Trump targets China cooking oil trade - but sales were already tanking

"I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act. We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution," Trump wrote on social media on Tuesday.

"As an example, we can easily produce Cooking Oil ourselves, we don't need to purchase it from China."

The U.S. was China's top market for used cooking oil (UCO), importing a record 1.27 million metric tons worth $1.1 billion in 2024. But after China cut tax rebates late last year and the U.S. imposed tariffs on Chinese goods this year, imports plunged 65% in January-August to 290,690 tons, or $286.7 million.

As such, Trump's comments would have "minimal" impact on the commodity, two UCO traders in China said on condition of anonymity as they were not authorized to speak to media.

"Domestic producers are now mainly taking orders for Europe and are no longer considering the U.S. market," said one of the traders.

SHORT HISTORY AS EXPORT MARKET FOR CHINESE COOKING OIL

The U.S. does not have a long history of being a top export market for Chinese used cooking oil, a product that can be converted into renewable diesel and which has helped the U.S. become one of China's top ten export destinations only as recently as 2022.

By contrast, the Netherlands, Singapore, Spain and Malaysia have consistently processed hundreds of millions dollars' worth of Chinese UCO over the past decade, Chinese customs data shows.

Year-to-date shipments to this year's top buyer Singapore are up 15% from last year at $537 million, while exports to the Netherlands - whose figures are distorted by the Rotterdam megaport - have jumped 131.5% over the same period.

Chinese used cooking oil exports to the U.S. had surged in 2023, driven by federal and state incentives supporting biofuels and a rush to build new renewable diesel plants.

TRUMP'S ANNOUNCEMENT 'NOT ESCALATORY,' ANALYSTS SAY

Analysts said Trump's announcement was not escalatory following a week of fresh tariff threats and export controls.

Used cooking oil trade is small compared with that of soybeans. Last year, China imported 22.13 million tons of U.S. soybeans worth $12 billion.

But restricting UCO imports allows Trump to show the U.S. agriculture industry he is still being tough on China, some analysts said.

"Used cooking oil is a niche trade, but it shows how the Trump Administration is standing up for American farmers, just as China shifts its agricultural purchases towards other suppliers," said senior analyst Chim Lee at the Economist Intelligence Unit.

China is the world's largest buyer of soybeans. In recent months it has slashed purchases of U.S. soybeans in favor of Brazilian and Argentine produce.

Trump has called the shift a negotiation tactic. He said this month he hoped to discuss soybeans with Chinese counterpart Xi Jinping while also saying the U.S. may halt a large share of imports from China.

"So from 100% tariffs on all Chinese trade (in response to the rare earth/critical mineral export controls) to targeted sanctions on cooking oil?" Brad Setser, a former U.S. trade official now with the Council on Foreign Relations wrote on X.

"Definitely not escalatory."