US Loses $2.5 Billion as Trade War Tensions Flare Up (Uncut) 04-20-2025

China SHUTS DOWN American LNG Deals: US Loses $2.5 Billion as Trade War Tensions Flare Up

Welcome back, everyone. Thank you so much for being here today. The economic decoupling between the United States and China appears to be underway.

Following the escalations in tariff wars, with tariffs rising to the point where they effectively become an embargo, as of April the 18th, China effectively ceased importing liquefied natural gas, LNG, from the United States. For now, the suspension is expected to last 10 weeks. However, with how things are going, if both sides don’t reach an agreement, it might be safe to assume that the suspension will be extended.

China’s imports of liquefied natural gas, LNG, from the United States have varied over the years and mostly depended on such factors such as trade policies and global energy demand. However, China never stopped importing LNG completely before. Now, it doesn’t import at all.

Analysts warn the renewed suspension could impact the viability of large LNG infrastructure projects in the United States and in Mexico, particularly those that rely on Chinese investment and a long-term contract. So in other words, potentially this may cost US jobs if the suspension of LNG imports lasts for a long period of time. This is an excellent example of the consequences that a tariff war may lead to.

And here’s the catch. China managed to swiftly shift toward Russian and Iranian sources. China’s ambassador to Russia shared that there are ongoing talks to establish stronger ties with Russian suppliers of LNG.

Russia, by the way, has become China’s third largest LNG supplier after Australia and Qatar. US LNG accounted for just 6% of China’s LNG imports in 2024, which appears to be relatively easy to replace. Over the past five years, the United States has significantly increased its liquefied natural gas exports to China.

Here are the approximate annual export figures in million cubic feet. As you can see, volumes have been trending up during the past decade. China is not one of the top importers of US LNG.

Among the biggest importers are Europe, Latin America, and Africa. However, the total value of US LNG exports to China last year in 2024 was approximately two and a half billion dollars, a substantial source of revenue. The trade war is actually working very much in favor of long-term strategic goals by forcing countries of the global majority to seek ties with countries that they didn’t really have close ties before.

And in this particular case, these quite aggressive moves create more and more reasons, more incentives for China and Russia to strengthen economic cooperation. Of course, both countries seek to develop cross-border trade with Iran. Iran has vast natural energy resources as well and will prove to be a really important partner in the region.

Chinese buyers are diverting their US LNG contracts to Europe and are increasingly sourcing LNG from other regions, including Australia and the Middle East. Additionally, China is boosting its domestic gas production to enhance energy security, which is likely a benefit in the long run. So this shift has significant implications for global LNG markets.

European buyers are capitalizing, of course, on the situation by purchasing more LNG from the United States that would have otherwise been delivered to China. US LNG exports to Europe have surged, so in a way, Europe is likely to become even more dependent on the United States for its energy resources. For the United States, the trade war may cost thousands of jobs, similar to the outcomes of the trade war started by President Trump during his first presidency.

The US-China trade war, initiated under President Donald Trump, has had significant economic repercussions, including job losses in the United States. A study commissioned by the US-China Business Council and conducted by Oxford Economics estimated that the trade war led to a peak loss of 245,000 US jobs. These job losses were concentrated in manufacturing industries, particularly in states like California, Texas, New York, Illinois, and Pennsylvania.

The hardest-hit districts were often those with a high concentration of jobs in electronics, in textiles, and other durable goods industries. In summary, under Trump’s first presidency, the US-China trade war had a substantial negative impact on US employment, particularly in manufacturing sectors, with hundreds of thousands of US jobs lost or displaced. Should we expect a rerun of this scenario now? I would say so, but of course, now the consequences will be much worse if both countries don’t reverse their escalatory course.

In response to China suspending imports of American LNG, President Trump is now considering imposing tariffs, more tariffs, on Chinese-built and owned ships that are docking at American ports. This will further escalate the trade tensions between the two nations. The administration proposes charging up to $1 million per port call for Chinese-owned vessels and up to $1.5 million for non-Chinese operators with fleets containing Chinese-built ships.

These fees would be calculated based on the vessel’s net tonnage or cargo capacity. The unfolding economic decoupling between the US and China is rapidly shifting from a theoretical concern to a real-world disruption, with tangible consequences, as you can tell. China’s recent suspension of liquefied natural gas purchases from the US, a move prompted by escalating tariffs that were basically on the verge of a de facto embargo, signals a significant fracture in energy trade relations.

The suspension points to China’s growing ability to pivot swiftly toward alternative suppliers like Russia, Iran, Australia, and Qatar. This flexibility underscores the limited strategic leverage that the United States holds in LNG exports to China, which accounts for only 6% of China’s total LNG imports. So, clearly, China is not in a losing position here.

Still, the fallout for the United States is notable. An estimated $2.5 billion in trade, along with long-term contracts that support US and Mexican LNG infrastructure projects, are now threatened. With Chinese buyers diverting US LNG cargos to Europe and seeking new global suppliers, American LNG developers may face stalled investment and potential job losses, the outcomes we already witnessed during the earlier phase of the US-China trade war under Trump’s first presidency.

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