Former U.S. President Donald Trump has reignited concerns about a full-blown trade war with China, threatening new tariffs and considering the termination of trade ties in sectors like cooking oil. This move, stemming from perceived economic hostilities, signals potential significant shifts in global supply chains and commodity markets, demanding close attention from investors.
The specter of an escalating trade war between the United States and China has once again emerged, with former President Donald Trump publicly contemplating an end to certain trade relationships, specifically mentioning cooking oil. This development, rooted in accusations of China’s “Economically Hostile Act” regarding soybean purchases, adds another layer of uncertainty to an already complex global economic landscape. For investors, understanding the nuances of these threats and their potential ripple effects is crucial for navigating future market volatility.
A Brewing Storm: Trump’s Latest Trade Ultimatum
On Tuesday, October 14, 2025, former President Donald Trump declared that Washington was “considering terminating some trade ties with China, including in relation to cooking oil.” This statement was made in response to what he termed China’s “purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers,” which he labeled an “Economically Hostile Act.” Trump asserted the U.S. could “easily produce Cooking Oil ourselves,” minimizing the need for Chinese imports, as reported by Reuters. China, the world’s largest buyer of soybeans, has indeed reduced its purchases from the U.S. recently, opting for sources like Brazil and Argentina amid existing tariff and trade disputes.
This specific threat, while seemingly narrow, highlights a broader strategy of using targeted economic pressure to achieve geopolitical and trade objectives. Investors in the agricultural sector, particularly those exposed to soybean markets, should closely monitor these developments, as well as companies involved in the production and distribution of cooking oils and related commodities.
The Echoes of Past Battles: A Brief History of US-China Trade Wars
This is not the first time Trump has wielded tariffs and trade restrictions against Beijing. During his first term, he imposed duties on over $360 billion worth of Chinese products, aiming to narrow the trade deficit, bring back manufacturing jobs, and combat issues like the fentanyl trade. These tariffs initially slowed, then leveled off, Chinese exports to the U.S., which ultimately reached around $500 billion last year. The Biden administration largely maintained these duties while adding new ones on strategic sectors such as steel, solar cells, and electric vehicles.
The current threats extend beyond specific products. Trump has previously mentioned imposing an additional 10% tariff on all goods from China, and even a 25% tax on products entering from Canada and Mexico. Other proposals have included tariffs of 60% or more on all Chinese imports. Experts suggest that a 60% tariff would have a “severe impact” on Chinese exports, potentially causing many companies to “completely halt their trade with the U.S.,” according to Tu Xinquan, director of the China Institute for WTO Studies at the University of International Business and Economics in Beijing.
The U.S. and China have also engaged in tit-for-tat port fees on ocean shipping firms, impacting everything from holiday toys to crude oil. This history underscores that any new tariffs or trade restrictions are part of a larger, ongoing economic and geopolitical tension between the world’s two largest economies.
Supply Chains on the Move: How Chinese Exporters are Adapting
The anticipation and reality of U.S. tariffs have already prompted significant strategic shifts among Chinese exporters. Many have begun to reduce their reliance on the U.S. market, exploring new destinations for their goods and even relocating production. For example, some Chinese companies have shifted manufacturing to Southeast Asian countries and Mexico to circumvent U.S. tariffs. This trend is likely to accelerate under renewed threats of increased tariffs.
For instance, companies in cities like Yiwu, a major hub for small commodities, have reported a shrinking U.S. market since 2019, with American customers pressing for lower prices. In contrast, the Middle East has emerged as a more lucrative market with higher prices and larger orders. The share of China’s exports going to the U.S. has notably decreased from 19% in 2018 to 15% last year, even as China’s overall exports reached a record high, as highlighted in reporting by AP News. This diversification and relocation strategy by Chinese businesses indicates a long-term adjustment to global trade dynamics, rather than a temporary workaround.
Targeting Loopholes: The $800 Exemption in the Crosshairs
Another significant target of Trump’s trade policy is the exemption that allows small packages under $800 to enter the U.S. duty-free. This “de minimis” rule has been a boon for products sold through platforms like Amazon’s third-party marketplace, Temu, and Shein, allowing Chinese goods to bypass existing U.S. tariffs. Closing this loophole, a measure that has also seen proposals from the Biden administration for goods subject to U.S.-China tariffs, would be a “crushing blow” to Chinese exporters who have built business models around low-value exports, according to Eswar Prasad, a professor of trade policy at Cornell University. Conversely, Gary Hufbauer of the Peterson Institute for International Economics noted it would be a “big loss to low-income American consumers” who benefit from the exemption.
Investors should assess companies heavily reliant on this exemption, particularly those in the e-commerce and logistics sectors, for potential impacts on their business models and pricing strategies. The increased costs from losing this exemption could translate to higher consumer prices and reduced sales volumes for affected goods.
Investment Implications: Navigating the Trade War Headwinds
For investors, the renewed threats of trade hostilities between the U.S. and China present a complex risk-reward scenario. Key considerations include:
- Commodity Volatility: Specific commodities like soybeans and cooking oil are directly impacted. Increased tariffs or trade bans could boost domestic prices and production in the U.S. while creating oversupply in other markets.
- Manufacturing Shifts: Companies with agile supply chains that can quickly shift production out of China, or those already diversified, may fare better. Conversely, firms heavily invested in China for manufacturing that sells to the U.S. will face pressure on margins and potential disruption.
- Tech Sector Risk: Beyond physical goods, threats of software export controls could severely impact China’s burgeoning tech industry, including cloud computing and artificial intelligence. This could create opportunities for U.S. tech firms but also carries risks of retaliatory measures.
- Consumer Impact: Higher tariffs on everyday goods, especially if the $800 exemption is removed, could lead to increased prices for American consumers, potentially dampening consumer spending.
- Geopolitical Risk Premium: The broader tensions over technology, human rights, and geopolitical flashpoints like Taiwan contribute to a persistent geopolitical risk premium in global markets. Investors should brace for increased market volatility during periods of heightened rhetoric.
The Bigger Picture: Geopolitical Tensions and Long-Term Outlook
Trump’s latest trade threats are not isolated incidents but rather part of a continuous strain in U.S.-China relations, encompassing disputes over trade tariffs, technology, human rights, the origins of the COVID-19 pandemic, and geopolitical matters concerning Hong Kong, Taiwan, and Ukraine. This multifaceted rivalry suggests that trade friction is a symptom of deeper strategic competition.
For long-term investors, the takeaway is clear: while short-term market reactions to tariff announcements can be sharp, the underlying trend points toward a decoupling of supply chains and a re-evaluation of global economic interconnectedness. Companies that proactively adapt to these shifts, prioritize resilient supply chains, and diversify their market exposure will be better positioned to weather the storms of future trade disputes. Understanding these structural changes, rather than merely reacting to headlines, is paramount for sustained investment success.
