China's tariff on US LNG now 25% means most of new business will go to Europe and elsewhere

Fuel Fix:

China announced Monday it will raise tariffs on U.S. LNG to 25 percent, part of a broad retaliation to President Donald Trump's announcement last week he was raising tariffs on $200 billion in Chinese goods.

The escalating trade war between the world's two largest economies sent financial markets reeling, with the Dow Jones Industrial Average down more than 2 percent Monday morning.

The new tariffs come as U.S. LNG exports are fast rising - up to almost 3.7billion cubic feet a day in February, a more than 35 percent increase over 12 months earlier. Last year China was the fourth largest importer of U.S. LNG, after Japan, South Korea and Mexico, according to the Department of Energy.

"The reality is China is going to be the largest consumer of natural gas in the world very soon," said Charlie Riedl, executive director of the Washington-based Center for Liquefied Natural Gas. "The U.S. is largest natural gas producer in the world, so the two sides deadlocked in a trade dispute its not a great piece of news. This further impedes the progress and slows things down."

Chinese tariffs on U.S. liquefied natural gas are currently set at 10 percent. The new tariffs, which include increases on a broad range of products worth $60 billion a year in trade, will go into effect June 1, according to China's Ministry of Finance.

Over the weekend the administration acknowledged the tariffs on Chinese goods were likely to hit U.S. consumers, who enjoy a steady flow of cheap goods out of Chinese factories. But Trump downplayed the impact on the U.S. economy Monday, tweeting that he expected many industries would leave China for Vietnam and other Asian nations to avoid the U.S. tariffs.

"There will be nobody left in China to do business with. Very bad for China, very good for USA! But China has taken so advantage of the U.S. for so many years, that they are way ahead (Our Presidents did not do the job). Therefore, China should not retaliate-will only get worse!" Trump wrote.
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It would not surprise me to see manufacturers move their business to Vietnam and Taiwan.  Taiwan already produces several tools sold in the US.  The tariffs could become a boom for those countries.  The sale of LNG to Latin America will likely increase as well as the sale of LNG to European countries, especially ones looking to be less dependent on Russia.