China, the biggest energy-importing nation, has begun an aggressive retaliatory action by applying tariffs to both US crude oil, liquefied natural gas (LNG) and coal imports. Beijing previously officially denounced the EV import levies that the EU implemented last year. This time, it gave the US its own dose of medicine.
China Imposes Tariffs on US Energy Imports
On Feb. 6, the Chinese Finance Ministry declared plans to tax all US oil and gas products entering its territory at rates of 10% and 15% respectively. China made this announcement right after Donald Trump imposed China trade tariffs, hence worsening the existing trade conflict. The tariff implementation date is set for Feb. 10, which will affect US energy export flows bound for China.
The volume of US energy imports entering China proves to be "relatively small" for the country despite potential mounting strains between both nations, according to Reuters.
China cut its yearly US crude oil imports by 52% in 2024 as figures dropped from 480,000 barrels per day (bpd) to approximately 230,540 bpd. The substantial decrease in US crude oil imports amounts to only 1.7% of Chinese imports with a total value of $6 billion.
It's important to note that Trump will pause tariffs on neighboring North American countries, Mexico and Canada, but China is an exemption, according to BBC.
China's LNG Imports Doubled in Recent Years
While crude oil imports declined, China's imports of US LNG increased. In 2024, China imported 4.16 million tons of LNG from the US, amounting to $2.41 billion. It nearly doubled compared to 2018, reaching almost double in volume of LNG imported.
Although it is the global leader in the exportation of liquefied natural gas, America is only the fifth-highest supplier in China. Therefore, this still makes China very important in the future of US exports.
China, as estimated by energy analyst Saul Kavonic, accounted for around 10% of total US LNG exports last year. He pointed out that, although tariffs could be a challenge to US LNG sales in China, demand from other regions could balance this out.
"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," Kavonic said.
Crude Oil Tariffs Have Limited Impact on China's Refining Demand
One of the more material aspects of the China tariff package is the 10% import tax on crude oil from the United States. Analysts anticipate that this could force a response in China, where Chinese refiners will instead turn to substitute supplies, particularly West African and Asian oil origins, to substitute for US supplies.
Mia Geng, FGE analyst said that when China imposed 25% tariffs on US crude in the last trade war, there was a shutdown of around 300,000-400,000 bpd purchases.
West Texas Intermediate crude, typically sourced from the United States, will also be more expensive in China as a result of the tariffs. The effect is also seen as minimal, however, particularly since WTI can still be sold to other regions without a problem.
According to Sparta Commodities analyst June Goh, since WTI can flow to other regions smoothly, the tariffs should not impact WTI's price significantly.
Coal Tariffs: A Small but Notable Impact
China is not a large importer of US coal, but it did experience a significant increase in the value of coal imports from the US in 2024. Coking coal, used mostly in steel, rose by almost a third to $1.84 billion.
On the other hand, with China's import levels of US coal relatively low, the effects of the 15% tariff are likely to be minimal and can be ignored especially when comparing other energy sectors like LNG and crude oil.
Although the retaliatory tariffs imposed by China on US energy exports may seem like a targeted measure, the larger implications of this trade conflict stretch far beyond energy markets alone.
Analysts point out that the intensifying trade war may temper global market sentiment as investors increasingly become wary of further tit-for-tat measures between the two largest economies in the world.
