US LNG export gains at risk if Trump wins election: analysts

Analysts predict that former president Donald Trump’s presidency might give a tough time to the US exporters of liquefied natural gas (LNG) due to the proposed 60% tariff on imports from China, despite Trump’s promises of boosting new energy permits. 

The US became the world’s largest exporter of the super-chilled gas last year, generating tens of billions of dollars in annual trade. Exports will average 12.1 billion cubic feet per day this year, almost double their level four years ago, according to US government estimates.

Even greater potential gains have been stalled because President Joe Biden’s Energy Department paused approvals for new LNG export permits to non-free trade agreement countries. A federal judge in July blocked the administration’s ability to continue the pause in approvals of applications and in September, DOE authorised New Fortress Energy to export up to 1.4 million tonnes a year of LNG.

The Democratic presidential campaign of Vice President Kamala Harris has not said whether she would attempt to continue the pause.

Trump has promised to speed up energy permitting, but this promise could be undercut by his plan to apply 60% tariffs on imports from China, said Erica Downs, Senior Research Scholar at Columbia University’s Centre on Global Energy Policy. She warned that China might reciprocate by avoiding new contracts and re-exporting US cargoes to other nations.

Re-exports to avoid tariffs 

“The destination flexibility of US LNG means that Chinese companies can on-sell it to other buyers to avoid paying the tariff,” Downs told Reuters.

Last year, China accounted for about 4% of total US LNG sales. Its companies have long-term contracts to take almost 28 million metric tonnes per annum (MTPA) of LNG in the future, seven times what it bought last year.

“Trump will stimulate investment, but at the cost of heightened trade risks, especially with China,” added Alex Munton, consultancy Rapidan Energy’s director of global gas.

The largest US LNG exporter, Cheniere Energy LNG, in June said it agreed to sell a subsidiary of China’s ENN Natural Gas 1.8 MTPA of the super-chilled gas, with deliveries to commence in mid-2026. The contract allows ENN to ship the fuel anywhere in the world.

Natural gas demand in Louisiana and Texas, the two states with the most LNG export facilities, expanded by 116% between 2016 and 2022, driven largely by increased demand for feedgas for LNG exports, according to EIA data.

Scare tactic

The Trump campaign has rejected claims that his proposed tariffs could hurt LNG exports, calling it a scare tactic by opponents. Tariffs and deregulation will increase US jobs and production by encouraging companies to drill and produce more oil and gas, campaign spokespeople said.

“Kamala Harris is trying to fear-monger and lie about his plan even though she and Joe Biden kept the Trump era tariffs in place,” said campaign spokesperson Anna Kelly.

Data from the US Energy Information Administration shows Trump’s 2018 sanctions on China caused a 12-month freeze of Chinese imports of US LNG that lasted until March 2019.

If China wanted to retaliate over tariffs, US LNG and oil would be high on its list of imports since they rank among the most valuable US exports to China, said Columbia’s Downs.

“There are other LNG exporters that undoubtedly would be very happy to sell more LNG to China,” Downs told Reuters.

The Harris presidential campaign did not respond to a request for comment. US environmental groups that oppose new LNG plants view Harris as a possible ally.

“Harris has been a proven climate champion throughout her career,” said Mahyar Sorour, Sierra Club’s Director of Beyond Fossil Fuels Policy.

Three US companies whose projects face potential permitting delays, Energy Transfer, Venture Global LNG, and Commonwealth LNG declined to comment.

Top exporter Cheniere Energy, which has new projects on the drawing board, said it has worked with both Democratic and Republican administration and is confident it will do so after the November 5 election.