The evolving landscape of trade relations between the United States and China has increasingly become a topic of global interest, particularly regarding the sectors of oil and liquefied natural gas (LNG). Since 2020, the amount of crude oil and LNG exported from the U.Sto China has consistently exceeded $50 billion annuallyHowever, this relationship appears to be heavily one-sided, as China shows little dependence on American oil and gas importsThis dynamic is now beginning to shift, particularly in light of recent tariff decisions made by both nations.

In a strategic response to the U.Simposing a 10% tariff on Chinese goods, China has moved to levy its own tariffs on certain imports from America, placing particular emphasis on U.S.-sourced LNG and crude oilIt was on February 4, 2025, that an official announcement of these tariffs came to light, coinciding with the U.Sgovernment's declaration of tariffs on all products imported from China, citing the contentious issue of fentanyl among other concerns

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Such unilateral action by the U.Sis seen by many as a profound violation of World Trade Organization rules, a step that does little to address the core issues at stake while harming the bilateral economic relationship.

The history of U.Soil exports traces back to the lifting of a ban in 2015, and by 2018, the U.Shad surpassed Saudi Arabia to become the largest producer of oil in the worldBy 2023, it achieved a similar status in the LNG sector, highlighting the strategic importance of oil and gas in U.Sinternational tradeChina began importing U.Scrude oil in 2016, and two years later, it saw a significant uptake in LNG importsNevertheless, when considering the overall volume of China's oil and gas imports, the stakes of U.Ssupplies appear minimal.

Industry experts suggest that the absence of strong trade dependencies implies that U.SLNG and crude oil imports will have little impact on China's energy choices

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The international market remains saturated with alternatives, and as a result, the latest tariffs are expected to divert U.Senergy exports toward other markets, leading to a significant reduction in the amounts sent to ChinaAccording to statistics from the General Administration of Customs, the projected import value of American crude oil and LNG for China in 2024 stands at around $60 billion, a figure now endangered by the looming threat of tariffs.

In detail, the newly imposed tariffs will add 15% on coal and LNG, alongside a 10% tariff on crude oil, agricultural machinery, large vehicles, and pickupsItems listed as originating from the U.Swill see tariffs levied in accordance with existing tax rates, indicating no room for exemptions or reductionsAmong these commodities, American crude oil and LNG represent the highest values of trade, demonstrating the considerable stakes involved.

Focusing specifically on crude oil, by the end of 2024, China is expected to import approximately 9.64 million tons from the U.S., making up only about 1.74% of its total crude oil imports

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This translates to an import value of approximately 42.85 billion yuan, or 1.85% of the total crude oil valueIn tandem, LNG imports from the U.Sare forecasted at around 4.16 million tons, which constitutes about 5.43% of China’s total LNG imports, corresponding to an import value of 17.18 billion yuan, adding up to a collective import value of around 60.03 billion yuan for both sectors.

This isn't the first time such tariffs have been levied against U.SenergiesBack in 2019, in a response to U.Stariffs on Chinese imports, tariffs were implemented on a wide range of American goods, including a 5% tariff on crude oil, marking an early frost in trade relationsFurthermore, following significant investments into LNG imports, recent trends indicated that the U.Sbecame the number one exporter of LNG by 2023, marking a critical point in this evolving energy narrative.

When considering tariff impacts, industry analysis suggests that without immediate substitutes, tariffs generally shift costs to consumers

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However, since both oil and natural gas are categorized as standardized commodities and given the current global oversupply, Chinese companies are unlikely to shoulder higher costs of American importsThis situation signals an urgent need for the U.Sto identify alternative export markets, suggesting a void that must be addressed in the wake of the tariffs.

With American oil and gas only marginally impacting China's final energy imports in 2024—1.74% for crude and 5.43% for LNG—the country ranks 11th and 5th respectively among the various nations it imports fromExperts like Wang Nengquan from the National Energy Advisory Committee express that the present condition of the international oil market, along with an anticipated LNG surplus, only reinforces China's ability to import energy from diverse, alternative sources beyond the U.S.

Indeed, following previous rounds of tariffs against U.S

oil and gas, China observed a sharp decline in the volume of these importsAnalysts predict that another wave of tariffs could further exacerbate this downward trendGao Fei, an energy researcher at Longzhong Information, has indicated that with the recently introduced 10% tariff on imported U.Scrude oil, an extra cost of approximately $7 per barrel translates to a potential increase in costs of about 500-550 yuan per ton—an unsustainable situation for importers operating under current market conditions.

American crude is primarily light and low sulfur, with a multitude of alternatives available worldwide across regions like the Middle East, Europe, and West AfricaCompanies like Sinopec, which owns Zhanhua, one of the world’s largest crude oil importers, enjoy a diversified portfolio of crude sources, allowing for strategic adjustments without significantly impacting operational efficiency.

In the realm of LNG, the increased tariffs disadvantage American products even more significantly

Over the past five years, LNG imported from the U.Shas regularly been priced higher than that from alternative exporters like Qatar and AustraliaAccording to Longzhong Information, the average profit margin for Chinese companies purchasing U.SLNG has been negative—importing at an average loss of 306.23 yuan per ton, and the 2022 figure revealing a staggering loss of 785.22 yuan per ton.

The high transportation costs associated with U.SLNG further exacerbate its market competitivenessThe journey from the Gulf of Mexico to China can take over a month, adding layers of logistical challenges that invariably inflate pricesIn contrast, imports from Qatar and Australia enjoy significantly lower shipping fees.

Despite these challenges, many Chinese energy companies have entered long-term contracts to import LNG from the U.S., totaling over 20 million tons in agreements over the last five years

While some contracts are set to commence actions after 2025, they do allow for flexibilityUnlike conventional gas contracts, these agreements broadly adopt a Free on Board (FOB) pricing structure, incorporating destination flexibility—a key advantage considering the possibility to redirect shipments should they become uncompetitive within the Chinese market.

Prior to these new tariffs, there were indications that China had no pressing need to increase its imports of U.Snatural gas, and some analysts posit that volumes could hover around zero following tariff implementation.

However, international analysts speculate that the rationale behind raising tariffs on Chinese imports is to negotiate a place at the bargaining tableSome proponents in the industry believe that U.Soil and LNG can provide leverage for negotiations, suggesting that should the U.Soffer concessions on other fronts, there may be space for altering the current tariff trajectory.