In a move that stunned traders, analysts and policymakers alike, China has just announced a complete halt on all liquefied natural gas imports from the United States. A decision made abruptly with no prior indication, no phased reduction and no explanation beyond a terse statement from Beijing…
…China was one of the fastest growing markets for American LNG, importing more than four million tons annually. Cutting that overnight is more than symbolic, it’s surgical.
Early reactions have been nothing short of panic. Energy markets were jolted, LNG prices in Europe and Asia swung wildly and US energy firms reported immediate financial hits…
…Overnight, the US was eliminated from one of the world’s most lucrative gas markets worth more than US$2.4 billion a year. Let that number sink in. More than 4.4 million tons of American LNG every single year now suddenly has nowhere to go.
Ports along the Gulf Coast are already feeling the shock. Massive LNG tankers are sitting idle with nowhere to dock, no buyers to receive them. Terminal operators are scrambling to reroute shipments, but the damage is done. Revenue streams are drying up. American energy firms are haemorrhaging cash: millions of dollars in losses each day…
…
China has begun rerouting LNG cargoes originally meant for East Asia straight into Europe’s energy-hungry markets. The message is clear: If the US wants to weaponise trade, China will weaponise its energy strategy.
Why Europe? Because it’s vulnerable and China knows it. Since the Russian invasion of Ukraine, the European Union has been scrambling to find a replacement for Russian gas. For the past two years, the US had been the emergency supplier, shipping LNG across the Atlantic to prevent blackouts and political chaos in capitals from Berlin to Warsaw. But that relationship, built out of necessity, was never guaranteed.
And China just exposed that fragility. By stepping in with competitive LG offers at lower prices, China is capitalising on a moment of weakness. European energy firms, already strained by inflation and political pressure, are welcoming any chance to secure stable and affordable supply.
One of the major stories of the Ukraine war is how the US took advantage of the pipeline sabotage and sanctions to sell Europe natural gas. Expensive natural gas. This increased the energy cost of heavy industry and led to a lot of European, especially German factories, shuttering and moving to the US.
Win/Win. For America.
China isn’t itself an LNG exporter, but it controls a lot of the market thru long term contracts. It has an excess of what it needs, and it just signed a new contract with Australia for long term supply:
In March 2025, Australia’s energy giant Woodside Energy inked a game-changing 15-year contract with China Resources Gas, one of Beijing’s top natural gas distributors.
Under the deal, Australia will begin supplying 600,000 tons of LNG per year, starting in 2027. While the volume might not seem earth-shattering on paper, the symbolism behind the agreement is monumental…
… Australian LNG is currently 20% cheaper than US shipments largely due to proximity and lower transportation costs. It takes roughly 10 fewer days for Australian cargo to reach Chinese ports, compared to those from the US.
Australia, of course, has been rather anti-China and a big US ally, BUT cold hard cash, err, trumps that.
What’s becoming clear about this trade war is that China has gamed it out. They thought ahead, having learned lessons during the first Trump administration: they were ready. They’ve massively reduced their vulnerabilities and carefully examined America’s weaknesses, and now they’re hitting them. Hard.
This realigns American allies in Europe and Australia more towards China, it hurts the US, and it highlights the benefits of doing business with China.
Xi Jingping
Xi, as we discussed in our last article, has been planning for this, not just since Trump, but since he took power. He’s locked and loaded and he’s firing his guns. The more Trump doubles down, the more America will be hurt, because China needs America less than America needs China. In many cases America firms have no choice but to buy from China, there is nowhere else to get what they need, while China either has alternatives or has already written off buying from the US, as is the case with chips. To China, America is a lost cause: it can’t be relied on either as a supplier or a buyer.
If America’s effectively a write-off, well, treat it like a write-off. And that’s what China is doing.
Trump and many Americans thought that China was the vulnerable one, that China was in a weaker position than them (they made the same mistake with Canada). It isn’t. Now Europe and Japan are holding weaker hands than the US in a trade war, but here’s China actually strengthening Europe.
It is to laugh. Trump’s fundamentally incompetent, a D- player and he’s going up against Xi, who’s arguably a great statesman, and so far, Xi is ripping him a new one.
This is what actual planning and actual competence looks like: see threats in the future and get ready for them. When someone declares you their enemy, as the US has repeatedly, take them seriously.
We haven’t seen that in any Western country in at least two generations.
BC Nurse Prof
BC should sell more LNG to China, never mind what the U.S. thinks about it. From our ports to China is easy – all of our coal goes there already. There are 19 full trains of coal barrelling through Kamloops every day on the way to the coast to be loaded on ships to China. It’s all coking coal for making steel.
Carborundum
It’s almost as if there were some foreign power meddling in our internal affairs helping keep LNG plants from getting built (while building something like 6 over the past decade). Who, I say, *who* could it be?
NR
To take just one of thousands of possible examples of how Trump’s trade war is going to screw over the people who voted for him, look at North Dakota. North Dakota farmers mainly grow soybeans, and they sell 60% of them to China. With China’s retaliatory tariffs doubling prices, they won’t be buying them anymore. That’s going to absolutely destroy farmers in North Dakota.
And it’s not like this comes as a surprise to them. The last time Trump was in office, he did the same thing, and it got so bad for some of these farmers that they actually killed themselves:
https://americanjournalnews.com/donald-trump-trade-war-suicide-rates-midwest-farmers-china/
And yet even with this knowledge of how bad things were for them the last time Trump was in office, North Dakota farmers still overwhelmingly voted for him. His margins were over 80% in some rural North Dakota counties. Because these people care more about hurting the people they hate than they do about even their own livelihoods.
Nate Wilcox
Why do so many American commentators think China is in desperate straits?
Purple Library Guy
Let’s be clear, though, this is the short term tactic. The medium term is simply to stop depending on imports for energy, via energy transition to renewable electrics. China isn’t going to need ANYONE’S natural gas for very damn long. Or oil, either.
Solar panels, batteries, wind turbines are all growing exponentially in China, setting records every year. The transition to electric vehicles is not complete, but is in effect a done deal–this year, the majority of new car sales will be electric or at least plugin hybrid, and by a couple of years from now at the current rate of change very few gas cars will be sold; the composition of the overall fleet will change more slowly, but it is clear where it is going. (This also constitutes a shift from cars made, mainly in China, by foreign manufacturers to cars made by Chinese companies)
It will be a while before China uses zero natural gas. But the last supplier they drop will be Russia, both because they’re buddies and because Russian natural gas is cheap and comes cheaply by pipeline and cannot be cut off by, say, the US navy. They will drop expensive, potentially unreliable LNG from countries that don’t like them first. That would be us.
If we could have right now this year new LNG plants in British Columbia, they could be profitable this year, and next year, and probably for five years. Maaayybe ten at the most; although there are other markets than China they will mostly be shrinking too–the EU is moving away from natural gas at a decent pace. But even ten years wouldn’t be long enough to make back the investment. Which in turn means that any new LNG plant we start talking about now wouldn’t even be finished and operating before the market dried up. LNG is an economic dead end. Also deeply irresponsible vis-a-vis climate.
Oakchair
Trump and many Americans thought that China was the vulnerable one, that China was in a weaker position
——
This is one of the problems with simplifying complex concepts, spreading propaganda, and devaluing serious intellectual discussion.
Eventually you –as in your country, your ruling class and so on– think the simplified explanation is everything, believe the propaganda, and view serious intellectual thought as so pointless it needs to be censored.
A perfect example of cognitive dissonance is seeing the government, the police/justice system, the tech industry, the financial industry, Boeing, the military etc etc fall into incompetence and corruption, while pretending other institutions have magically avoided this same fate.
The same economic structures, ideology, people, propaganda, carrots/sticks, and social culture that turned those entities into cesspools are the same ones every other institution resides in.
The trees aren’t diseased the entire forest is. All the crises –opioid, homelessness, chronic illnesses, declining IQ, environmental destruction, deindustrialization, mass emotional misery, social disconnection– are canaries that have been singing and dying for decades.
At some point they’ll be little left to save if people keep ignoring the warnings because the psychopathic ruling class tell them to turn on the TV, close their eyes and hate the heretical conspiracy theorists.
Feral Finster
@NR: I know North Dakota soybean farmers. It was tragicomic how they bleated about how “Trump has a plan!” last time. He didn’t, but because Trump is weak, stupid and easily manipulated, he won’t change anything over the long term.
And just like clockwork, it appears that the clown folded on tariffs. Evn if we took it as given that America needs to reindustrialize and tariffs on penguins are just the ticket to get America there, nobody is going to invest in anything other than day-trade speculation if there can be no assurances that tariffs will remain in place for over a week.
Mr. Welsh explained it as well as anyone – there is no master plan here, no strategy, just a loudmouth making moves with no thought as to second- or higher-order effects.
What a clown!
Nate Wilcox
What’s your comment on this post Ian?
https://x.com/izakaminska/status/1909666959312277750
“In our Monday Blind Spot piece we noted that the CNY-CNH spread would be the thing to watch now.
“This is the real high noon confrontation in global markets – at least if the real objective of Trump tariffs is breaking the PBOC, and forcing a reckoning over financial repression.
“Worth remembering that when Soros broke the Bank of England nobody considered the depletion of BoE reserves of hard currency as a show of strength or a sign that the GBP was winning. Yet for some reason this is the rationale applied to the PBOC’s USD drawdowns.
“When CNH (offshore yuan) is trading at a discount to CNY (onshore) as is now, it often reflects capital outflow pressure or a market expectation of devaluation.
“A rising CNY/CNH ratio (above 1) may imply that offshore actors are betting against the yuan, anticipating the PBOC will be forced to intervene or devalue.
“If the PBOC were to start burning USD reserves to defend the yuan peg: You’d likely see USD/CNH dropping (i.e., CNH appreciating) as the PBOC sells USD and buys CNH.
“If it happens, this will likely be spun by the CCP as a show of strength and a move to dump the dollar because the dollar is trash. I wouldn’t fall for this. Dumping the dollar to defend the yuan is a signal the government can’t afford to trash its credit standing in international markets. It will come to the Mar o Lago table for negotiations before it gets to its final USD billions.
“If on the other hand they stop selling USD and let the yuan devalue, it’s a sign they’re happy to see their corps get squeezed and even default. They will try to go it alone, and the cold economic war may turn hot. (I suspect).”
Troy
Natural gas, much like other fossil fuels, has uses other than for energy. So moving from burning fuels to renewables for energy will reduce the amount of natural gas China needs, it will still need it for manufacturing.
Burning fossil fuels almost seems like a waste of it.
GrimJim
Biggliest Trash-and-Cash/Poop-and-Scoop operation in history!
https://finance.yahoo.com/news/trump-says-he-decided-on-90-day-tariff-pause-because-people-were-yippy-and-afraid-181126787.html
mago
Gods and demigods and all the rest rejoiced.
Haha.
You have to wonder why The Trumpista’s billionaire buddies and handlers aren’t jerking the leash. Maybe they’re just as blind as he is?
Doesn’t take smarts to amass a fortune beyond a certain frequency on the bandwidth. So, you know, stupid is as stupid does.
Failed Scholar
I’m generally pretty hopeful WRT China, they will be OK as long as they don’t take up the NeoShitlibCon ideology that has destroyed America and the West. What I read from China sometimes makes me wonder how much of the neoshitlib kool-aid they’ve consumed, and how much they actually believe it themselves. Anyone have any first hand knowledge on what they teach in Chinese Econ courses at universities there?
They sometimes sound positively like eurocrats when they sing the praises of holy globalization, praise be, Amen: https://www.globaltimes.cn/page/202504/1331705.shtml
…
“Enormous benefits” like an immiserated and hollowed out rust-belt? The triumph of scammy finance economics (“GeeDeePee go up”) run by rentiers? Political instability resulting from that? Etc.
China and its BRICS partners need to come up with an industrialization paradigm that doesn’t rely on the consumer of last resort model where everyone exports their surpluses to America. Judging by the American experience, becoming the ConSooMer of last Resort™ is akin to committing slow-motion suicide.
Hairhead
The move “stunned” US traders because they, like the majority of Americans — dumb and smart, illiterate and well-educated, homebodies and well-travelled — simply cannot move their minds out of the “we’re the greatest and bestest evar!” and “no-one can stand up to Mighty America!” mentalities. Their brains are imprisoned and it is their greatest weakness; one which is easily exploited.
DMC
Why does the US press seem to be at a 180° to reality? They,’re paid to be so. Ukraine can win. Tarriffs will make us all rich. Random personel cuts throughout the Federal government will increase efficency. Immigrants are holding us back. Elon Musk is a rational actor.
We’re gitten’ while the gitten’ is good.
Jefferson Hamilton
No part of the US press says, “tariffs are good,” or “Elon Musk is a rational actor” for quite a while, now.
Revelo
If the PBOC burns USD reserves and then the Yuan falls when they run out of USD to burn, so what? This is fatuous financialization mentality that says money matters more than real things. China has real things the world wants and they can easily exchange those real things for real things China needs to import, regardless of yuan value and without using USD as intermediary. If some Chinese private banks get into trouble if yuan falls, easy enough to bail them out (with penalty to owners of bank stock) and then warn them to avoid leverage in the future, especially with regards to currencies
Revelo
Meant to put @Nate Wilcox on that comment
someofparts
Except for the source linked to above, nobody else has spotted this development yet. Saw nothing about it at NCap or Breaking Points. Guess I will be watching to see how long it takes everybody else to catch up.
different clue
@BC Nurse Prof,
Pretty soon it won’t matter what America thinks or doesn’t think about Canada exporting LNG from its Pacific West Coast ports.
But since that natgas would flow in pipelines from inland Canadian gasfields to the ports, it may matter what the First Nations across whose land such pipelines would be forced would think.