New tariff rules pose risk to US LNG market dominance

According to a report by the Financial Times, the American Petroleum Institute (API) has warned the US government about new tariff rules.

API stated that tariffs applied to vessels built, owned, or operated by China could cost the US liquefied natural gas (LNG) sector $34 billion annually and threaten the country’s leadership in the global LNG market.

The US became the world’s largest LNG exporter in 2023.

According to sources familiar with the matter who told to the Financial Times, the US currently does not have enough ships capable of transporting LNG.

Furthermore, it was reported that shipyards in the country do not have sufficient capacity to build such tankers by the deadline set for 2029.

API expressed concern that this situation could lead to a sharp increase in ship chartering costs, stating that most ships are produced in China or other countries.

The US Department of Commerce announced on April 18 that tariffs would be applied to all vessels entering US ports.

The tariff amount will depend on the volume of cargo transported on each voyage.

Restrictions on LNG transportation by foreign vessels have been postponed for three years.

It was noted that the applied tariff will be $50 per net ton after six months and will increase by $30 per ton over the following three years.

This step is considered part of the trade war between the US and China.

In April, the two countries began applying reciprocal tariffs on all imports; a 145% tariff was imposed on imports from China, and a 125% tariff on imports from the US.

The Washington administration aims to correct trade imbalances and relocate production back to the US through tariffs.

Beijing, on the other hand, called on the US to lift the tariffs. The Reuters news agency stated that although China is the world’s largest LNG buyer, imports from the US constituted only 5% of the total supply in 2024.

The agency also reported that Beijing stopped purchasing LNG from the US in March.

Aaron Padilla, Vice President of Corporate Policy at API, commented, “We will continue to work with the US Department of Commerce and the US Department of Energy to support realistic and long-term policies that benefit consumers and strengthen America’s energy dominance.”

Industry representatives also called for the abandonment of tariffs on crude oil and petroleum product shipments to avoid disrupting the supply chain.