Recently China fired shots in the trade war with the United States with a list of $16 billion in American imports that would be subjected to a 25% retaliatory tariff. One of the items on the retaliatory tariff list was quietly removed: oil.
According to a report from the Wall Street Journal, oil was a prime target with these tariffs. This was when Beijing was trying to intimidate Trump out of the tariffs in place. Since China is the top buyer of U.S. oil, this was a serious threat. U.S. imports $8 billion worth of oil to China, so this eliminates roughly one third of the sanctioned goods on the tariff list.
Analysts and industry insiders said the change could signal that China is reassessing its bluster, given its slowing economy, the ease with which crude sellers can find new buyers—and, most of all, its climbing reliance on foreign oil. China depends on imports for 70% of its energy needs, and the International Energy Agency forecasts that will climb to 80% by 2040.
“China would be shooting itself in the foot if they tax [crude oil] imports,” Shane Oliver, an analyst at AMP Capital Markets, said. “China’s economy is heavily dependent on oil.”
It turns out China is not able to absorb the huge price increase on the increasing volume of crude that is being purchased from the United States.
Check out some of the responses on Twitter:
China can end the trade war by conceding defeat to Trump https://t.co/QplKaSObA2 via @SCMPNews
— Laura Ingraham (@IngrahamAngle) August 11, 2018
Trump’s China tariffs claim another victim: A South Carolina TV manufacturing plant https://t.co/RhCU2ZOS8X
— FORTUNE (@FortuneMagazine) August 11, 2018
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