In response to the new wave of tariffs announced by the United States, China plans to fight back with USD 60 billion worth countermeasures, targeting, among others, the imports of liquefied natural gas from the U.S.
The Chinese Ministry of Finance announced on Friday, August 3, that it plans to impose 25 percent tariffs on LNG imports from the U.S. The new retaliatory tariffs would also impact copper (25 pct tariff increase), agriculture, as well as power/renewables.
The exact implementation date of the new tariffs is yet to be announced as Beijing awaits the official move of the Trump administration.
The escalation of the trade war between the two countries comes on the back of the 10 percent tariffs the U.S. imposed on July 11. What is more, the U.S. Government announced on August 2, that it plans to heighten these measures with an additional tax increase from 10 to 25 percent, impacting Chinese imports worth USD 200 billion.
The Chinese ministry said such actions were in violation of the consensus between the two countries and the trade rules agreed by the World Trade Organization (WTO).
As such, China is considering a move where it would hurt the U.S. the most- LNG exports.
The buoyant LNG exports, aided by the expanded Panama Canal, have supported Trump’s ambitions of making the U.S. an energy leader. In 2017, the country ramped up its production and quadrupled the amount of LNG shipped across the globe year-on-year. China imported 15 pct of the total amount of LNG shipped by the U.S. last year, making it the third top importer of LNG together with Mexico and South Korea, data from the U.S. Energy Information Administration (EIA) shows.
The U.S. is expected to account for 40% of the world’s extra gas production to 2022, thanks to its shale industry growth, based on the International Energy Agency (IEA), which predicts U.S would compete with Australia and Qatar in global LNG supply.
However, it should be noted that China is expected to drive global demand for gas accounting for up to 40 percent of the global share. Therefore, the new tariffs on LNG, if enforced, are likely to impact the country’s liquefied natural gas sector considerably.
On the other hand, Trump may have found an alternative, as last month he agreed with the President of the European Commission Jean-Claude Junker to boost LNG trade.
When it comes to China, the country is expected to take its demand elsewhere, creating a shift in trade lanes.
Source: World Maritime News
Image Courtesy: Panama Canal Authority