Oil market steadies despite China's latest retaliatory tariff hike on US imports

Oil market steadies despite China's latest retaliatory tariff hike on US imports

Crude oil markets rallied on April 11 as China again raised its tariffs on US imports to a cumulative 125% but indicated that it would be the final hike. However, prices held below their most recent highs as concerns of slowing demand growth offset hopes of more Chinese stimulus measures to counterbalance the impact of US President Donald Trump’s tariffs.

S&P Global Commodity Insights analysts see refined product demand growth potentially decreasing by up to a third from previous projections for the rest of 2025, with the possibility of zero growth periods due to ongoing trade policy volatility. China's high stake in US LPG and ethane export flows means potential demand destruction for those oil products.

"Despite President Trump’s snap decision to suspend most 'reciprocal' tariffs, the world economy is not out of the woods yet," S&P Global Commodity Insights oil analysts said in an April 11 note. "Indeed, the escalating trade tension between the US and China in recent days underlines this reality."

US crude and product flows to China, Asia's largest crude buyer, are under threat due to escalating tariffs. Regional trade flows in Southeast Asia face particular vulnerability due to their economic interconnectedness with both Chinese and US markets.

Total US crude exports averaged 4.007 million b/d in March, Commodities at Sea data showed, climbing above the 4 million b/d level for the first time in eight months. In Q1 2025, Asian buyers comprised 43% of US crude exports and European buyers made up 40% of exports.

Exports of US-origin crude to China have averaged 62,000 b/d this year, but no loading has been recorded since Feb. 27, according to CAS data. Notably stepped-up shipments to other countries in the region meant the share of US exports to Asia remained steady in March at 46%.