Less than 24 hours after President Trump late Monday announced tariffs on $200 billion worth of Chinese products, Beijing responded in kind with $60 billion worth of taxes on American goods, including a 10% tariff on liquefied natural gas (LNG), as the Sino-U.S. trade war continued to escalate.
The White House said a 10% tariff on products imported from China would take effect next Monday (Sept. 24) and increase to 25% after Jan. 1. The administration vowed to enact tariffs on an additional $267 billion worth of Chinese imports if Beijing were to take "retaliatory action against our farmers or other industries."
Beijing responded in kind Tuesday morning. China's Commerce Ministry said beginning Monday it would levy tariffs of 5-10% on 5,207 products imported from the United States, including LNG at 10%. The ministry referenced four lists of products it released last August, under which it would enact tariffs of 5-25%.
LNG was on the 25% tariff list in August. China on Tuesday took 2,493 products on the original list and combined it with other tariffs. Last month, China imposed a 25% tariff on a range of American-made goods valued at $16 billion, including coal and petroleum products, in retaliation for the Trump administration levying a tariff of similar size and scope on the same day.
It was unclear if the moves were an exercise in restraint or if China plans further retaliation, should Trump follow through on a threat to tax another $267 billion worth of Chinese imports.
Both sides continued to ratchet up trade tensions.
"For months, we have urged China to change [their] unfair practices, and give fair and reciprocal treatment to American companies," Trump said Monday. "We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices."
While China's Commerce Ministry expressed "deep regret" for the ongoing trade tensions, it said it had no choice but to counter the Trump administration's moves.
"The U.S. insists on increasing tariffs, which brings new uncertainty to the consultations between the two sides," the ministry said. "It is hoped that the U.S. will recognize the possible negative consequences of such actions and take convincing means to correct them in a timely manner."
The oil and gas industry reacted negatively to the news that U.S. LNG had been ensnared in the escalating trade war.
"We are disappointed with this development and would like to see the two countries reach a resolution quickly, which is in the best interest of all parties," said Center for Liquefied Natural Gas Executive Director Charlie Riedl. "Certainty is key for the U.S. LNG industry, where timelines are years long and investments are worth billions, and these tariffs cause serious uncertainty.
"These tariffs have the power to price U.S. LNG out of the Chinese market, the second-largest LNG importer in the world. Tariffs will also make long term contracts more difficult to negotiate. Pricing U.S. LNG out of a key market undermines its competitiveness and ability to reduce the U.S. trade deficit while providing good jobs at home and growing the economy."
Qatar Petroleum CEO Saad Sherida Al-Kaabi, whose state-owned company is the largest gas exporter in the world, agreed that China's tariffs could hobble the burgeoning U.S. LNG industry.
"One of the things that could be damaging for the LNG industry in the U.S. is the taxes that could be levied on them by China or others," Al-Kaabi told CNBC's Steve Sedgwick on Tuesday from the sidelines of the Gastech conference in Spain. "It needs to be looked at carefully because I don't think it's to the benefit of the oil and gas industry for having politics and taxation entered into this.
"It could serve Qatar to have us more competitive in comparison to the U.S., when some of the countries put taxes on U.S. LNG. But I don't think long term it's good for the market to have politics and taxation in a very important basic requirement for humanity, which is energy."
Al-Kaabi said he thought the oil and gas sector should be "left out of the trade discussion."
"It would be beneficial for the LNG industry in the U.S.,” he said, to keep the sector out of the trade dispute. "Otherwise, I think that will impede growth in the American LNG industry, which could be serving Qatar and Australia and others. But I don't think that's a wise thing to do for the long term. We need everybody to be on equal footing and to have real economies compete in oil and gas."