The USA And China Trade Deal: How Is This Affecting The Worlds Fuel Prices

The price of fuel fluctuates a fair amount over the course of the year, but with the ongoing political tension between the US and China, this could be set to drop to an all-time low. With this trade war spanning over a year with no sign of peaceful resolution in the near future, this could be problematic to the price of fuel all over the world. In this article, we are going to look at the effects this trade war is having and how it could eventually lead to a huge drop in the price of the world's fuel.

What Has Happened So Far?

As this trade war between the US and China edges close to the 400 day mark of ongoing tariff increases and ongoing negotiations, we have compiled a bullet proof list of what has gone on thus far and where the negotiations are set to take off from.

• Day 1- 33 = Tariffs have been placed from both sides
• Day 40 = WTO Claim Against The US Filed By China
• Day 48-49 = US and China Begin Talks
• Day 49 = Second complaint filed by China as well as a second round of tariffs from China
• Day 74 = More Tariffs Finalised From Trump ( Now $200 billion)
• Day 79 = China no longer willing to talk with the US
• Day 81 = Third Round of Tariffs Implemented
• Day 137 = Trump Proposes Export Controls
• Day 186-188 = 3 Day Trade Talks In Beijing
• Day 209-210 = 2 Day Talks held In Washington DC
• Day 231- 234 = More Trade Talks Held In Washington As Negotiations Continue
• Day 299-300 = US and China hold trade talks in Beijing
• Day 305 = Trump threatens to increase tariffs
• Day 310 = Tariff increased from 10% to 25%
• Day 313 = China raises tariffs on the US
• Day 316 = America places bans on Huawei
• Day 348 = A meeting at the G20 summit
• Day 356 = A truce is reached
• Day 359 (present day) = Talks have restarted, and ban on Huawei is relaxed for the time being

As these negotiations continue, there are set to be increases in tariffs as well restrictions on international trade that could see many fluctuations in both the US and China as well as all over the world.

Weakening Of Oil Prices

One of the biggest concerns of this trade deal to date is the effect that it is having on the oil prices in the US as well as around the world. As the relationship between these two countries continues to worsen there is evidence to suggest that the price of oil could drop to as low as $45 per barrel or £36.07 per barrel in the UK. This is detrimental to the world's oil prices as this is only an estimate, there is a possibility that it can drop significantly lower, should even more tariffs be implemented over time.

Tariffs Placed On Imports

As the trade deal between the USA and China continues to worsen, there has been a sharp increase in the number of tariffs that have been implemented from both sides. With the Trump administration setting a tariff of $250bn on a number of Chinese imports, this is not only harming the relationship between the world's leading superpowers, but it is also having a profound effect on the US economy as a result. As these tariffs continue to be used as a threat for all those involved, there is no sign of a peaceful conclusion in the near future.

Other Effects On The Economy

In addition to the increase in tariffs, there has also been hesitation in those looking to invest in the USA. Although their economy remains stable at this time, there have been stock market fluctuations as well as a growing concern for the relationship between the USA and China moving forward. With the recent controversy surrounding the president and his racial attacks on a group of women congressmen, as well as this ongoing war with China, there is a huge amount of media attention surrounding the US and their current president, perhaps for all the wrong reasons. However, with the 2020 election drawing ever closer, the economy stays fairly stable. With unemployment rates at an all-time low and an increase in the number of Americans in work, this seems to be a benefit to the president at this time which could see him re-elected for another turn in office.

Potential Blow To Supply And Demand

In addition to the other economic factors, there is also the potential for a drop-in supply and demand. If this is the case, the price of oil is sold at a significantly lower price as a result. An example of this is the benchmark oil price falling by an estimated 7% to just $73 following the first round of tariffs placed on U.S imported goods. Though the president plans to stand his ground and remain firm with the Chinese, this can have a profound effect on the world's oil prices and will continue to do so until a deal is reached.

As the pressure continues to build, all eyes are on these two nations and the ongoing negotiations to see when a conclusion will be reached and how this will affect the world fuel prices, as well as trade, moving forward, only time will tell.