US Oil, Farm Exports Vulnerable in Tariff Battle, says Currie

The United States' reliance on exporting easily replaceable commodities like oil and agricultural goods puts it squarely in the "crosshairs" of the ongoing trade war with China, potentially inflicting more pain on American consumers than their Chinese counterparts, warned Jeff Currie, Chief Strategy Officer of Energy Pathways at Carlyle.

Currie highlighted a critical asymmetry in the trade conflict: while China can readily source oil ("barrels") and agricultural goods ("bushels") – two major US exports – from alternative global suppliers like Brazil or OPEC, many manufactured goods the U.S. imports from China are "non-fungible."

"The problem with the US, all the stuff that China exports is non-fungible, which means they can't go other places to get it," Currie explained in a Bloomberg Television interview. "Which means the US consumer is going to feel more of this than what the Chinese consumer feels."

This dynamic is particularly relevant given the scale of US energy exports. "US is the largest exporter in the world and producer of oil, China is the largest importer of oil. So oil and commodities are in the crosshairs right here right now," Currie stated. He identified oil ("barrels") as the largest component of what he termed the "three Bs" of major US exports: Bushels, Barrels, and Bombs.

The recent market volatility, which Currie described as "'liquidation now, ask questions later'," reflects the heightened risks. He noted that the subsequent "dead cat bounce" in commodities was relatively weak, suggesting "there's still a lot of risk left in the system," particularly with tariffs remaining at historically high levels.

Currie characterized the U.S. as a "barbell economy," strong in technology on one end and commodity production on the other, but dependent on China for much of the manufacturing in between. This structure, he argued, makes the targeted nature of tariffs specifically on Chinese goods particularly impactful for the U.S., even as other countries received smaller levies or reprieves.

The vulnerability of these key export sectors could also create domestic political pressure. Currie noted that farmers and oil producers are feeling the most pain, potentially leading lawmakers from states like Nebraska, Iowa, and Texas – key areas for these industries – to "break ranks."