
Dragon tariffs: how China's duties on US LNG will change global flows

A new trade war is about to break out between the US and China. The countries have already imposed duties on each other's imports. Beijing has imposed duties on energy carriers in response to U.S. tariffs; they will affect LNG, oil and coal. Foreign analysts predict serious consequences, a change in trade flows around the world is expected. Experts interviewed by Izvestia believe that China's response was rather mild, the tariffs will not have a serious impact on the United States, and energy prices will depend to a greater extent on factors unrelated to the trade war. Whether the world is threatened with a global redistribution of markets due to the escalation of relations between China and the United States - in the Izvestia article.
A logical reaction
US President Donald Trump, who threatened many countries with tough tariffs, has moved to action. He signed decrees imposing duties on goods from Canada, Mexico and China. In the first two cases, negotiations helped to soften the decision of the American leader, but China, against which duties of 10% were imposed (in addition to those already in place on Chinese imports), took decisive action. More and more often there are fears that the world is on the verge of another trade war. Experts predict that China's actions will have serious consequences.
First of all, to protect its interests, the Celestial Empire imposed duties on imports of American energy resources. The decision of the State Council of the People's Republic of China will come into force on February 10. Oil will be subject to a duty of 10%, and tariffs on coal and LNG will amount to 15%. China's response will also affect the U.S. auto industry - multi-cylinder cars, pickup trucks and agricultural machinery will be subject to a 10% duty.
Inaddition, China has filed a complaint against the US tax measures with the World Trade Organization (WTO), as announced by the Ministry of Commerce of the People's Republic of China. The ministry considered Washington's unilateral imposition of duties as "a typical manifestation of unilateralism (actions that do not take into account the interests of other countries. - Ed.) and trade protectionism".
China considers the steps taken on its part as completely fair and justified. Such a statement was made by the Chinese Embassy in Washington. The diplomatic office emphasized that the measures comply with existing laws, regulations and basic principles of international law.
The new tariffs, however, are not so critical for the United States. At the end of 2024, trade turnover between China and the United States amounted to $688.28 billion, but supplies from the U.S. accounted for only $163.62 billion. Of these, the share of energy imports in monetary terms amounted to a modest $6 billion for oil, $2.4 billion for LNG and $1.8 billion for coal coke.
An alarming signal
Nevertheless, China's decision to impose duties on imported liquefied natural gas is already raising concerns among experts. It may provoke a struggle for the world's largest fuel buyer. Such a move could push Chinese customers who have long-term contracts with U.S. suppliers to resell their supplies to importers from other countries at a higher price, causing the cost of LNG to skyrocket everywhere.
It is unlikely that Chinese firms will sign new long-term contracts with U.S. suppliers. This situation will continue as long as trade tensions remain high.
The tariff hike has already affected Europe's energy market, which has a high dependence on LNG. EU natural gas prices have fallen sharply in five sessions. Futures for benchmark grades fell by 2.1%.
The fact is that importers from China are already selling most of the volumes received from the US to other markets. In particular, sea flows to Northwest Europe, which is in dire need of LNG due to cold weather and rapidly dwindling reserves in gas storage facilities, have increased. At that time, fuel prices rose significantly, but the possibility of increased supplies led to a drop in the cost.
By the way, the imposed tariffs also affected oil. The prospect of a trade war between the PRC and the U.S. undermining value growth jeopardized energy demand. As a result, the price of West Texas Intermediate fell to $71 per barrel. Futures fell below the end-2024 level for the first time this year.
In 2024, the U.S. delivered an average of about 250,000 barrels of crude oil per day to the Middle Kingdom. This is a relatively small amount, but an escalation in trade disputes between the two largest economies could have a much broader impact, hurting global consumption.
Unsymmetrical response
Donald Trump's decision to protect American markets from goods from China and other countries could not go unanswered, Galina Ryazanova, an associate professor at the State University of Management, said. However, compared to the amount of aggregate duties in monetary terms imposed on China, the backlash looks rather modest.
At the moment, it is unknown how long the imposition of these duties will last, says Maxim Kuznetsov, chairman of the Russian-Asian Business Council.
- But if they will be in force for a long time, we will see a redirection of commodity flows and a general decrease in efficiency on the market, as it was with the oil segment after the introduction of anti-Russian sanctions, when in fact Russia and the Middle Eastern countries swapped markets: China and India in exchange for the EU, - warns the expert.
China has now imposed duties on the main positions of American exports, Kuznetsov says. At the same time, Beijing has not affected other types of supplies.
- The US is actively supplying China with airplanes, IT equipment, industrial equipment and other technological commodity groups, on the import of which China is seriously dependent and in respect of which duties have not been imposed," the Izvestia interlocutor says.
China's retaliatory decisions are not symmetrical, which shows that China's leadership is unwilling to escalate the trade war, says Ryazanova.
- China has imposed tariffs point by point, and it is obvious that this is a blow not to the US economy, but to the support of President Donald Trump," said Vladimir Demidov, an independent expert of the resources and energy market.
It is oil and gas producers who are the key group that supports the American leader, he reminds. This could be a fairly effective response to the US tariffs, albeit disproportionate.
Obviously, the duties were introduced not to incite war, but to persuade Trump to come to the negotiating table, Demidov believes. With its actions, China primarily wants to show that it can act with the same weapons as the Americans.
A combination of factors
In the case of LNG prices, there may be short-term fluctuations on the background of the news, but in the medium term the introduction of duties will not have a significant impact on the market, Maxim Kuznetsov is convinced.
- A more important factor for the energy market will be the impact of the new trade war on economic growth in the USA and China, a derivative of which is the dynamics of global demand for energy resources. If the trade war leads to a slowdown in China's economy, and estimates of a 0.5% decrease in China's GDP growth have already been published, we will see a decrease in the price of energy resources," predicts the Izvestia interlocutor.
Galina Ryazanova agrees that the tariffs will not have a significant impact on prices on the energy market.
- The imposition of duties on 10.8 million tons of oil out of 4.5 billion tons consumed in the world and on 4.2 million tons of gas out of the world consumption of about 3.4 billion in terms of tons does not pose a threat to global pricing in these markets," the expert believes.
According to her, the cost is influenced to a much greater extent by geopolitical and technological factors, currency exchange rates and the situation on financial markets, as well as changes in the flow of goods and logistics chains.
Market redistribution
China's shift away from U.S. energy is very real. Maxim Kuznetsov emphasizes that China is famous for its strategy of resource diversification. Imports of LNG from the United States in the previous year, of course, increased, amounting to 4.16 million tons, but Australia remained the leader, meeting China's needs by 35% (23.5 million tons), says Galina Ryazanova. In second place was Russia with a total volume of 21.7 million tons. Qatar (16.2 million tons) and Malaysia (6.5 million tons) were also among the leaders.
- In response to the growing demand for LNG and the desire to reduce dependence on LNG imports, China is increasing domestic production, improving infrastructure and gas processing technologies. Supplies from Russia will continue to grow both through pipelines, railroads and road transport, as well as through a network of terminals," the expert is convinced.
Coking coal supplied by the Americans met the needs of China in 2024 by 9%, steam coal - by 0.8%, notes Ryazanova. These volumes can be replaced by additional supplies, which can be realized by Indonesia, Russia and Australia, as well as Mongolia, South Africa and Vietnam.
And oil supplies from the United States to China decreased by more than half in the previous year, amounting to only 10.8 million tons, according to Izvestia's interlocutor. For comparison, China imported 10 times more oil from Russia in 2024 - 108.5 million tons of oil. It follows that China's oil imports have already been reoriented towards Russian products, which will intensify in the future.
For Russia, which is suffering from tougher sanctions on oil and LNG, the trade war between the U.S. and China may come in handy, becoming a factor in increasing demand for Russian energy products, Kuznetsov believes.
- However, it should be understood that diversification of energy supplies is extremely important for China, and it is unlikely to allow Russia to dominate its market," the expert believes.
To replace American oil, China, in his opinion, can increase supplies from Iran via Malaysia, as well as countries of the Middle East and Africa.
The trade war itself between the US and China will end sooner or later by signing an agreement like the one signed in 2020, summarizes Vladimir Demidov.
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