US groups express concerns about China plans to impose LNG tariffs

Aug. 3, 2018
Officials from three leading US groups that support increased exports of US LNG separately addressed concerns on Aug. 3 over the Chinese Ministry of Commerce’s announcement that tariffs ranging 5-25% will be imposed on US LNG.

Officials from three leading US groups that support increased exports of US LNG separately addressed concerns on Aug. 3 over the Chinese Ministry of Commerce’s announcement that tariffs ranging 5-25% will be imposed on US LNG.

“China’s retaliation will hit America’s energy industry particularly hard,” said American Petroleum Institute Vice-Pres. for Regulatory and Economic Policy Kyle Isakower. “American oil and gas already hit by US tariffs on industrial products and specialty steel essential to our industry will now be faced with Chinese tariffs on critical US exports, affecting American jobs that rely directly and indirectly on the energy industry.”

China is the third largest importer of US LNG, but US LNG makes up only a modest but growing portion of China’s supply portfolio, Isakower said. This suggests that this particular trade dispute will hurt America more than it hurts China, he said. “We urge the administration to end these trade policies that work against our own energy interests and threaten our shared goal of maximizing US energy production and US energy exports.”

Center for Liquefied Natural Gas Executive Director Charlie Riedl warned, “The administration’s ‘Energy Dominance’ and ‘New Energy Realism’ agendas will cease to exist if one of the largest energy markets in the world is preemptively placing tariffs on LNG.”

Domestic benefits of LNG exports are muted when the market is distorted with tariffs, especially when imposed by a country that has imported more than 185 bcf of US gas to date and is the third largest buyer of US LNG, Riedl said. “China has a growing demand for LNG and is slated to become the world’s largest importer. Should these tariffs remain, it will source the LNG from other suppliers eager to fill the gap. This would be a tremendous missed opportunity and would have very real effects on the US LNG industry,” he said.

LNG Allies Pres. Fred H. Hutchison called China’s move unwelcome, but not wholly unexpected. “It is imperative that the US and China begin serious, high-level negotiations to resolve the complicated issues—which, by the way, are wholly unrelated to energy—that lie beneath the current tariff dispute,” he urged.

“The US will be a major supplier of LNG for the Chinese market, and China will be one of the leading markets for US natural gas,” Hutchison said. “All parties need to keep these fundamental facts in mind as they work through the present difficulties, which have nothing to do with energy trade between our two nations.”

Contact Nick Snow at [email protected].