China’s tariff retaliation targets its modest US imports
Beijing’s countermove is likely to drive more US volumes to Europe and benefit other regional producers, says energy analyst
04 February 2025 - 11:07
byTony Munroe, Florence Tan, Trixie Yap, Emily Chow, Sudarshan Varadhan, Siyi Liu and Chen Aizhu
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An oil tanker approaches cargo vessel Dongtai Baoze, left, berthed at an anchorage off Zhoushan port to supply it with bunker fuel, in Zhejiang province, China. Picture: REUTERS
Singapore — China is the world’s top energy importer, but its purchases from the US are relatively modest, blunting the effect of Beijing’s move on Tuesday 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 Tuesday, China’s finance ministry said it would impose levies of 15% on imports of US coal and LNG and 10% for crude oil as well as on farm equipment and some cars, starting on February 10.
Chinese imports of US crude oil declined 52% to about 230,540 barrels a day (bbl/day) 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% of China’s crude imports, worth about $6bn, according to Chinese customs data, down from 2.5% in 2023.
China’s LNG imports from the US have been growing, however, totalling 4.16-million tonnes last year worth $2.41bn, Chinese data showed, nearly double 2018 volumes for the fuel used in power generation and accounting for about 5.4% of China’s purchases.
The US is the top global LNG shipper but is just the number five 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 about 10% of US LNG exports last year.
China’s tariffs would 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.
Crude costs
Mia Geng, an analyst at FGE, said that when China imposed 25% tariffs on US crude during the trade war in Trump’s first administration, China stopped its purchases of 300,000bbl/day-400,000bbl/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 100,000bbl/day of recent US inflows, which is not a big amount for Chinese refiners,” she said.
The tariffs would make flows of US West Texas Intermediate (WTI) 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 could 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 was not a big importer from the US, but the value of shipments of coking coal — used mainly in steelmaking — rose by nearly a third to $1.84bn in 2024, China customs data showed.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
China’s tariff retaliation targets its modest US imports
Beijing’s countermove is likely to drive more US volumes to Europe and benefit other regional producers, says energy analyst
Singapore — China is the world’s top energy importer, but its purchases from the US are relatively modest, blunting the effect of Beijing’s move on Tuesday 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 Tuesday, China’s finance ministry said it would impose levies of 15% on imports of US coal and LNG and 10% for crude oil as well as on farm equipment and some cars, starting on February 10.
Chinese imports of US crude oil declined 52% to about 230,540 barrels a day (bbl/day) 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% of China’s crude imports, worth about $6bn, according to Chinese customs data, down from 2.5% in 2023.
China’s LNG imports from the US have been growing, however, totalling 4.16-million tonnes last year worth $2.41bn, Chinese data showed, nearly double 2018 volumes for the fuel used in power generation and accounting for about 5.4% of China’s purchases.
The US is the top global LNG shipper but is just the number five 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.
Trump warns of ‘some pain’ for Americans as China vows to fight tariffs
Saul Kavonic, an energy analyst at MST Marquee, said China bought about 10% of US LNG exports last year.
China’s tariffs would 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.
Crude costs
Mia Geng, an analyst at FGE, said that when China imposed 25% tariffs on US crude during the trade war in Trump’s first administration, China stopped its purchases of 300,000bbl/day-400,000bbl/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 100,000bbl/day of recent US inflows, which is not a big amount for Chinese refiners,” she said.
The tariffs would make flows of US West Texas Intermediate (WTI) crude into China expensive relative to alternatives such as Kazakhstan’s CPC and Abu Dhabi’s Murban grades, said Sparta Commodities analyst June Goh.
Trump pauses tariffs on Mexico for a month
“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 could 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 was not a big importer from the US, but the value of shipments of coking coal — used mainly in steelmaking — rose by nearly a third to $1.84bn in 2024, China customs data showed.
Reuters
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