Oil prices fell on Monday as President Donald Trump has threatened China to slap a 25-percent tariff on hundreds of billions worth of Chinese goods that have as yet “remained untaxed” adding that the US will increase the current 10-percent tariff on US$200 billion worth of goods to 225 percent, he said in a series of tweets, sparking worry that ongoing trade negotiations may not have the positive outcome markets hoped for until recently. Oil prices reacted with a drop.
“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday,” Trump tweeted on Sunday.
“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” the President of the United States added.
Another round of tariffs will in all likelihood prompt a retaliatory move, which, as before, many worry will affect U.S. oil and LNG exports to China. Currently, China taxes U.S. LNG imports at a 10-percent rate but does not tax crude oil imports. These were suspended last summer anyway, as Chinese refiners waited to see where trade negotiations will go. It was only last month that China’s Unipec—the trading arm of Sinopec—received the first cargo of U.S. crude since September.
Commenting on the latest tariff update from the President, the director of the National Economic Council, Larry Kudlow, told Fox News, "The president is I think issuing a warning here, that we bent over backwards earlier. We suspended the 25% tariff to 10%," S&P Global Platts reports.
The official added that the negotiations with the Chinese side were ongoing.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More