Traders Speculate China Tariffs to Include Used Cooking Oil

Bloomberg’s Michael Hirtzer and Tarso Veloso reported Friday that “soybean oil futures surged by the most since July as traders bet that Chinese used cooking oil may be included on the list of tariffs expected to be announced by the US.”

“Speculation spread in the market Friday that imports of used cooking oil from China could be included in the batch of tariffs,” Hirtzer and Veloso reported. “The US market has been flooded with supplies in recent months to make biofuel, eroding profits for agriculture processing companies that crush soybeans.”

Details of the Expected Tariffs

Bloomberg’s Josh Wingrove, Jennifer A Dlouhy, and Eric Martin reported that “President Joe Biden will double, triple and quadruple tariffs on some Chinese goods this week, unveiling the measures at a White House event framed as a defense of American workers, people familiar with the matter say.”

“Biden will hike or add tariffs in key sectors after nearly two years of review,” Wingrove, Dlouhy and Martin reported. “The total tariff on Chinese electric vehicles will rise to 102.5% from 27.5%, the people said, speaking on condition of anonymity ahead of the announcement. Others will double or triple in targeted industries, though the scope remains unclear.”

The Financial Times’ Demetri Sevastopulo, James Politi and Aime Williams reported that “the Biden administration has for three years been reviewing the tariffs that then president Donald Trump put on imports from China as part of the trade war he launched in 2018. The new EV tariffs will be announced alongside the conclusion of the review, led by the US Trade Representative.”

“During a visit last month to Pennsylvania — a swing state in November’s election — Biden said he wanted the agency to triple tariffs on Chinese steel and aluminium. USTR also recently opened an investigation into unfair practices in the Chinese shipbuilding industry following a petition from the United Steelworkers union.”

Business Insider reported Friday that “Beijing will likely release angry comments after Biden’s speech (announcing the tariffs this) week, followed by a tit-for-tat response.”

“If China were to retaliate, in a tit-for-tat effort, they could hit Elon Musk’s Tesla or continue reducing US agricultural exports of corn and soybeans. …US Senator Chuck Grassley, an Iowa Republican, warned Beijing will respond:

‘We know how China reacted when Trump put tariffs on … and they hit agriculture with it. I can’t be sure that China would hit agriculture the same as they did in the Trump ones, but they’re going to hit back.'”

Soybean Oil In Focus

‘”Rumors abound that we may soon see levies against imported used cooking oil,’ Susan Stroud, a grain analyst for No Bull Ag in St. Louis, said Friday,” according to Hirtzer and Veloso. “’Soybean oil is hanging on to any glimmer of hope we can to slow the flow of cheap, less-carbon intensive feedstock imports.’”

“Soybean oil futures settled 4.2% higher on Friday, after climbing as much as 5% intraday,” Hirtzer and Veloso reported. “The rise far outpaced gains in the larger market for whole soybeans, which settled 0.9% higher.”