China-U.S. Tariff Exchange Highlights Risks & Opportunities for U.S. LNG

As President Trump continues his sweeping tariff campaign, many have noted concerns around its potential impact on U.S. LNG exports, especially as they relate to China. Currently, the U.S. has imposed a 145% tariff on most Chinese imports, and China has placed a 125% reciprocal tariff on U.S. imports. Having previously explored the effects of tariffs on the supply of natural gas and electricity in the U.S., BTU Analytics now explores the potential impacts this ongoing tariff exchange has on U.S. LNG exports.

Although the current tariff rates were officially announced in April 2025, U.S. LNG exports to China have been declining since the beginning of 4Q24, with imports down from their 2024 peak in September, which averaged 1.05 Bcf/d, to an average of 0.23 Bcf/d in December 2024. According to the Department of Energy (DOE), the U.S. did not export any LNG to China in January 2025.

This trend may be further exacerbated by the tariffs, as, in conjunction with the current pricing picture, China may no longer be an attractive destination for U.S. LNG. A 125% tariff on the average Henry Hub forward for the remainder of 2025 would equate to $8.04/MMBtu, while the JKM forward is averaging just $11.88/MMBtu for the remainder of 2025. After accounting for the liquefaction fee and the cost of shipping, the total price for the U.S. cargoes is likely uneconomic when going to China.

However, in the broader context, U.S. LNG exports to China make up a relatively small percentage of total U.S. LNG exports, averaging only 5% in 2024. According to the DOE, China was the 8^th largest importer of U.S. LNG in 2024, surpassed by the Netherlands (10%), Japan (8%), France (8%), South Korea (7%), India (6%), and others. Additionally, U.S. natural gas only made up an average of 5% of China’s total natural gas imports in 2024. Australia and Qatar made up a much bigger portion, accounting for 34% and 24%, respectively, according to Chinese customs data.

Despite declining U.S. LNG exports to China, demand elsewhere for U.S. cargoes remains strong. Europe, which consumed an average of 5.8 Bcf/d of U.S. LNG in 2024, is one destination that may be able to make up for the decrease in China’s demand. Currently, Europe’s storage is particularly low, sitting at a 410-Bcf deficit to the five-year average, as storage levels are at just 1.4 Tcf as of April 21^st, compared to 2.4 Tcf at the same time last year. As a result, U.S. LNG exports to Europe could grow in the coming months as European countries push to refill storage to meet their 90% storage requirement by December 1st. In addition, the European Commission is considering weakening methane regulations, which could also bolster imports of U.S. LNG. European pricing is supportive of additional LNG imports from the U.S., as the TTF forward is averaging $11.54/MMBtu for the remainder of 2025 as of April 24^th, and cargoes headed for Europe wouldn’t be subject to the 125% reciprocal tariff in place in China. As a result, the arbitrage window is still open, and the European market is far more attractive for U.S. cargoes than China.

Despite concerns that tariffs might temporarily limit access to China's demand for LNG, other regions, namely Europe, are likely to compensate, especially as Europe works to replenish its natural gas storage. However, if current tariffs persist in the long term, reduced demand from China due to high prices and worsening trade relations could pose challenges for pre-FID facilities, as Chinese buyers may be discouraged from signing offtake agreements with U.S. LNG projects. Be sure to check back in for future Insights, as BTU Analytics will continue to cover the ever-evolving LNG landscape.

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