U.S.-China Tariff Dispute Sends Cooking Oil Stocks Soaring [Sisasyo]

Trump's "Cooking Oil" Remarks Send Related Stocks Soaring
China Weaponizes Rare Earths... Working-Level Talks Intensify

■ Broadcast: The Asia Business Daily "So Jongseop's Current Affairs Show"

■ Host: Political Specialist So Jongseop

■ Producer: Park Sumin

■ Guest: Reporter Lee Hyunwoo

As tariff disputes between the United States and China show signs of escalating, negative effects are now reaching South Korea's shipbuilding and shipping industries. However, most analyses suggest that this tariff dispute is unlikely to be prolonged. Above all, it is viewed positively that both countries are fully aware of the negative impact of a long-term dispute and are continuing to hold working-level talks. In addition, since the leaders of both countries are expected to meet at the Asia-Pacific Economic Cooperation (APEC) Summit in Gyeongju at the end of this month, it is anticipated that a breakthrough will be reached before then.

Trump Considers Halting Imports of Chinese Cooking Oil... Tariff Dispute Flares Up Again

UPI Yonhap News

President Trump recently strongly criticized China's suspension of imports of American soybeans and announced that he would consider halting imports of Chinese cooking oil. This statement had an immediate impact on the market. Just the day before, he had shown a conciliatory attitude, saying he would pursue a "win-win" deal with China, so his sudden change in stance sent not only the U.S. stock market but also global markets into turmoil.

Interestingly, there was significant skepticism over whether the U.S. actually imports cooking oil from China. Chinese cooking oil has been the subject of constant hygiene concerns even within China. The trust level is so low that Chinese consumers sometimes bring their own cooking oil when dining out. In fact, U.S. import statistics show that most cooking oil is sourced from Canada and Europe, with virtually no imports from China.

Nevertheless, immediately after Trump's remarks, the stock prices of companies related to cooking oil soared. The share price of Australia's Australian Oilseeds more than doubled, and the stock prices of domestic cooking oil producers also rose. The market reacted first to the impact of Trump's message rather than its factual accuracy. In reality, what President Trump referred to was not edible cooking oil, but waste cooking oil. As part of its environmental policies, the U.S. has been converting waste cooking oil into sustainable aviation fuel (SAF), and a significant portion of this waste oil had been imported from China.

In the international community, it is assumed that President Trump made these remarks impulsively without fully understanding the details. There is also analysis that, since the U.S. government has already used numerous anti-China measures since the Joe Biden administration, there may have been no further strong options left to pressure China.

U.S. Frustrated by China's Weaponization of Rare Earths... Refining Is the Bottleneck

Reuters Yonhap News

Most analyses indicate that the dynamics of the tariff negotiations have shifted unfavorably for the U.S. compared to earlier this year. China has wielded the threat of halting rare earth exports as a powerful weapon, following the U.S. failure to secure alternative supply chains for rare earths. Although the U.S. has made efforts to diversify rare earth imports from countries like Brazil and Australia, it has not found an effective solution.

It is true that the U.S. has largely caught up in terms of rare earth mineral reserves and raw material production. With increased raw material supplies from Brazil and Australia, China has now dropped to third place globally in mineral production. However, the real issue is not mining but refining. To use rare earths in manufacturing electric vehicle batteries, tanks, and fighter jets, they must undergo complex refining processes, in which China still maintains an overwhelming global lead.

Since the 1980s, all rare earth refining companies in the U.S. have moved abroad due to environmental concerns. Currently, not only environmental regulations but also high labor costs make it virtually impossible to build large-scale refining plants in the U.S. The same is true for U.S. allies in Europe and Australia. Vietnam and other Southeast Asian countries lack the technology, capital, and basic infrastructure to immediately replace China.

As a result, China still monopolizes the production of about 90% of refined rare earth materials. The U.S.'s domestic output is insufficient to meet even its defense needs for fighter jets and tanks. If China were to completely halt rare earth exports, there are concerns that the U.S.'s ability to wage war would be severely restricted.

Given this situation, the U.S. government is issuing tough statements on one hand, while on the other hand proposing to join forces with allies to counter China's weaponization of rare earths. At the same time, it is maintaining an open channel for dialogue with China, displaying a dual approach.

U.S.-China Tariff Dispute: Both a Crisis and an Opportunity... Korea-U.S. Negotiations Accelerate

Steel products loaded at Pyeongtaek Port on the 12th. Photo by Yonhap News Agency

Some analysts argue that the current situation could actually present an opportunity for South Korea. As the U.S.-China tariff dispute intensifies, the U.S. also needs to conclude tariff negotiations with allies such as South Korea, Europe, and Japan. The logic is that the more disadvantageous the U.S. position in negotiations with China, the more conciliatory it will be in negotiations with its allies.

U.S. Treasury Secretary Scott Bessent's recent statement that he would finalize tariff negotiations with South Korea within 10 days is interpreted in this context. The intention appears to be to settle Korea-U.S. tariff talks before the APEC Summit and then focus on negotiations with China. The fact that the Trump administration is now in its second week of a government shutdown, making it difficult to introduce further strong sanctions, could also present an opportunity for Korea-U.S. tariff negotiations. With tensions between the U.S. and China continuing, strategic responses from the Korean government and companies are more crucial than ever.