China to Impose 25% Tariff to U.S. LNG

In the latest statement, China has included for the first time liquefied natural gas (LNG) in its list of goods up for a potential 25 percent import tariff, as a fight back to the United States imposing additional tariffs on Chinese imports.

As the U.S.-China trade spat turns into a full-blown war with tariffs and retaliatory tariffs and threats of further tariffs, U.S. energy exports to China may suffer if Beijing follows through with its threat to slap tariffs on U.S. oil and oil product imports.

Up until last Friday, China had excluded LNG from the goods that it would hit with an import tariff in retaliation for a possible new U.S. round of tariffs on Chinese goods. The Friday statement from the MOFCOM has already had Chinese LNG end-users and suppliers saying that they would likely deter spot procurement of U.S. LNG cargoes in the near term if the tariff comes into effect.

To remind that China’s crude import from the U.S. has collapsed since the tariff on it from July, and it is foreseeable that the same will happen on U.S.-origin LNG import. In the past 12 months, China imported around 3 million tons of LNG from Cheniere Energy’s Sabine Pass, and the volume in the first half of 2018 reached 1.3 million tons, taking up 13% of the U.S. LNG exports and 5.5% of China’s LNG imports within this period. The new 25% tariff on LNG will not exert an instant impact on global LNG market, but slowly it will slightly drive spot LNG price upwards, change the trade flows and eventually hinder the promising potential between the prospective world top exporter and importer.