China to Raise Tariffs on LNG Imports from United States

(Reuters) – China said on Monday it would raise tariffs on LNG imports from the United States amid a series of additional levies, a move that could further reduce U.S. LNG shipments to the world's fastest growing importer of the fuel.

So far this year, only two vessels have gone from the United States to China, versus 14 during the first four months of 2018 before the start of the 10-month trade war.

On Monday, China said it would boost the tariff on U.S. LNG to 25% starting June 1 versus the current rate of 10%.

That move came in retaliation for a U.S. increase on Friday in tariffs on $200 billion in Chinese goods to 25% from 10%.

Natural gas is seen as a bridge between current worldwide use of much dirtier coal for power generation and industrial uses, and renewable fuels, because it burns cleaner. There has been massive growth in LNG sales in recent years, particularly to Asian nations seeking to reduce their dependence on coal.

The United States, meanwhile, is the fastest-growing LNG exporter in the world, and is expected to rank third in exports in 2019 behind Qatar and Australia. Abundant supplies of natural gas have kept prices low, feeding demand for projects for both domestic consumption and export.

So far, the biggest U.S. LNG producer, Cheniere Energy Inc , has not expressed major concerns about the trade war. Last week, Cheniere, which owns two of the three big operating U.S. LNG export terminals, said the trade war is "unproductive and creates some added costs for our Chinese consumers," but it has not yet materially affected sales.

The United States and China started imposing tariffs on each other's goods in July 2018. As the dispute heated up, China added LNG to its list of proposed tariffs in August and imposed a 10% tariff on LNG in September.

U.S. LNG sales jumped 61 percent in 2018 versus 2017, while China, the world's second-biggest buyer of the fuel behind Japan, increased its purchases by 39 percent last year, according to data from the International Gas Union.

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