Cooking Oil Is the New Front in the U.S.-China Trade War. Who Might Benefit.

Used cooking oil has become a hot commodity. (Dreamstime)

Key Points

• President Trump is considering banning cooking oil imports from China, targeting used cooking oil (UCO), which is used for biofuel production.
• Chinese UCO exports to the U.S. reached 1.27 million metric tons in 2024, but declined over 40% in the first seven months of 2025.
• A U.S. ban on Chinese UCO could benefit domestic oilseed processors, as biofuel producers would seek alternative feedstocks.

Green commodities have become new weapons in the escalating trade conflict between Washington and Beijing, but the damage remains to be seen.

This week, President Donald Trump said he is considering cutting off cooking oil imports from China in retaliation for Beijing’s decision to halt imports of American soybeans. The move isn’t about what’s used in kitchen fryers, but about the supply chain of used cooking oil that goes into making biofuel.

What is cooking oil and why is it important?

Cooking oil broadly refers to refined vegetable or seed oils used for frying, baking, dressings, and general food preparation. The oil is extracted from sources such as soybeans, palm fruit, canola seeds, sunflower seeds, and corn, and is then refined, bleached, and deodorized to make it more palatable.

While China is a major producer of cooking oil, the U.S. imports relatively little of it from that country. The much bigger trade is done in used cooking oil—or UCO—the leftover cooking oil that’s collected, filtered, and reprocessed to become a valuable industrial feedstock, particularly for biofuels.

Until recently, UCO was largely discarded or used to make soap or animal feed. That changed with the rise of renewable diesel mandates around the world as carbon emissions from traditional fossil fuels became a bigger concern for their contribution to climate change.

Biofuel refiners often need far more feedstock than local sources can provide. And UCO, the recycled waste that’s one of the lowest-carbon feedstocks, has become a hotly traded commodity. China is one of the biggest UCO exporters, shipping millions of tons a year mainly to the U.S., Europe, and Singapore.

How much UCO does the U.S. import from China?

Chinese exports of UCO to the U.S. surged in recent years after the Biden administration made clean-energy expansion a top priority through the 2022 Inflation Reduction Act. The law offered tax credits and other incentives for renewable fuels, spurring demand for waste oils such as UCO.

But the shipments have fallen sharply in 2025 since the U.S. excluded foreign-sourced feedstocks from tax credits following American farmers’ complaints about competition. Trump’s tariffs, as well as Beijing’s elimination of tax breaks for UCO exports, have further discouraged the trade.

In 2024, China’s UCO exports to the U.S. reached a record 1.27 million metric tons, or 43% of that country’s total UCO exports, according to the U.S. Department of Agriculture. In the first seven months of 2025, however, the volume declined more than 40% from the same period last year.

What would a U.S. ban on Chinese UCO mean?

In case of a U.S. ban, Chinese traders could redirect their UCO to other buyers such as the European Union. Even if they can’t find alternative buyers in a short time, the total value of the trade—about $1.2 billion in 2024—is dwarfed by the nearly $13 billion of U.S. soybeans sold to China in the same year.

Banning Chinese UCO would likely benefit oilseed processors, as biofuel producers would be compelled to turn to alternative sources. In the U.S., soybean oil is the dominant feedstock thanks to its wide availability. The biofuel industry also taps a variety of other feedstocks such as animal fats and agricultural waste.

Shares of Bunge Global, the world’s biggest crop trader and processor, have jumped 14% since Tuesday, when Trump posted on social media about his intent to terminate UCO imports from China. Archer-Daniels-Midland, another agricultural processing giant, has seen its stock gain 2.1%.

Write to Evie Liu at evie.liu@barrons.com