Flood of Chinese Used Cooking Oil Spurs Call to Boost US Tariffs

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(Bloomberg) — As President Joe Biden prepares a new wave of tariffs against China, a US soybean trade group is pushing for higher levies on Chinese used cooking oil that it says is undercutting American crops used for biofuels.

A group that represents the biggest US soybean processors, including Cargill Inc., Bunge Global SA and Archer-Daniels-Midland Co., wants the levies to be higher than the current 15.5% rate, according to a notice the National Oilseed Processors Association, or NOPA, sent to its members over the weekend that was seen by Bloomberg.

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NOPA Chief Executive Officer Kailee Tkacz Buller said the memo was sent in response to rumors of possible additional tariffs being applied on used cooking oil. NOPA members support a boost on par with other clean energy sources, such as electric vehicles and solar, to level the playing field, Buller said in an email. 

Soybean crushers worry a flood of used cooking oil imports from China is weakening demand for US crop-based ingredients that can be used to make renewable diesel and sustainable aviation fuel. There’s also widespread, unconfirmed speculation the used oil from Asia may not be authentic and instead is mixed with fresh vegetable oils, such as palm, potentially distorting commodity values and undermining US biofuel laws.

Read More: Suspicions of Fake China Cooking Oil Alarm US Biofuel Industry

Soy oil values are down so far this year, though futures in Chicago have seen an uptick in the last couple of trading days as commodities traders await tariff news. Biden on Tuesday is expected to unveil an increase in some tariffs first imposed under former President Donald Trump. It’s not known if the announcement will include used cooking oil. 

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White House officials declined to comment.  

US growers of soy and other crops used to make renewable diesel stand to lose the most from the trade imbroglio, according to agriculture traders. That sets the stage for possible tension between farm groups and biofuel producers who are making money importing used cooking oil from China.   

US imports of used cooking oil more than tripled in 2023 from a year earlier, with more than 50% coming from China, according to the US International Trade Commission. The surge is eroding profits for processors who crush whole soybeans to extract the oil, forcing some plants to slow down.

The increased imports also jeopardize plans to ramp up US crushing capacity amid a flurry of government incentives aimed at making lower-carbon fuels to help fight climate change. 

NOPA plans to discuss the tariff issue with members this week as well as look another possible options, according to the memo. 

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