This week, China announced that it was stopping all imports of US liquefied natural gas (LNG). This constitutes a major shift in the long-standing U.S. – China trade war. Shipments have ground to a standstill. This is because, thanks to the escalating costs fueled by the ongoing trade conflict, it requires substantially more money for China to purchase American LNG cargoes. Data from Kpler, the commodities data firm, show a very different story is developing. Not since the 6th of February has China imported an LNG cargo from the US.
The most recent US LNG cargo to China, exported from Corpus Christi, TX. It finally made historic destination there — a facility in Zhangzhou, Fujian province. This interruption in trade reflects broader tensions that have characterized US-China relations in recent years, particularly concerning tariffs and trade policies. China is looking to shift their dependence and lock in LNG from other partners. This decision is clearly a reflection of increasing costs as well as continued diplomatic strain.
China is the world’s second-largest economy. It is very cutting on the limits of liquefied natural gas to support its industrial expansion and economic trajectory. The cessation of American LNG imports poses a challenge for China, as it seeks to maintain its energy supply amidst a complex geopolitical landscape. The trade war has deeply influenced China’s LNG import strategy. In the other direction, in response, China is accelerating its efforts to diversify its energy supply and reduce its dependence on US energy.
The trade relationship between the two nations has changed profoundly, as tariffs which China has raised in response to U.S. The rapid increase in the price of US LNG has meant shipments are less attractive to Chinese buyers. This escalation has been exacerbated by the tariffs levied during the trade war. Consequently, China has begun importing LNG from all over the world. This has expanded to include Australia and the Middle East to help satisfy its growing energy needs.
This change has deep consequences. Not only does it affect bilateral trade, it has the potential to re-shape the structure of the global LNG market itself. With China actively seeking alternatives to American natural gas, the balance of power within energy markets may shift, influencing pricing and availability worldwide.