China’s decision to impose a 15% tariff on U.S. liquefied natural gas (LNG) could disrupt the U.S. LNG market, particularly its spot market. As a result, Chinese buyers are expected to reduce their purchases of U.S. LNG and may look for alternative sources.
Industry analysts predict that this move could also lead to hesitation among Chinese buyers to commit to long-term contracts for U.S. LNG from upcoming projects, affecting the future growth of U.S. LNG exports.
The ongoing U.S.-China trade tensions could make Chinese buyers reluctant to sign long-term deals for American energy. This scenario could threaten one of the Trump Administration’s key goals: increasing LNG exports to reduce the U.S. trade deficit and boost its geopolitical influence.
LNG developers in the U.S. typically seek long-term buyers before making final investment decisions (FID) on new projects. These contracts ensure that there is a stable customer base, providing a predictable revenue stream regardless of global market fluctuations. Banks that finance LNG projects also prefer these contracts to secure their investments.
The new Chinese tariff, set to take effect on February 10, 2025, could hinder the signing of such contracts. According to energy consultancy EBW Analytics, the tariff would make it harder for new U.S. LNG projects to proceed toward FID, delaying project progress.
The U.S. LNG sector had previously welcomed the Trump Administration’s efforts to lift the pause on new LNG permits, but the Chinese tariffs introduce new uncertainty. Charlie Riedl, Executive Director of the Center for LNG (CLNG), a trade association for U.S. LNG exporters, stated that the tariffs undermine the administration’s efforts to expand American energy exports and enhance the country’s geopolitical standing.
Before the tariffs were announced, Wood Mackenzie had noted that U.S. Energy Department approvals for LNG permits would take time due to expected legal challenges. However, they still expected at least one U.S. LNG project to reach FID in 2025, possibly more.
U.S.-China LNG Trade Dynamics
China’s role as a buyer of U.S. LNG has been inconsistent. After a year-long hiatus from March 2019 to February 2020 during the first phase of the U.S.-China trade war, China resumed buying U.S. LNG. The trade briefly resumed with a tariff waiver, but in 2023, U.S. LNG accounted for just 5% of Chinese LNG imports.
While China is expected to have long-term contracts for over 20 million tonnes per annum (mtpa) of U.S. LNG in the next few years, most U.S. LNG sales to China currently occur on a spot basis. The new tariff is expected to effectively end the spot trade between the U.S. and China.
Spot sales offer higher returns, but developers looking to proceed with new LNG projects typically seek long-term contracts to ensure a stable revenue base. If China steps back from these contracts, it could delay the development of U.S. LNG projects as developers work to secure alternative buyers.
Growth in U.S. LNG Capacity
Despite the potential setbacks from Chinese tariffs, U.S. LNG export capacity is set to grow over the next few years, thanks to projects that have already received approval from federal authorities. The U.S. remains the world’s top LNG exporter, ahead of Qatar and Australia, with LNG exports reaching a new record in 2023.
Currently, the U.S. has eight operational LNG export terminals, including the newly operational Plaquemines LNG, which shipped its first cargo in December 2024. Another new terminal, Corpus Christi Stage 3, also began LNG production in December 2024.
According to the U.S. Energy Information Administration (EIA), U.S. LNG exports are expected to increase by 15% in 2025, driven by the ramp-up of the Plaquemines and Corpus Christi LNG Stage 3 plants. The Golden Pass LNG project, a collaboration between ExxonMobil and QatarEnergy, is also expected to come online in 2025, contributing to the growth.
By 2026, U.S. LNG exports are expected to rise by 2.1 Bcf/d, reaching an average of 16.2 Bcf/d, according to the EIA’s Short-Term Energy Outlook.
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