. Instead, Brazilian exporters are already pivoting to alternative, high-premium markets, most notably the European Union.

Historically, entering the European market's been difficult for South American animal fats due to strict European Commission (EC) veterinary certifications and categorization rules. However, anticipating trade friction, more than ten major Brazilian rendering plants have fast-tracked and secured EC certification.

As Brazilian tallow flows into Europe's massive, mandate-driven HEFA market, that global volume is permanently locked up. This alternative pathway completely starves the US market of a critical supply cushion. US producers are left stranded, unable to find untariffed global supply streams to relieve the domestic price pressure.

Why Tallow? (The HEFA Feedstock Equation)
While used cooking oil (UCO) and agricultural vegetable oils represent the bulk of overall US bio-feedstocks, animal tallow is uniquely vital for premium HEFA SAF production.

The Carbon Intensity (CI) Advantage: Under programs like California's Low Carbon Fuel Standard (LCFS) and the federal 45Z Clean Fuel Production Credit, biofuels are subsidized based on how clean they are. Soybean oil has a relatively high CI score because of the carbon footprint of planting, fertilizing, and harvesting crops. Tallow, as a waste byproduct, has an exceptionally low CI score.
The Premium Demand: Because of this CI difference, low-CI waste fats like tallow are highly prized by SAF refiners to maximize their tax credits. While animal fats make up roughly 10% to 15% of the broader US biomass-based diesel feedstock pool, they represent a much higher proportion of the specific, high-value, low-CI feedstocks that keep SAF production economically viable.

Caught in the Crossfire: Diamond Green Diesel (DGD)
This tariff isn't just a theoretical threat; it directly impacts some of the largest players in the industry. The most prominent example is Diamond Green Diesel (DGD), a massive joint venture between Texas-based refiner Valero Energy and global rendering giant Darling Ingredients.

The Brazilian Pipeline: In 2022, Darling Ingredients acquired Fasa Group, Brazil's largest independent rendering company, specifically to secure a direct, proprietary pipeline of Brazilian beef tallow to feed DGD's North American refineries.
The Squeeze: For years, DGD's relied on importing tens of thousands of tonnes of beef tallow from South America directly to its Port Arthur, Texas facility. Under today's mandate, DGD's proprietary supply line is hit with a 25% financial penalty.
The ESG Double-Whammy: To make matters worse, recent investigative reports have linked Fasa's supply chain to slaughterhouses operating on illegally deforested land in the Amazon. DGD's now facing a punishing financial penalty on a supply chain that's already a public relations liability.

The Airbus Report: Canada's Dangerous Import Reliance
This trade turmoil coincides directly with a stark warning issued in a new report by Airbus and Air Canada . The analysis warns that without an immediate, aggressive scale-up of domestic production capacity, Canada's on track to import over 65% of its liquid biofuels by 2030 to meet federally mandated targets.

Relying on foreign refineries (predominantly US HEFA producers currently being squeezed by rising feedstock costs) leaves Canadian aviation uniquely exposed to geopolitical shocks and tariff volatility. While Canada produces world-class agricultural feedstocks like canola, its lack of domestic processing forces the country to export raw seed only to re-import finished, higher-cost biofuels from abroad.

The Airbus study notes that building a self-reliant domestic SAF ecosystem could add $32 billion to Canadian GDP and support 140,000 jobs by 2040, transforming what's currently a severe trade vulnerability into a major industrial asset.

The Contrast: SUSTAERO’s Localized, Zero-Tariff Architecture
This chaotic, reactionary scramble is exactly why we built SUSTAERO. We recognized early on that swapping foreign fossil fuels for foreign agricultural waste isn't a true transition; it's just trading one geopolitical bottleneck for another.

We bypassed this trap entirely by anchoring our feedstock strategy in the vast, stable, and highly regulated Canadian forestry sector.

Un-tariffed Geography: Our feedstock consists of local, regional wood waste and cellulosic biomass. Unlike beef tallow, which is bound to complex global agricultural markets and highly politicized trade disputes, Canadian forestry residue is localized and exceptionally secure. Put simply, you can't place a foreign import tariff on a domestic, regional forest floor. Our supply chain's completely immune to the whims of international trade policy.
Absolute Simplicity of Logistics: Importing tallow from South America requires a multi-stage logistics chain: regional collection, processing, ocean transport through vulnerable maritime chokepoints, port customs clearances, and heavy inland trucking. Every single node is a point of potential failure. At our facility, our logistics are exceptionally simple. We source wood waste directly from local mill and forest operations, transporting it via short, regional, land-based routes. The supply chain begins and ends within a highly predictable, stable geographical envelope that extends no more than 150km from our site.
Complete Pricing Predictability: By decoupling our feedstock from global agricultural commodities (such as soy, tallow, or palm oil) and foreign fossil exploration, we provide our airline partners with a pure macroeconomic hedge. We don't have to watch the outcome of trade disputes, Section 301 investigations, or retaliatory tariff wars to know what our fuel's going to cost to produce tomorrow.

Security is the Immediate Currency
The 25% tariff on Brazilian tallow and the looming 30-day tariff threats against Canada are stark reminders that the green transition can't succeed without energy security. If a sustainable fuel relies on a supply chain that can be disrupted overnight by a single political pen stroke, it isn't truly sustainable.

Predictability is the most valuable asset an infrastructure project can deliver. As the global aviation sector navigates a turbulent geopolitical landscape, the winners won't just be the ones who can produce green molecules; they'll be the ones who built the structures to deliver them, safely and simply, no matter what happens on the global stage.

Join Us in Scaling Domestic SAF Capacity
Reaching net-zero aviation requires resilient, localized supply chains that can withstand geopolitical shocks. SUSTAERO is proud to advance a secure, Canadian-built pathway to keep the aviation sector moving forward.

Visit SUSTAERO.ca to explore our technology platform and strategic partnerships.

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