U.S.-China talks target LNG tariff cuts ahead of Xi visit

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US-China LNG tariff talks

Highlights

U.S. and China are negotiating cuts or removal of China's 15% tariff on U.S. LNG as part of a wider $30 billion trade package ahead of the Sept. 24 Trump-Xi meeting.
U.S. LNG export capacity will expand by 10 bcf/d by 2027, with 24.5 million metric tons of the nearly 100 million under construction still uncontracted.
U.S. LNG exports to China dropped from 64 vessels in 2024 to nearly zero after the tariff, but recent shipments indicate some Chinese buyers are returning despite ongoing tariffs.

Tariff discussions linked to broader trade package

As first reported by Reuters, the U.S. and China are discussing a plan to reduce or eliminate China's tariffs on American LNG as part of a wider package that also includes energy and agriculture agreements. The talks are also tied to a broader framework under which both countries would cut tariffs on about $30 billion of goods, according to two people briefed on the discussions.

China imposed a 15% tariff on U.S. LNG in February 2025 in retaliation for President Donald Trump's duties on Chinese goods, effectively halting the trade. The discussions are part of efforts to stabilize bilateral trade ties before a Sept. 24 meeting between Trump and Xi, but the people said the proposals are not final; neither the White House nor the Chinese embassy in Washington responded to requests for comment.

Potential boost for U.S. LNG exporters

The possible return of Chinese buyers comes as the American LNG industry enters a major expansion phase, with export capacity set to grow by about 10 billion cubic feet per day through 2027 as new and expanded facilities ramp up. Projects involving Cheniere Energy, Venture Global, Sempra, NextDecade and Exxon Mobil are among those adding capacity, while 24.5 million metric tons of the nearly 100 million metric tons under construction in the U.S. have not yet been contracted to long-term customers, according to industry estimates and Reuters analysis.

China remains the world's largest LNG importer and the U.S. is the world's largest LNG exporter, giving both sides an economic incentive to restore a trade relationship that had been expanding before the tariff dispute. U.S. LNG exports to China fell from 64 vessels in 2024 to effectively zero in 2025 after Beijing imposed the tariff, although LSEG shipping data shows several U.S. cargoes leaving the Gulf Coast in recent months have arrived in China or are headed there, suggesting some buyers are returning even with the tariff still in place.

Global supply shifts are also reshaping the market. After Russia's 2022 invasion of Ukraine disrupted Europe's access to Russian pipeline gas, U.S. LNG cargoes that might otherwise have gone to Asia were increasingly drawn to Europe, while the ongoing conflict in the Middle East between the U.S. and Iran is increasing competition for LNG cargoes in Asia. U.S. LNG exports average 17.4 bcf/d in the first half of 2026, up 23% from a year earlier, according to the Energy Information Administration.

Our earlier article examined how markets were bracing for the Trump-Xi summit in Washington amid a “higher-for-longer” Fed outlook, elevated yields, and rising geopolitical risk. We noted that investors were watching the meeting mainly for signals on tariffs, artificial intelligence, and potential spillovers into energy markets that could either worsen stress or support a relief rally.

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