"Oil Prices Plummet as Trump’s Tariff Threats on China Fuel Global Market Fears"

X LINE TRADING

4/7/20252 min read

On April 7, 2025, oil prices continued their downward trajectory, driven by renewed geopolitical tensions and economic uncertainty following U.S. President Donald Trump’s latest threat to impose additional tariffs on China. The escalating trade war between the world’s two largest economies has rattled global markets, with crude oil bearing the brunt of fears over weakened demand.

West Texas Intermediate (WTI) crude fell by 2.3% to $68.45 per barrel, while Brent crude, the international benchmark, dropped 2.1% to $71.92 per barrel. This decline marks the third consecutive day of losses, as investors weigh the potential impact of Trump’s proposed tariffs—reportedly as high as 25% on Chinese goods—against an already fragile global economic backdrop. Analysts suggest that such measures could stifle China’s industrial output and energy consumption, further dampening its appetite for oil.

China, the world’s second-largest oil consumer, imported an average of 11 million barrels per day in 2024, according to the International Energy Agency (IEA). Any significant reduction in this demand could exacerbate the current oversupply situation, especially as OPEC+ struggles to maintain cohesion on production cuts. The cartel’s recent decision to delay a planned output increase has done little to bolster prices, with market sentiment remaining bearish.

Trump’s tariff threats come amid his administration’s broader strategy to address trade imbalances and bolster domestic manufacturing. In a statement on X, he claimed, “China’s been ripping us off for years—time to level the playing field.” However, critics argue that these measures could backfire, raising costs for American consumers and disrupting supply chains still recovering from pandemic-era shocks.

Beyond U.S.-China tensions, oil markets are also grappling with a strengthening U.S. dollar, which gained 1.2% against a basket of currencies following Trump’s announcement. A stronger dollar typically pressures oil prices by making it more expensive for foreign buyers. Meanwhile, geopolitical risks in the Middle East have taken a backseat, with no immediate disruptions to supply despite ongoing conflicts.

Analysts remain cautious. “The tariff rhetoric is a double-edged sword,” said Jane Carter, an energy strategist at Goldman Sachs. “It’s spooking markets now, but if it triggers a broader slowdown, we could see oil dip below $65 by mid-year.” For now, traders are bracing for volatility as the U.S.-China standoff intensifies.