LNG not on tariff list

07.17.18

China’s omission of liquefied natural gas (LNG) from its vast list of U.S. products that face hefty import duties has preserved a potential weapon should the trade war with Washington deepen, reports Reuters.

The omission also underscores Beijing’s desire to ensure supplies of gas as it pushes to switch millions of households and businesses away from using coal as a key part of its “war on pollution.”

China imposed tariffs on $34 billion of U.S. goods – from pork to soybeans to cotton – in retaliation for a similar move by Washington as trade relations sour between the world’s top two economies.

Although U.S. LNG supplies to China have so far been tiny in volume and value compared with the approximately $12 billion per year of U.S. crude that arrives in the country, analysts say those levels could be set to shoot up as Beijing forges ahead with its battle to clear its skies.

Morgan Stanley has estimated annual Chinese imports of U.S. LNG could rise to as much as $9 billion within two or three years, from $1 billion in 2017. The amount could be even larger if the U.S. resolves a logistics bottleneck.

That would go a long way to helping balance China’s trade surplus with the U.S. But the strategy also hands China another weapon in its arsenal if the dispute deteriorates further. (Source: Reutersg)


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