The latest escalation in the US-China trade war sees an unlikely pair—used cooking oil and soybeans—become central bargaining chips. This in-depth guide explains how these seemingly common commodities are now at the heart of geopolitical tensions, impacting everything from renewable energy to global food security, and what their roles reveal about the ongoing economic rivalry between the world’s two largest economies.
The economic friction between the United States and China, the world’s two largest economies, has consistently simmered, periodically boiling over into outright trade disputes. While tariffs on electric vehicles and semiconductors often dominate headlines, the latest front in this ongoing battle has emerged in the less expected realms of used cooking oil (UCO) and soybeans. These agricultural commodities, seemingly mundane, carry significant weight in renewable energy initiatives, national food security, and the livelihoods of countless farmers, making them powerful leverage in a complex geopolitical chess match.
President Joe Biden is preparing a new wave of tariffs against China, and concurrently, a prominent US soybean trade group is advocating for higher levies on Chinese UCO. This move underscores the intricate connections between agriculture, energy policy, and international trade, as both nations grapple with domestic economic priorities and global strategic interests.
A New Front in an Old Conflict: The Current Escalation
The current tensions are a continuation of a trade saga that intensified under former President Donald Trump, who initially imposed tariffs on a wide range of Chinese goods. While a “Phase 1” trade deal was reached in January 2020, Beijing did not significantly reduce or waive tariffs on many US commodities, including crude oil, propane, and LNG, as documented by Reuters. The 2024 presidential race now looms large, with President Biden aiming to differentiate his approach to cracking down on China from his predecessor, even as the two nations remain at odds over a slew of issues, from espionage to Taiwan.
Amid this backdrop, the recent actions and threats highlight the strategic importance of specific commodities. Donald Trump, for instance, used his Truth Social platform to declare China’s refusal to buy US soybeans an “Economically Hostile Act” and threatened retaliation involving cooking oil, as reported by Truth Social. This rhetorical escalation, coupled with actual tariff adjustments, signals a deepening of protective trade measures from both sides.
The Unexpected Commodity: Used Cooking Oil (UCO)
The Rise of UCO in US Biofuels
Used cooking oil is not just kitchen waste; it’s a valuable raw material for producing renewable diesel and sustainable aviation fuel (SAF). The US, in its push for a green energy transition, has offered significant tax credits and incentives for lower-carbon fuels, particularly through the Inflation Reduction Act of 2022. This policy shift transformed the US from a net exporter of UCO to a net importer by 2022, with China quickly becoming the top supplier.
The demand for UCO as a biofuel feedstock created a burgeoning market. China’s exports to the US of processed animal and vegetable fats and oils—a category that includes UCO—surged, reaching $201 million in the first three months of 2024, compared to $770 million for the entire year of 2023, according to Chinese customs figures compiled by Bloomberg. This dramatic increase followed a period where US imports of UCO more than tripled in 2023 from the previous year, with over half originating from China, as detailed by the US International Trade Commission.
Concerns and Tariffs
This “flood” of Chinese UCO has ignited strong objections from US soybean processors, represented by the National Oilseed Processors Association (NOPA). These groups, including giants like Cargill Inc., Bunge Global SA, and Archer-Daniels-Midland Co., argue that the inexpensive imports are undercutting demand for US crop-based ingredients used in renewable fuels. NOPA CEO Kailee Tkacz Buller stated that association members support higher levies on Chinese UCO, on par with tariffs on other clean energy sources like electric vehicles, to “level the playing field,” a sentiment echoed in a memo sent to members, as reported by Bloomberg.
The concern is not merely competitive. There is “widespread, unconfirmed speculation” that some imported UCO from Asia may be “not authentic” and could be mixed with fresh vegetable oils, such as palm oil. If true, this could distort commodity values and potentially undermine US biofuel laws designed to promote genuinely sustainable fuels, as noted in the Bloomberg report.
Shifting Trade Winds
In response to mounting pressures, the landscape for Chinese UCO imports into the US is already changing. The Biden administration moved in January 2025 to exclude fuels made from foreign-sourced supplies from tax credits, according to Bloomberg. Former President Trump’s tariffs, which had climbed to 145% on Chinese imports before settling at 30%, also played a role in pushing China to seek other markets, as reported by Reuters. Furthermore, China itself terminated export tax rebates for UCO in December 2024. Consequently, Chinese UCO exports to the US had already dropped by 43% in the first seven months of 2025 compared to the same period last year, according to Bloomberg.
This pre-existing decline in UCO sales may reduce its effectiveness as a bargaining chip for the US, even as Trump highlights it as a potential retaliatory measure. The situation reflects a dynamic and complex trade environment where policy shifts and market reactions are constantly influencing economic leverage.
The Enduring Agricultural Battleground: Soybeans
Historical Significance and Trump’s Stance
While UCO is a newer point of contention, soybeans have long been a flashpoint in US-China trade relations. China was historically the largest buyer of American soybeans, accounting for over 40% of total US sales in typical years. However, this changed dramatically after Trump’s initial tariffs, leading the Chinese government to shift its soybean purchases to countries like Argentina and Brazil. As a result, US soybean sales to China fell to virtually zero during periods of peak tension.
The economic impact on American farmers has been substantial. In 2024, US soybean imports from China totaled $12.6 billion, making China’s de facto ban a major blow, as reported by The New York Times. Trump’s recent public statements underscore the perceived economic hostility of these actions. “I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act,” he stated on Truth Social.
Impact on US Farmers
The trade imbroglio disproportionately affects US growers of soy and other crops used for renewable diesel, who stand to lose the most. This creates a potential divide between agricultural producers and some biofuel companies that profit from importing cheaper UCO from China. The decreased demand for US soybeans impacts market prices and farmer incomes, complicating agricultural planning and investment decisions across the country.
Broader Implications: Food Security and Global Trade
The US-China trade friction over UCO and soybeans must be understood within larger global contexts, particularly those of food security and shifting trade dynamics. Both nations are increasingly prioritizing self-reliance in critical sectors, leading to protectionist policies that can have ripple effects worldwide.
China’s Drive for Self-Sufficiency
China, facing the challenge of feeding nearly 20% of the global population with less than 9% of its arable land and 6% of its water resources, has made food security a paramount national priority. President Xi Jinping has set ambitious targets for the country to become an “agriculture power” by mid-century, aiming for 92% self-sufficiency in staple grains and beans by 2033, up from 84% in 2021-2023. These goals include drastically reducing corn imports by 75% and soybean imports by 21% over the next decade, as detailed in a Reuters report.
However, experts caution that these targets will be exceedingly difficult to meet due to limited arable land, degraded soil, water scarcity, and the predominance of small farms. While China is investing heavily in agricultural technology, genetically modified crops, and land expansion, analysts like Carl Pray, an agriculture professor at Rutgers University, argue that achieving soybean import reduction targets is unrealistic, primarily due to insufficient land to replace foreign supplies of high-oil producing varieties for cooking oil.
Lessons from Past Trade Wars and Global Crises
The current trade skirmishes echo past global food crises, such as those in 2007-2008, where export restrictions exacerbated price spikes and led to deeper distress in food-insecure regions. As highlighted by the G20, there is a critical need to avoid export restrictions inconsistent with WTO rules, yet many nations, including G20 members, have recently implemented such barriers in response to global disruptions like the Russia-Ukraine conflict. This situation underscores the fragility of global supply chains and the importance of multilateral frameworks to manage future shortages, as discussed by experts at the Center for Strategic and International Studies (CSIS).
The Path Forward: Navigating Complex Trade Relations
The trade dispute over UCO and soybeans is a microcosm of the broader US-China economic rivalry. Both nations are using trade measures as leverage, with recent actions from China, such as new export controls on rare earth products, prompting strong reactions from the US. Jamieson Greer, US Trade Representative, told CNBC that new 100% tariffs on China depend on Beijing’s next move, emphasizing that China had chosen to escalate by imposing global export controls. China, in turn, accused the US of “double standards” and “abusing export control,” according to its Commerce Ministry.
As negotiations continue, the strategic value of commodities like UCO and soybeans will remain high. The stakes are not just economic but also political, tied to national security, climate goals, and the global balance of power. Understanding these seemingly small trade disputes is key to comprehending the larger trajectory of US-China relations and their profound impact on the world.
