US-China LNG Trade Talks
US and China Discuss LNG Tariff Cuts as Part of $30 Billion Trade Framework
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Key Points
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China Gas Holdings Ltd. recently agreed to a 20-year arrangement to purchase U.S. LNG beginning in 2030, while other Chinese buyers also met with U.S. sellers at a gas industry gathering in Bangkok.
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U.S. LNG export capacity is projected to increase by roughly 10 billion cubic feet per day through 2027, with new or expanded projects involving Cheniere Energy, Venture Global, Sempra, NextDecade and Exxon Mobil.
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Chinese companies have continued honoring their U.S. LNG contracts despite the tariff, redirecting the cargoes to European and Asian buyers rather than paying the duty to bring them into China.
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The disruption to Persian Gulf shipping has increased the strategic value of U.S. LNG for China; access to Qatar, one of China’s key suppliers, is described as largely severed, while buyers holding long-term U.S. contracts have been relatively insulated from the supply crunch.
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Neither the White House nor the Chinese embassy in Washington commented on the discussions, which Reuters sources said were part of efforts to stabilize trade ties ahead of a Sept. 24 Trump-Xi meeting and remained nonfinal.
The U.S. and China are negotiating a major trade package that could slash or eliminate Beijing's 15% tariff on American liquefied natural gas. US Treasury officials signaled openness to a broader deal following talks between Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. The LNG tariff, imposed in February 2025, has frozen U.S. exports to China worth roughly $6 billion annually.
Chinese companies still hold long-term contracts for about 14 million tons of U.S. LNG per year but have redirected cargoes to Europe and Asia to avoid the duty. Reviving direct trade would help U.S. producers as Gulf Coast export capacity grows and give China a reliable gas source as Persian Gulf supplies face disruption. Negotiators are also discussing mutual tariff cuts on roughly $30 billion of goods, though no deal has been finalized.
How the LNG Tariff Froze U.S.-China Trade
China imposed the 15% duty on U.S. LNG in February 2025 as retaliation for President Trump's tariffs on Chinese imports. The tax made American gas prohibitively expensive for Chinese buyers, effectively halting direct shipments overnight. Before the tariff, the two countries traded roughly $6 billion worth of LNG annually, cementing America as a major supplier.
Chinese companies legally hold contracts for about 14 million tons of U.S. LNG per year. Rather than pay the tariff, they have been redirecting these cargoes to European and Asian markets instead. This workaround kept the supply chains moving but left China without the American gas it had relied on for years.
Why China Needs U.S. LNG More Than Ever
Disruptions in the Persian Gulf have made U.S. LNG strategically crucial for China. Access to Qatar, one of China's largest suppliers, is now described as largely severed due to regional tensions. Buyers holding long-term U.S. contracts have stayed insulated from this supply squeeze, making American gas a reliable fallback.
US Treasury officials noted the talks are part of efforts to stabilize trade ties ahead of a planned September 24 meeting between President Trump and Chinese leader Xi Jinping. Neither the White House nor China's embassy in Washington has commented on the negotiations. The discussions remain preliminary, and no final agreement or specific agricultural concessions have been locked in.
U.S. LNG Capacity Booming as Negotiations Heat Up
U.S. LNG export capacity is projected to jump by roughly 10 billion cubic feet per day through 2027. Major producers including Cheniere Energy, Venture Global, Sempra, NextDecade, and Exxon Mobil are expanding or building new projects. This surge in supply gives American producers leverage in trade talks and makes the Chinese market even more valuable.
China Gas Holdings Ltd. recently signed a 20-year deal to buy U.S. LNG starting in 2030, signaling confidence in future U.S.-China energy trade. Other Chinese buyers also met with U.S. sellers at an industry gathering in Bangkok. These long-term commitments show both sides see value in restoring a relationship fractured by tariffs.
What a $30 Billion Deal Could Look Like
Negotiators are discussing tariff cuts on approximately $30 billion of goods beyond just LNG. The framework could also cover agricultural products and other energy goods. Both nations benefit from lower duties: America gains access to Chinese markets, while China secures stable supplies and lower costs.
Any agreement would need to overcome lingering tensions over trade policy and geopolitics. US Treasury signaled willingness to extend the existing trade truce, which expires November 10, or negotiate something bigger. The timeline remains tight, with negotiations ongoing but no firm commitments announced yet.
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