China's move to impose tariffs on U.S. liquefied natural gas (LNG) imperils the ability of a burgeoning industry to export the bounty of American shale.
To retaliate against new Trump administration tariffs on $200 billion in Chinese goods, China issued levies on $60 billion of U.S. products on September 18, including a 10% tariff on LNG products.
Shares of Cheniere Energy Inc., the first U.S. company to export LNG from the U.S. Gulf Coast, rose on the news, as the tariff was lower than a 25% levy China had earlier threatened. Still, the tariff is bound to have an impact on American LNG exporters, analysts said, making them a potential early victim in the escalating trade battle between the U.S. and China.
China is the biggest source of new global LNG demand as the country steps up efforts to combat air pollution by shifting from coal-powered plants to natural gas and renewable energy sources.
But tariffs may now hamstring American companies as they negotiate for long-term contracts, experts said. Fewer long-term contracts could help stall a planned wave of new export terminal projects in the U.S.
Currently, numerous countries including Australia, Qatar and Russia are competing with the U.S. as gas becomes a more globally traded commodity.
Sources:sxcoal
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