Analysis: US renderers push for VAT relief on exports to Mexico

The North American Renderers Association (NARA) has spent the past few months advocating for the US government to address Mexico’s “unfair” application of a value-added tax (VAT) on imported US feed ingredients.

According to the trade group, the country is applying a 16% VAT to US-origin rendered animal protein meals and other feed inputs, which would violate the United States–Mexico–Canada Agreement (USMCA).

Mutual benefit

Entered into force in 2020, the agreement aims to be a “mutually beneficial win” for the 3 North American countries and create “more balanced, reciprocal trade” between them, according to the Office of the United States Trade Representative (USTR).

In its Chapter 2, the text establishes that “except as otherwise provided […], the rate of customs duty on originating goods is designated with ‘0,’ and these goods shall be duty-free on the date of entry into force of this Agreement.”

As feed ingredients and rendered animal protein are not listed as exceptions, “the USMCA’s market-access provisions guarantee these products duty-free entry,” NARA states.

State of negotiations

For NARA, the VAT imposition puts US renderers and their supply-chain partners at a competitive disadvantage, as their partner association in Mexico reports that the tax authority is not applying this tax to domestically produced feed ingredients.

“Mexican importers of feed ingredients are receiving demand letters from the federal tax authority retroactively assessing a 16% VAT on imported feed ingredients such as meat and bone meal going back as long as 5 years,” Dana Downing, Vice President of International Programs at NARA, tells GlobalPETS.

Downing refers to the VAT as a “contagion that is spreading from rendered animal by- products to other agricultural commodities.”

Market insights

The rendering process converts inedible animal by-products from livestock, poultry, and meat processing into usable materials, such as oil, fat, and protein products. In pet food, meat and bone meal (MBM) is the most widely used rendered ingredient.

The National Council of Animal Feed and Nutrition Manufacturers (CONAFAB) is Mexico’s leading feed industry association. Speaking to GlobalPETS, its Executive Director, Javier León Romero, says that “pet food production in Mexico requires approximately 170,000 to 200,000 tons of animal-based meal each year.”

This includes MBM primarily, although they can also be derived from offal, blood, feathers and other by-products, he explains. Mexican supply is roughly 70% domestic and 30% imported, with the United States as the source of over 90%, according to Romero.

Top export market

US renderers export approximately $100 million (€85M) to Mexico, making it one of their top three export markets, and there are 88 rendering plants approved for export to the country.

“Their customers have already warned that they will need to stop importing from the US if the VAT exemption is not restored,” warns NARA’s Dana Downing.

Advocacy work

NARA has been actively participating in public hearings at USTR to address the issue. According to Downing, trade negotiators have been working through a number of so-called trade irritants (government policies or practices that create trade challenges) between the US and Mexico.

“At the urging of NARA and our member companies, key congressional leaders have weighed in on this issue with Ambassador Greer [Jamieson Greer, the US Trade Representative] to ask him to intervene and insist that our VAT exemption be restored,” she says.

The industry is optimistic that the problem will be resolved ahead of the joint review of the United States–Mexico–Canada Agreement (USMCA), scheduled for 1 July 2026.