EU Suspends Nitrogen Fertilizer Import Tariffs for One Year

The Council of the European Union adopted on May 22, 2026 a regulation suspending customs tariffs on key nitrogen-based fertilizers and their raw material inputs for a period of twelve months. The measure covers urea, ammonia and other nitrogen mixtures essential for European agricultural production, and entered into force the day after publication in the Official Journal of the European Union.

The decision comes as European farmers face severe pressure from rising fertilizer costs triggered by the closure of the Strait of Hormuz in late February 2026. The maritime chokepoint normally handles approximately 30 percent of global fertilizer trade and is the main export route for major Gulf producers including Qatar, Saudi Arabia and Oman. The disruption pushed urea prices from around 482 dollars per tonne in late February to more than 720 dollars per tonne by mid-March 2026, an increase of roughly 50 percent in just a few weeks. Anhydrous ammonia later breached the 900 dollars per tonne mark on several spot markets.

According to the European Commission, the tariff suspension is expected to save EU farmers and the fertilizer industry around 60 million euros in import duties over the next twelve months. The measure aims to lower production costs and improve the resilience of European food supply chains at a time when many member states are reporting tight inventories ahead of the summer growing season.

Cyprus, which currently holds the rotating presidency of the Council, framed the decision as part of a broader strategy to diversify supply sources and accelerate the phase-out of Russian and Belarusian fertilizers from the EU market. Makis Keravnos, the Cypriot Finance Minister, said the move would give European farmers better access to affordable and reliable supplies while supporting consumers facing food price inflation.

A central feature of the regulation is the explicit exclusion of products originating in Russia and Belarus. Brussels justified the exclusion by pointing to Russia's ongoing war against Ukraine and Belarus's continued support for Moscow. The decision builds on additional duties imposed on Russian and Belarusian fertilizer imports in 2025 as part of the EU's wider sanctions framework.

To prevent the suspension from undermining European fertilizer producers, the regulation includes a quantitative cap. Duty-free imports under the new measure are limited to a quota equal to the total Most Favoured Nation imports in 2024, plus 20 percent of the volumes imported from Russia and Belarus during the same year. Products already entering the EU duty-free under preferential trade agreements are not affected by the suspension.

The scale of the European fertilizer market underscores the importance of the measure. In 2024, the EU imported around 2 million tonnes of ammonia, 5.9 million tonnes of urea and 6.7 million tonnes of other nitrogen-based fertilizers and mixtures. These imports are critical for the production of cereals, oilseeds and other staple crops across the bloc.

Italy and France had been among the most vocal advocates for the tariff suspension, alongside calls for a temporary easing of the Carbon Border Adjustment Mechanism on fertilizer imports. Agricultural lobby groups across several member states argued that without intervention, the cost shock from the Hormuz disruption would translate into reduced fertilizer use, lower yields and ultimately higher food prices in late 2026 and 2027.

The Commission had initially responded earlier in May 2026 with a broader Fertiliser Action Plan focused on alternative solutions such as digestate, organic fertilizers and increased domestic capacity. However, pressure from the agricultural sector and from the European Parliament, which criticized the lack of immediate measures, pushed the Council to adopt the more direct relief of tariff suspension.

Globally, the fertilizer market remains under significant stress. The United Nations Food and Agriculture Organization warned in April 2026 that a prolonged blockade of the Strait of Hormuz could trigger a wider food crisis. The FAO estimated that 30 to 35 percent of global urea exports and 20 to 30 percent of ammonia exports normally transit through the strait. Fitch Ratings raised its 2026 ammonia and urea price expectations by approximately 25 percent due to uncertainty over the duration of the disruption.

India has reported the loss of around 800,000 tonnes of monthly urea production due to restricted natural gas supply, while ammonia imports have collapsed because the country sources roughly 80 percent of its needs from the Gulf region. China has tightened export controls to protect domestic stocks, and Russian shipments of key nutrients have declined. These compounding factors have left European buyers competing for limited spot cargoes from North Africa, Trinidad and the United States.

The European Commission will monitor fertilizer market developments throughout the next twelve months and may propose an extension or modification of the suspension if conditions warrant. With the Strait of Hormuz still effectively closed to Western-aligned shipping in late May 2026 and urea futures trading well above 680 dollars per tonne, analysts expect that pressure on European agricultural supply chains will persist into the 2027 planting season.