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The US has accounted for roughly 97% of Brazil’s tallow exports in 2025, according to customs data. Exporters of the feedstock were hit hard by the new tariff.
Since the announcement, export trading of Brazilian tallow was halted, with market participants focused on mapping out strategies to avoid the tariff.
The US duty drawback mechanism – which allows companies to claim reimbursement of up to 99% of the tariff paid, provided that the finished product is exported – was a way to sidestep the duty, sources said.
In the week to Friday July 25, storage tanks at the Port of Santos resumed receiving tallow for export. Fastmarkets heard that at least three Brazilian companies sold cargoes for August delivery to the US, totaling up to 36,000 tonnes. Offers for September shipment have already been made, though “the negotiations will likely be drawn out,” one source said.
Market participants expect more clarity on the tariff scenario starting August 1, when the measure is set to take effect.
July shipments have already sailed or are being prepared to depart for the US, although their final destination was not clear. US domestic biofuel producers are hoping for a relaxation or reduction of the tariff, as many of these cargoes are expected to arrive in the second half of August.
A major obstacle preventing this alternative from becoming a long-term solution for Brazilian exporters – should the tariff remain in place – is how much time it takes to recover the money, which can be several months, according to sources.
In the short term, market participants consider this a temporary workaround for a limited number of Brazilian exporters – unless they manage to strike trade deals with companies already experienced in exporting SAF produced with foreign tallow to destinations such as Europe. Such companies are few, and they probably would not absorb current Brazilian volumes, the source said.
In any case, there is a consensus among US market participants that the US domestic biofuels market would still require imported feedstocks.
If the 36,000 tonnes sold for August are destined to be exported for SAF production, biofuels producers serving the US domestic market would still need to source volumes from other suppliers.
In the past three months, Brazil has exported an average of 51,000 tonnes per month of tallow to the US. In June, monthly exports to the country hit an all-time high of 71,650 tonnes, according to the latest official data from Brazilian customs.
The announcement of the tariff triggered a wave of speculation and a rush for alternatives. Last week, members of Brazil’s rendering sector held meetings with Uruguayan diplomatic and trade officials, including “20 of the country’s largest beef tallow exporters,” another source close to the sector said.
Although Uruguay lacks the capacity to absorb Brazil’s tallow volumes, the country is well positioned in the export market and already serves as a route for tallow shipments from Argentina and Paraguay.
Argentina was also approached as a possible alternative, but the pressure from Brazilian supply “would collapse the domestic market,” a third source said.
Market participants rejected rumors of the possibility that the Brazilian tallow could be reclassified as Argentinian or Uruguayan and then shipped to the US without the 50% tariff.
Trump said during the announcement that transshipped goods attempting to circumvent the 50% tariff would be subject to an even higher rate.
“Basically, this would be the same as committing fraud,” a fourth source said.
While some sources believed Brazilian tallow would remain in the domestic market – due to both the new tariffs and the exclusion of imported feedstocks from the US 45Z tax credit program starting in 2026 – others viewed the opening of new markets as a natural outcome.
Europe emerged as the most likely destination, according to several sources.
The main barrier would be bureaucratic certification requirements, but limited economic viability and weaker demand compared with the US also weigh against the option, at least in the short term, sources said.
“Certification and export costs are extremely high and undermine the competitiveness of our product. Exporting to Europe does make sense, but if it happens, it will be more due to pressure from the Brazilian side than actual demand from Europe,” a source familiar with certification procedures said.
Between 2022 and 2035, European demand for properly certified beef tallow for SAF production is expected to grow by 250%, which could potentially shift the market landscape, according to the source.
“For now, many companies prefer to sell domestically rather than earn slightly more and deal with all the extra work [of certification],” the source added.
Beyond the EU, other international markets do not appear to be viable.
“Even when there’s strong alignment between countries, developing a new market takes at least 40 days. On top of that, there are too many unpredictable and challenging variables,” the source said.
Right after Trump announced the tariffs, rumors circulated that vessels en route to the US were being redirected to Southeast Asia. But sources familiar with the region said Brazilian tallow is already uncompetitive there in terms of costs and product quality.
In the medium term, with changes to the 45Z banning US foreign feedstocks from the credits, Australia is expected to become a stronger supplier of animal fats in Asia and likely flood that market with a surplus of the feedstock, since it would not consume its current US-bound volumes domestically, sources said.
Understanding the dynamics of tallow pricing is essential for market players in the biofuel industry and it can be a game changer when it comes to determining the competitiveness and affordability of biofuel costs. Fastmarkets Bleachable Fancy Tallow prices are used by procurement managers and traders as benchmark references for negotiating biofuel contracts.