China and the United States are discussing the resumption of U.S. liquefied natural gas trade worth an estimated $6 billion a year, as energy returns to the forefront of trade talks during Chinese President Xi Jinping’s visit to Washington this week.
China effectively halted imports of U.S. liquefied natural gas in February 2025 after Beijing imposed a 15% tariff on U.S. energy imports in response to tariffs imposed by President Donald Trump’s administration.
Tariffs redirect cargoes
Chinese companies have continued to honor their contractual commitments with U.S. suppliers, but resold the cargoes to buyers in Europe and Asia instead of bringing them into the Chinese market and paying the tariffs. Their existing commitments total about 14 million tonnes a year, worth nearly $6 billion at long-term contract prices, and the value of trade could rise if China resumes buying additional cargoes on the spot market.
Washington and Beijing are discussing the possibility of reducing tariffs on energy and agricultural products, which could pave the way for China to scrap its tariffs on U.S. gas and restore the flow of cargoes between the two countries. Supply disruptions in the Middle East are also giving China an added incentive to diversify its gas sources amid constraints affecting shipping in the region.
Price gap and signs of returning demand
Long-term U.S. contracts supply gas to buyers in Northeast Asia at an estimated cost of about $8 per million British thermal units, while spot-market prices are about three times that level.
China Gas Holdings last week signed a 20-year agreement to purchase U.S. liquefied natural gas starting in 2030. China also imported at least two cargoes during July and August, a limited return after U.S. shipments stopped arriving for months.
Other Chinese buyers held talks with U.S. exporters at a gas conference in Bangkok last week, according to traders familiar with the discussions.
Export projects and sanctions on Russia
The United States is the world’s largest liquefied natural gas exporter, while China is the biggest buyer of the fuel. U.S. exports have risen about 60% from 2021 levels, and annual exports are expected to double by the end of the decade as new projects come online.
U.S. gas accounted for about 12% of China’s total liquefied natural gas imports at its peak in 2021. Chinese buyers could support new U.S. projects, including the Alaska LNG project and proposed export terminals on the U.S. Gulf Coast, whose development depends on securing long-term purchase contracts before multibillion-dollar investment decisions are made.
U.S. sanctions on Russia could, however, pose an obstacle to closer energy-trade ties after Trump signed a law giving him the authority to impose steep tariffs on countries that buy Russian oil and gas. Russia is currently China’s second-largest supplier of liquefied natural gas, with cargoes continuing to arrive from facilities subject to U.S. sanctions.
It remains unclear whether Washington will use the new authority against China or when any potential measures might be imposed, as the two countries prepare to discuss trade and energy issues during Xi’s visit.
