U.S. crude oil is unlikely to become a target of possible Chinese retaliatory tariffs in response to the latest American tariff threat, refinery and trading sources told S&P Global Platts after U.S. President Donald Trump announced 10-percent tariffs on the remaining US$300-billion U.S. imports of Chinese goods.
Chinese refiners have not bought much U.S. crude oil over the past year, because of the U.S.-China trade spat and related uncertainties over which goods could be subject to tariffs next. So far, oil has been spared from the tariffs, yet Chinese oil traders and refiners have been shunning U.S. crude and they no longer want to sign long-term supply agreements with U.S. producers.
So, American crude oil is currently not an essential trade item between the United States and China, refinery and trade sources in China have told S&P Global Platts.
China, for its part, will likely be aiming at goods that could hurt more U.S. exporters and create maximum impact for U.S. exports in possible retaliatory tariffs, the sources say.
On Thursday last week, oil prices took a heavy hit after U.S. President Donald Trump said that the U.S.-China trade talks—after no-breakthrough negotiations—would continue in September, while the “U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country.”
China pledged that it would impose new “necessary countermeasures” to protect its interests after the latest tariff threat, saying that President Trump’s tariff announcement was “an irrational, irresponsible act,” according to Zhang Jun, the new Chinese ambassador to the United Nations, as carried by Reuters.
On Monday, China let its currency, the yuan, drop to a decade-low and reportedly told its state companies to suspend imports of agricultural products from the United States in response to last week’s tariff threat.
By Tsvetana Paraskova for Oilprice.com
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