China kills energy trade with the US, but initial impact is limited: Russell
CAPE TOWN, Feb 4 (Reuters) - The trade in crude oil, liquefied natural gas and coal between the United States and China is effectively dead after Beijing responded to President Donald Trump's tariffs with measures of its own.
China, the world's biggest importer of the three energy commodities, on Tuesday slapped import duties of 15% on U.S. LNG and coal, and 10% on crude oil and farm equipment.
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Beijing's move came after the Trump administration imposed an additional 10% tariff on all imports of Chinese goods into the United States.
While the 10% impost was lower than the up to 60% threatened by Trump during his campaign last year to reclaim the U.S. presidency, it was still enough to prompt an immediate response from China.
China's reaction raises the risk of further moves by the United States, and ratchets up the trade tension between the world's two largest economies.
The risk is that a series of tit-for-tat measures causes global economic growth to slow and inflation to rise as countries have to re-order supply chains and deal with increased disruptions to industries such as manufacturing and construction.
However, the immediate impact of China's measures on imports of U.S. crude, LNG and coal is likely to be limited.
China imported 5.99 million barrels of crude from the United States in January, according to commodity analysts Kpler.
This is equivalent to about 193,000 barrels per day, which is less than 2% of China's total imports.
The January imports were typical of volumes in recent months, although China has imported more U.S. crude on occasion, with the 948,000 bpd of June 2023 being the highest in the past two years.
China's LNG imports from the United States have also been modest in recent months, with January coming in at 190,000 metric tons, down from 220,000 tons in December.
The LNG volumes have been fairly volatile, reflecting the spot nature of the trade between the United States and China, but the highest in the past two years was 780,000 tons in October last year.
China's total LNG imports have been averaging around 6.5 million tons a month recently, meaning the U.S. is supplying in a range between 4% and 12% of the total.
China's imports of coal from the United States were 1.34 million tons in January, according to Kpler, with the strongest month in the past two years being 1.55 million in August last year.
Official customs data showed China's total coal imports averaged 45.2 million tons per month in 2024, making the U.S. little more than a fringe supplier.
BROADER IMPLICATIONS
Given that both China and the United States can probably adapt without too much inconvenience to Beijing's tariffs on energy imports, the question then becomes whether it matters.
The answer is that it amplifies tensions and accelerates the trend of increasingly splitting the world into two trading blocs, one that does business with Trump's America and its allies, and one that prefers to deal with China and what has been described as the global south.
The risk is that Trump continues to attack both his traditional allies and rivals with tariffs as part of his "America first" agenda, a policy that may serve to drive commodity producers more towards the emerging BRICS trading bloc.
China is also flexing its muscle in commodities by announcing new export controls on five minerals that are used in defence and energy transition industries.
The controls, which come into effect immediately, cover the metals tungsten, tellurium, bismuth, indium and molybdenum and their related products.
The measures make it more likely that Western nations will seek to find and develop their own supplies.
But this will mean having to engage with companies and governments in Africa, Asia and Latin America, many of which are likely to be targets of Trump's tariff and aid measures.
(Editing by Mark Potter)