US LNG Shipment Redirected from China Due to Tariffs

A recent shipment of US liquefied natural gas (LNG) has arrived at Yangpu port in southern China, but it won't be staying there. The cargo, which originated from Venture Global's Plaquemines LNG facility in Louisiana, was initially thought to signal a thaw in trade between the two countries.

However, Chinese buyers are re-exporting the gas due to a 25% tariff that would cut into their profits if they brought it into China. This move is not random, as global LNG prices have risen over the past month, making it more lucrative to sell the gas abroad than at home.

China has secured alternative supply routes, particularly in light of Middle East turmoil disrupting shipments from Qatar and the UAE. The US LNG was unloaded and placed in a tariff-free bonded warehouse, where it will be readied for shipment to markets offering better pricing.

This development highlights how tariffs can influence trade flows even when goods are already on the water. While the US LNG is still being sold, it's not to the original buyers, underscoring the persistent trade divide between the two nations.