- China has made plan to slap retaliatory tariffs on imports of US crude oil, liquefied natural gas (LNG) and coal.
- For the full year, US imports accounted for 1.7 per cent of China’s crude imports, worth about $6 billion, according to Chinese customs data, down from 2.5 per cent in 2023.
China has made plan to slap retaliatory tariffs on imports of US crude oil, liquefied natural gas (LNG) and coal. Shortly after tariffs on China imposed by US President Donald Trump took effect on February 4, China’s Finance Ministry said it would impose levies of 15 per cent on imports of US coal and LNG and 10 per cent for crude oil as well as on farm equipment and some autos, starting on February 10.
Chinese imports of US crude oil declined 52 per cent to about 230,540 barrels per day (bpd) in the first 11 months of 2024 from the same period a year earlier, data from US Energy Information Administration showed.
For the full year, US imports accounted for 1.7 per cent of China’s crude imports, worth about $6 billion, according to Chinese customs data, down from 2.5 per cent in 2023.
China’s LNG imports from the US have been growing, however, totalling 4.16 million tons last year worth $2.41 billion, Chinese data showed, nearly double 2018 volumes for the fuel used in power generation and accounting for roughly 5.4 per cent of China’s purchases.
The US is the top global LNG shipper but is just the No.5 supplier to China. Still, it has ambitions for sharp increases in LNG exports in coming years under Trump, with China, the world’s biggest importer of the fuel, seen as a potential customer for even more.
Saul Kavonic, an energy analyst at MST Marquee, said China bought around 10 per cent of US LNG exports last year.
China’s tariffs will drive more US volumes to Europe and benefit other regional producers such as Australia, he said.
“The negative impact on US LNG from these tariffs will only partly offset the strong appetite from other buyers to procure more US LNG under pressure from Trump to rebalance trade deficits,” he said.
Mia Geng, an analyst at FGE, said that when China imposed 25 per cent tariffs on US crude during the trade war in Trump’s first administration, China stopped its purchases of 300,000-400,000 barrels per day of US crude and turned to alternatives such as West Africa and Asian supply.
“We are still assessing this internally but it looks like we will see a pause in buying while light-sweet alternatives will be sought after. This impacts about 100,000 bpd of recent US inflows, which is not a big amount for Chinese refiners,” she said.
The tariffs will make flows of US West Texas Intermediate crude into China expensive relative to alternatives such as Kazakhstan’s CPC and Abu Dhabi’s Murban grades, said Sparta Commodities analyst June Goh.
“However, in the big scheme of things, this should not impact the price of WTI significantly as WTI can still flow to other regions easily,” Goh said.
IG market strategist Yeap Jun Rong said China’s tariffs may be seen as a sign of escalation, reducing the chances of a temporary resolution with Washington of the kind that Canada and Mexico reached at the last-minute to delay US measures.
“As such, broader risk sentiments pare down some optimism amid the changing dynamics, with oil prices extending losses further. Market participants are back to price for potential downside risks to global growth in the event of further tit-for-tat measures from both US and China,” he said.
As for coal, China is not a big importer from the United States, but the value of shipments of coking coal – used mainly in steelmaking – rose by nearly a third to $1.84 billion in 2024, China customs data showed.