China Stops Buying U.S. LNG Due to Tariffs, Indicating They Will Buy More from Russia Instead

      In another example of tariffs causing loss of market share, China stopped purchasing U.S. LNG, despite long-term contracts. After the 15% tariff was increased to 49%, China had to stop buying it. The U.S. was a minor LNG supplier to China, making up 6% of the country’s LNG purchases in 2024. Still, it is a significant loss of market share that will likely be replaced by Russia, helping to relieve their sanctions pain. Putin can be grateful to Trump for that. This also serves to undermine Europe’s dropping of Russian LNG purchases. China has plenty of other LNG supplier opportunities with lower economic growth expected, so it is fair to assume that the loss of market share may become permanent. The tariffs have become a de facto embargo. One positive effect might be that the loss of demand from Asia may bring down natural gas prices for Europe, which Trump wants to buy more U.S. LNG.

     Shummas Humayun for Cryptopolitan writes:

“For now, the empty arrival logs at Chinese ports underline the practical impact of tariffs that turned U.S. LNG from a growth trade into a stranded cargo, while giving Russia another opening in Asia’s largest gas market.”

     Michael Barnard of Clean Technica writes:

“The result is a gaping hole in the U.S. LNG export market, one that undermines years of investment assumptions and exposes the growing fragility of fossil fuel infrastructure in a changing geopolitical landscape.”

He also points out that when the U.S. began exporting LNG in 2016, China emerged as a major customer. However, they have been dropping their purchases for some time, going from 11% of their total buys in 2021 to 6% in 2024. China bought 15% of U.S. LNG in 2017, but Trump, during his first term trade war caused the purchases to plummet to nearly zero by 2019. A Phase One trade agreement restarted flows in 2020, but even then as now, it was a loss for the U.S. The volumes in 2021 were a record high in Chinese purchases, representing 1% of U.S. LNG sales and about $3.4 billion.

“The loss of China as a customer comes as the U.S. LNG industry is still navigating Europe’s shifting role. Europe became the largest destination for U.S. LNG almost overnight after 2022, when Russian pipeline gas was cut off and European countries scrambled for replacements. U.S. export volumes to Europe surged to over 60% of total shipments in early 2023, with countries like France, the Netherlands, and the UK relying on American LNG to keep industries running and homes heated.”

However, he notes that the EU buys were not meant to last as they decarbonize, electrify, and diversify their energy supply. As a result, they have favored short-term contracts. He also thinks that the long-term viability of increasing U.S. LNG export capacity is in danger and that stranded capacity will occur in the future. I tend to disagree, since natural gas still has a lot of ability to replace coal. However, he may be right that we may end up building too much export capacity. There are competitors like Qatar and Australia. The U.S. has lots of gas but not an endless supply. I doubt there will be stranded cargoes anytime soon, as he suggests, but deeper into the future its possible.

“The implications for these terminals are severe. Without Chinese offtake, nearly a third of the volume committed to future U.S. projects has evaporated. Some developers will attempt to resell this capacity, but few buyers have China’s appetite, credit profile, or willingness to sign 20-year deals.”

“Projects that have yet to reach FID may be shelved entirely. Banks and institutional investors will demand more conservative projections. Risk premiums will rise. Insurance may become harder to obtain. Terminal utilization rates will fall short of modeled expectations, and the entire economics of Gulf Coast LNG will have to be revisited.”

I am not sure he is correct here, and I disagree with his suggestions that we are in a “managed decline” of fossil fuel use – the statistics show otherwise – but at some point, in the next 20 years, that may be the case. In any case, the current loss of Chinese market share is not a good outcome for the U.S., especially if a new trade agreement is not reached. Even if it is, China may not want to risk the unreliability of U.S. trade policy.

 

    

 

References:

 

China halts its purchase of U.S. liquified natural gas. Shummas Humayun. Cryptopolitan. April 18, 2025. China halts its purchase of U.S. liquified natural gas

China Walks Away: U.S. LNG Expansion Plans Unravel as Trade War Escalates. Michael Barnard. Clean Technica. April 18, 2025. China Walks Away: U.S. LNG Expansion Plans Unravel as Trade War Escalates - CleanTechnica