Trump’s Tariffs on China and China’s Retaliation: Impact on Oil and LNG Markets

With 4 charts

The News

Bloomberg: Chinese Tariffs on US LNG Set to Reroute Global Trade Flows

Summary

China's imposition of a 15% retaliatory tariff on US LNG in response to US tariffs on Chinese goods will disrupt the trade relationship between the world's largest LNG buyer and seller. This action will likely lead Chinese buyers to redirect their US LNG shipments to other markets. The tariffs could increase global LNG prices due to market inefficiencies. Ongoing trade tensions will deter Chinese firms from entering new long-term contracts with US LNG projects, impacting US exporters' ability to finance new developments.

Reuters: China’s Curbs on Exports of Strategic Minerals

Summary

China has introduced new export controls on five metals, including tungsten and indium, in retaliation to a 10% US tariff on Chinese goods. Since 2023, China has incrementally tightened export restrictions on minerals like lithium, gallium, and antimony, targeting the US with outright bans and export licenses for others. In late 2023, bans extended to technologies for rare earth magnets and graphite, crucial for electronics, EVs, and batteries, highlighting China's dominance in processing these materials.

EOA’s Main Takeaway

The Chinese retaliation by imposing tariffs on oil and LNG imports from the US is a joke. Chinese oil and LNG imports from the US are very small as explained below.