Beijing has not yet deployed “King Card” in trade war with the Trump Administration, but is threatening to raise new tariffs on natural gas and crude oil in response to $50 billion in sanctions imposed by Washington.
Such tariffs would inhibit Chinese refiners from buying US crude imports, potentially crashing US energy markets and hitting the fossil fuel industry where it hurts the most.
Now this is a big deal. China is essentially the largest customer for US crude now, and so for crude it’s an issue, let alone when you involve [refined] products, too.
According to US Energy Department figures, China imports approximately 363,000 barrels of US crude oil daily. The country also imports about 200,000 barrels a day of other petroleum products including propane.
The US energy industry has seen its profits boosted by fracking in domestic shale fields, which produce some 10.9 million barrels of oil per day.
The USA is also exporting a record 2 million barrels per day, and encouraging countries like China to import more US energy products instead of those from Iran, after Trump recently withdrew from the historic Joint Comprehensive Plan of Action (JCPOA) 2015 nuclear arms deal with Tehran.
China is currently the largest buyer of Iranian oil as well, purchasing some 650,000 barrels daily during the first quarter of 2018. China is currently running a $376 billion surplus in trade with the US, according to the White House.
If Beijing chooses to continue its tit-for-tat tariff policy with the US, Washington will impose further tariffs on imports from China in addition to the $200 billion announced.
China responded by setting a 25% tariff on 545 American products, worth $50 billion, in agriculture products, cars, and seafood.
Separately, in a bid to deliver on campaign promises, Trump announced his intention to impose a 25% tariff on steel imports and a 10% tariff on aluminum imports from an array of US allies, including the EU, Mexico and Canada.
Trump has also reportedly mulled placing a 25% import tax on European cars, something that would significantly affect the highly-profitable US market for expensive German automobiles.
Sputnik / AA Flash Point News 2018.