China to begin imposing 5% tariff on US crude oil imports from Sunday
Today, the first batch of Chinese tariffs on $75 billion worth of US goods will come into effect, including a 5% Chinese tariff on US crude oil.
It is the latest round of the year-long Sino-American trade war and is in direct response to a 15% US tariff due to come into effect on $150 billion of Chinese goods today and $300 billion by year’s end.
Chinese tariffs on US crude oil is a big step for Beijing, which has previously held out on imposing tariffs on commodities of significant importance to the Chinese economy. Chinese demand for American crude oil reached historic high levels in 2018 with a 113% annual jump in imports—the second-highest growth among suppliers. However, the US still ranks a lowly tenth overall, accounting for only 2.8% of China’s market.
Regardless, the importance of crude oil to China is such that state-owned buyers, like Sinopec, are likely to continue US purchases for the time being.
In the long-term, with no end in sight to the trade war and further tit-for-tat tariffs expected in December, expect China to turn elsewhere for crude. Primarily, China will likely increase its reliance on Russia, Saudi Arabia, Angola, Iraq and Oman, which together already account for 55% of Chinese oil imports this year.
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