China has ceased importing liquefied natural gas (LNG) from the United States, following the imposition of a 15% tariff on these shipments on February 10, according to ship tracking data. This marks another step in China’s ongoing economic decoupling from the U.S.
Imports of U.S. LNG had already dropped significantly from November to January, with data from China’s customs agency showing a continued decline. Instead, China has increased its purchases from Russia, which supplied four times as much LNG to China last year compared to the U.S.
When China introduced the tariff on American fossil fuels, only two LNG cargoes from the U.S. were en route to China. One cargo arrived before the tariff took effect, while the other was diverted to Bangladesh to avoid the new tax, as reported by energy data company Kpler.
The European boycott of Russian gas after Russia’s 2022 invasion of Ukraine has caused Russian gas prices to plummet, while European companies have turned to more expensive sources, including the U.S. As a result, Chinese electric utilities have taken advantage of lower-priced Russian gas instead of U.S. LNG.
Before the tariff, Chinese energy firms had already reduced their LNG imports from the U.S., redirecting more of their purchases to Europe, where gas prices were higher. According to Gillian Boccara, director of the LNG team at Kpler, the tariffs haven’t significantly altered global trade patterns. With high European gas prices, she said, it “doesn’t really make sense” to send U.S. LNG all the way to Asia.
While the tariffs may not greatly affect trade flows, they could still harm the U.S. LNG industry. Boccara highlighted how U.S. steel tariffs are raising the cost of building LNG export terminals. Additionally, broader tariffs could slow global economic growth, potentially reducing demand for gas.
LNG exports from the U.S. to China surged after the January 2020 trade agreement between the two nations, which included a Chinese commitment to increase LNG purchases from the U.S., though not necessarily for domestic use. In 2021, U.S. LNG shipments to China rose dramatically to 9.3 million tons from just 268,000 tons in 2019. However, in 2022, shipments plummeted as more gas was redirected to Europe, where it fetched higher prices.
Last year, the U.S. accounted for just 3% of China’s natural gas imports, according to China’s customs data.
Six months before Russia’s invasion of Ukraine, Chinese companies began dominating the global LNG market, accounting for 91% of worldwide long-term LNG contracts. A 2023 analysis from Rice University’s Institute for Public Policy found that Chinese firms “virtually monopolized” LNG procurement in the final months of 2021. Many of these cargos, as well as others purchased just after the invasion, were then redirected to Europe for a quick profit.
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