China will remove retaliatory tariffs on various US agricultural and other products imposed since March 10, effective Nov. 10, following the White House's Nov. 1 announcement of a 10% reduction in fentanyl-related tariffs on Chinese goods. However, this tariff reduction will not extend to key US energy commodities, including LNG, crude oil and coal, according to a statement from the State Council Tariff Commission (SCTC) on Nov. 5.
In a separate announcement published the same day, the SCTC said it will further suspend the 24% reciprocal tariffs on all US goods for one year starting Nov. 10, while retaining a 10% reciprocal tariff on US imports as a countermeasure.
While these measures represent a significant step toward easing bilateral trade tensions, the exclusion of major energy products has fueled continued uncertainty about the outlook for US-China energy trade, domestic trade sources said.
Since the latest cuts exclude energy products, tariffs on US LNG, coal and crude oil remain at 25%, 25% and 20%, respectively. These include a 15% retaliatory tariff on LNG and coal, and a 10% retaliatory tariff on crude oil imposed Feb. 10, and the 10% reciprocal tariff is still in place.
China first imposed retaliatory tariffs on US energy commodities as part of a tit-for-tat trade dispute that escalated after the US government's unilateral move to add tariffs on Chinese goods in early February, as previously reported by Platts, part of S&P Global Commodity Insights.
"We will adopt the same strategy as before, since there is no change to current LNG tariffs," said a trade source with one of China's top three national oil companies.
Chinese LNG buyers have been optimizing their exposure to US-origin LNG since Beijing imposed a 15% retaliatory tariff, swapping US cargoes for non-US cargoes, Platts has reported.
Even if China were to remove the 15% retaliatory tariff on US LNG, the remaining 10% reciprocal tariff would still discourage imports, a trade source at another national oil company said.
"There's no difference between 10% and 25%, as long as tariffs exist, trade between the two sides cannot proceed smoothly," the first source added.
China has suspended LNG imports from the US for nearly eight months, since early February, a direct consequence of the US-China tariff dispute, according to Chinese customs data and shipping figures from Commodity Insights.