Chinese President Xi Jinping's upcoming visit to Washington could revive a lucrative $6 billion-a-year trade in US liquefied natural gas (LNG), which was effectively halted in February 2025 when China imposed a 15% tariff in retaliation for President Trump's duties on Chinese goods. This potential agreement on LNG tariffs is part of broader discussions that could see the US and China each cut tariffs on approximately $30 billion worth of goods. Reinstating US LNG imports would benefit both nations, providing China with a reliable energy source, especially given ongoing supply constraints in the Gulf and issues with Qatari supplies, while offering US producers a critical market for their expanding output.
The US is the world's largest exporter of LNG, and China is the top buyer. Despite the tariffs, Chinese companies have maintained existing contracts for US LNG, totaling about 14 million tons per year or $6 billion at long-term prices, but have been reselling these shipments to buyers in Europe and Asia to avoid the tariff. The potential tariff removal would not only re-establish direct trade but also underpin the sustained growth of the US LNG industry, which is undergoing a major expansion phase with export capacity set to grow by roughly 10 billion cubic feet per day through 2027. American LNG exports averaged 17.4 billion cubic feet per day in the first half of 2026, marking a 23% increase from the prior year.
The prospect of renewed Chinese demand is particularly appealing for US LNG developers who require long-term purchase agreements to secure billions of dollars in financing for new projects. About 24.5 million metric tons of the nearly 100 million metric tons of LNG capacity currently under construction in the US are not yet contracted to long-term customers. Some Chinese companies are already positioning themselves for this potential shift; China Gas Holdings Ltd. recently agreed to a 20-year US LNG purchase starting in 2030, and other Chinese buyers have engaged in discussions with US exporters. Analysts like Jane Nakano of the Center for Strategic and International Studies view LNG as an "apparent area of mutual gain," which could help address the trade imbalance and support the US LNG industry's continued expansion.
