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May 16, 2019

16 May 2019

Exploring the Impact of Increased Chinese Tariffs on LNG Growth

On Monday, May 13, China proposed to increase the current tariff of 10% to 25% on liquefied natural gas (LNG) exported from the United States. The proposed increase would go into effect on June 1 in response to the proposed increase on certain Chinese goods imported into the U.S. While this may have limited immediate impact on LNG exports from the United States for LNG plants that have already been constructed (there have been only two cargos of LNG sold to China from the United States this year), it has the potential to slow the growth of LNG exports, including reduced LNG off-take and equity investments in the United States from Chinese entities. China is currently the largest importer of LNG in the world, having surpassed Japan in 2018. The U.S. is projected to be the third-largest LNG exporter, with much of those exports forecasted to go to China.

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