Donald Trump’s recent declaration to consider cutting off cooking oil trade with China, framed as a response to Beijing’s halt on U.S. soybean purchases, reveals complex layers of the ongoing economic rivalry. While aimed at demonstrating resolve, the move primarily targets an already dwindling segment of trade—used cooking oil imports from China to the U.S. have plummeted by 65% in the last year, highlighting the strategic maneuvers and underlying market shifts that define this high-stakes dispute.
In a notable escalation of economic rhetoric, former President Donald Trump recently announced that the United States is considering terminating business with China related to cooking oil and other trade elements. This threat comes as retribution for what Trump described as an “economically hostile act”—China’s deliberate halt in purchasing U.S. soybeans, which he claimed was causing significant difficulty for American farmers.
Trump asserted that the U.S. possesses ample domestic capabilities to produce cooking oil, negating any need to import it from China. This statement reignites a familiar battlefront in the ongoing trade disputes between the world’s two largest economies, drawing parallels to previous tariff showdowns and China’s strategic leveraging of key commodities.
The Soybean Standoff: An Economically Hostile Act?
The current U.S. soybean harvest is underway, yet China, once the largest buyer of American soybeans, has reportedly not booked a single purchase. This abrupt halt has sent prices tumbling and left farmers across the Midwest in a state of panic. Last year, China’s purchases amounted to approximately Rs 1.05 lakh crore, a stark contrast to the zero purchases recorded for the current harvest.
This strategic shift by Beijing is not new. It mirrors China’s previous use of rare earth exports as leverage in trade negotiations with the Trump administration over export controls. Now, as the soybean harvest commences, Beijing is repeating this tactic, using an import ban on U.S. soybeans as a powerful bargaining tool, as noted by Nomura Holdings chief China economist Lu Ting, who stated that U.S. soybeans are “not that important to China” anymore, allowing Beijing to afford such measures.
For American farmers, the situation is dire. Higher expenses from tariffs on fertilizer and equipment, coupled with a reduction in buyers, have significantly eroded profit margins. Many farmers are storing crops and postponing sales, watching futures markets decline. Morey Hill, a soybean grower from Iowa, warned the Wall Street Journal that without a timely agreement, the soybean market “might be a bloodbath.” The frustration is palpable, with figures like Caleb Ragland, President of the American Soybean Association, describing it as “overwhelming.”
The timing exacerbates the issue, as over half of U.S. soybean exports typically occur between October and December, immediately following the harvest. China is reportedly delaying purchases until February when Brazil’s crop becomes available, potentially causing U.S. soy exports to miss the entire global buying window.
The Cooking Oil Conundrum: A Closer Look at the Trade Target
Trump’s threat specifically targets cooking oil trade, yet an analysis of recent trade data reveals a nuanced reality. The commodity primarily at the center of this specific threat is used cooking oil (UCO). While the U.S. was China’s top market for UCO, importing a record 1.27 million metric tons worth $1.1 billion in 2024, these shipments have already experienced a dramatic decline.
From January to August this year, UCO imports from China plummeted by 65% to 290,690 tons, valued at $286.7 million. This significant drop occurred largely due to China’s decision to cut tax rebates late last year and the U.S. imposing its own tariffs on Chinese goods earlier in the year, as reported by Reuters. Consequently, traders and analysts suggest that Trump’s latest threat would have “minimal” impact, as domestic Chinese producers are now primarily fulfilling orders for European markets.
The dynamics of UCO trade are further complicated by domestic concerns. The National Oilseed Processors Association (NOPA), representing major U.S. soybean processors like Cargill and Bunge Global, has advocated for higher levies on Chinese UCO imports. U.S. imports of used cooking oil more than tripled in 2023, according to the U.S. International Trade Commission (USITC), with more than half originating from China.
NOPA members worry that this influx of Chinese UCO weakens demand for U.S. crop-based ingredients crucial for renewable diesel and sustainable aviation fuel. There’s also unconfirmed speculation that some imported UCO from Asia might not be authentic, potentially mixed with fresh vegetable oils, which could distort commodity values and undermine U.S. biofuel laws. This concern aligns with President Joe Biden’s administration also considering new tariffs on Chinese goods, including potentially used cooking oil, as it seeks to crack down on China and differentiate itself in the upcoming 2024 presidential race.
Echoes of Past Battles: The Tariff as a Tool
Trump’s reliance on tariffs as a tool for economic and strategic objectives is a hallmark of his approach to international trade. Proponents argue that tariffs are an effective means to level the playing field for American workers and businesses. A 2024 study examining the effects of Trump’s tariffs in his first term concluded that they “strengthened the U.S. economy” and “led to significant reshoring” in industries such as manufacturing and steel production.
A 2023 report by the U.S. International Trade Commission further found that tariffs on over $300 billion of U.S. imports reduced imports from China, stimulated more U.S. production of affected goods, and had very minor effects on downstream prices. The Economic Policy Institute also noted that Trump’s tariffs showed “no correlation with inflation” and only a fleeting effect on overall prices, leading to improved U.S. steel output, employment, capital investment, and financial performance.
Critics of tariffs often warn of trade wars and negative economic repercussions. However, those who support tariffs point to the substantial investments in new steel mills, totaling over $10 billion, and thousands of job gains in the metal industry during Trump’s first term as evidence of their positive impact. Even former Biden Secretary of the Treasury Janet Yellen has affirmed that she does “not believe that American consumers will see any meaningful increase in the prices that they face” due to tariffs.
The political motivations behind current tariff discussions are clear. Both Trump and Biden are positioning themselves as tough on China ahead of the 2024 presidential election, signaling a continued era of trade tensions regardless of who is in the White House. Biden is expected to unveil significant tariff increases on Chinese electric vehicles and other key industries, underscoring a bipartisan consensus on confronting Beijing’s economic practices.
Wider Economic Ripples: Beyond Soy and Oil
The ripple effects of such trade threats extend beyond the specific commodities involved. Immediately following Trump’s renewed tariff threats, global markets reacted with apprehension. Oil prices fell by about 2% as fears of a full-blown trade war between the U.S. and China reignited concerns about global economic growth. U.S. stock indexes also experienced declines, reflecting investor jitters over potential economic fallout.
China has warned it is fully prepared to respond with a “fierce counter strike” of fresh trade measures if the United States follows through on its threats, indicating a tit-for-tat escalation could be imminent. This geopolitical tension highlights how even targeted trade threats can significantly influence broader market sentiment and commodity pricing environments.
The Farmer’s Lament: A Community in Crisis
The human cost of these trade disputes is most acutely felt by American farmers caught in the crossfire. With China historically being a crucial market, the abrupt halt in soybean purchases leaves many in a precarious financial situation. Farmers like Dean Buchholz, who had planned to farm for life, are now concluding their final crops, unable to make ends meet without incurring more debt.
The political dimension also resonates deeply within agricultural communities. Some farmers, despite understanding the potential consequences of protectionist trade policies, have continued to support leaders advocating for such measures. As North Carolina crop scientist and blogger Sarah Taber remarked, “We knew what Trump would do. And a lot of farmers just voted for him anyway,” underscoring the complex relationship between agricultural policy, economic reality, and political loyalty.
Long-Term Implications: A Strategic Chess Game
The ongoing trade tensions between the U.S. and China represent a long-term strategic chess game with significant global implications. China’s diversification of soybean imports to South American countries like Argentina is a clear move to reduce its reliance on U.S. agricultural products, fostering more resilient supply chains for its substantial hog and poultry industries.
For the U.S., the debate over tariffs and trade policy remains central to its economic and geopolitical strategy. The efforts to bolster domestic production, reshore industries, and protect American farmers and manufacturers will likely continue to shape policy decisions. While the specific impact of a cooking oil trade termination might be limited due to pre-existing market shifts, the rhetoric itself serves as a powerful signal of an enduring, multifaceted economic rivalry. This complex interplay of economic leverage, political posturing, and real-world consequences ensures that the U.S.-China trade relationship will remain a critical global story for years to come.
