Trump's Cooking Oil Comment Wipes Out $450 Billion In Minutes: 'Beijing Will See This As Weakness,' Says China Expert
News Summary
President Donald Trump's comments regarding the U.S. producing its own cooking oil in retaliation against China's refusal to purchase American-grown soybeans led to a rout in equity markets within minutes, erasing $450 billion. Despite the initial pullback, major indices futures showed slight gains later that evening. Trump posted on Truth Social, accusing China of "purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers," labeling it an "Economically Hostile Act." He stated his administration was considering eliminating trade with China involving cooking oil, asserting the U.S. could easily produce it domestically. However, political scientist Rush Doshi and entrepreneur Arnaud Bertrand dismissed Trump's threats as weak and inconsequential. Bertrand highlighted that Trump's threat targeted used cooking oil, or "gutter oil," which China's domestic demand already far exceeds its production capacity. Chinese companies were reportedly even asking their government for export restrictions on the product, making Trump's ban threat largely irrelevant. In 2024, China exported 2.951 million metric tons of used cooking oil, with the U.S. being its largest importer. Despite expert skepticism, Trump's post sent Australian Oilseeds Holdings Ltd. (NASDAQ:COOT) soaring, with significant gains in after-hours trading. Other agricultural biotech stocks, such as Origin Agritech Ltd. (NASDAQ:SEED) and Arcadia Biosciences Inc. (NASDAQ:RKDA), also posted substantial rallies, demonstrating market sensitivity to policy rhetoric.
Background
As of 2025, trade relations between the United States and China remain strained. Following President Trump's re-election in November 2024, his administration continues to pursue an "America First" economic agenda. A central feature of this policy is the use of tariffs and trade restrictions as leverage against China, aiming to address trade imbalances and structural issues such as intellectual property rights and market access. Previous Trump administrations have frequently initiated trade measures against China, particularly imposing high tariffs on Chinese goods and pressuring China to increase purchases of U.S. agricultural products like soybeans. These trade disputes have historically triggered market volatility, especially in the agricultural and technology sectors. Market participants are generally highly sensitive to developments in U.S.-China trade relations, and any policy rhetoric can elicit rapid reactions.
In-Depth AI Insights
What strategic intentions might lie behind Trump's seemingly ineffectual trade threat? - This could largely be a domestic political maneuver, aimed at appeasing his core constituency—American soybean farmers—by demonstrating active government efforts against China's 'unfair' trade practices. - Despite experts deeming the threat itself 'weak,' it serves as a continuation of the Trump administration's 'maximum pressure' trade strategy against China, designed to test Beijing's resolve and set expectations for potentially more substantive trade actions in the future. - By generating short-term market volatility through media and social platforms, the rhetoric indirectly achieves its goal of attracting attention and asserting a tough stance, even if its actual economic impact is limited. How might China interpret and respond to this 'cooking oil' threat, and what are the deeper implications for future U.S.-China trade relations? - Beijing will likely interpret this as more performative than substantive, potentially using it as propaganda to highlight the capriciousness and lack of deep understanding in U.S. trade policy. - Given China's strong domestic demand for used cooking oil and significant export volume, Trump's ban threat not only lacks economic punch but may also prompt China to accelerate adjustments to its export strategies, potentially diverting products to other markets. - In the long term, such 'all bark, no bite' threats could further erode the foundation of trust between the U.S. and China, accelerating 'de-risking' or 'decoupling' efforts in critical supply chains, particularly in sensitive areas like agriculture and biotechnology. How should investors interpret such sharp, policy-rhetoric-driven market fluctuations? - These events underscore the immense influence of geopolitics and policy rhetoric in current markets. Even seemingly minor statements can trigger large-scale algorithmic trading and investor panic, leading to billions in market cap disappearing rapidly. - For agricultural commodities and related biotech stocks, while fundamentals might remain unchanged, policy rhetoric can create significant short-term trading opportunities (as seen with Australian Oilseeds' surge), but this also comes with extremely high policy risk and volatility. - Savvy investors should differentiate between short-term market noise from policy rhetoric and long-term fundamental impacts. For genuine investment decisions, a deeper analysis of the policy's actual implementability, its substantive impact on supply chains, and the resilience of target companies is crucial, rather than merely chasing short-term movements driven by headlines.