Last week Trump threatened to escalate the trade war with China. Today China responded with threats of its own starting with 25% Tariffs on US LNG.
China is proposing a 25 percent tariff on imports of U.S. liquefied natural gas as retaliation for the Trump administration’s latest threat to impose levies on the Asian giant, a major blow to an emerging American business.
Billions of U.S. dollars may hang in the balance. Cheniere, Tellurian Inc. and other LNG developers have been courting utilities and state-backed companies in the Asian country to justify construction of more terminals to ship the super-chilled form of natural gas. The shares of America’s largest gas exporter, Cheniere Energy Inc., fell on the report.
China accounted for 13 percent of the exports from Cheniere’s Sabine Pass terminal in Louisiana as of mid-June, based on ship-tracking data compiled by Bloomberg. The Houston-based company dropped as much as 7.7 percent after the report, the biggest one-day percentage decline since 2016, while Tellurian slid as much as 6.7 percent.
Assuming the tariffs “go into effect, this is a pretty dramatic move by China,” David Lang, global head of LNG at law firm Baker & McKenzie LLP, said by phone. “This has a real impact on prospective deals,” and could affect the next wave of U.S. LNG export projects, he said.
Bloomberg reports Kudlow Says Trump Won't Back Off as China Expands Trade War
President Donald Trump will keep pressing China for trade concessions, a top White House economic adviser said, as the Asian nation continued the tariff escalation by announcing further retaliatory actions against U.S. goods.
“We’ve said many times: no tariffs, no tariff barriers, no subsidies. We want to see trade reforms. China is not delivering, OK?,” National Economic Council Director Larry Kudlow said in a Bloomberg Television interview on Friday. “Their economy’s weak, their currency is weak, people are leaving the country. Don’t underestimate President Trump’s determination to follow through.”
China also signaled on Friday it has no intention of retreating from a trade war. The government announced it has prepared a list of $60 billion worth of U.S. goods to hit with duties should the U.S. follow through on a plan to impose duties on an additional $200 billion of Chinese goods, as early as next month. The Chinese duties ranging from 5 percent to 25 percent will be levied on 5,207 kinds of American imports, the Ministry of Finance said in a statement on its website.
Beijing’s plans for tariffs on $60 billion of U.S. goods includes an additional 5 percent in duty on about 600 kinds of U.S. products including planes and computers; another 10 percent on almost 1,000 products including wigs and textiles; an extra 20 percent on more than 1,000 items including some chemicals, cookers and paper; and an additional 25 percent on over 2,400 products such as meat, wheat, wine and LNG.
More Winning Coming Up
More winning is in the way. Trump will likely follow through on a proposed 25% tax on goods from China, and China will retaliate. This is called "winning"
It's safe to add Cheniere, Tellurian Inc. and other LNG developers to the Growing List of Companies and Organizations Complaining About Tariffs
Fight Fire With Fire
Some of my readers praise Trump for these actions on the basis he needs to "fight fire with fire". Such thoughts are complete silliness.
As I have stated dozens of times, if China is supplying the US with cheap steal, cheap solar panels, cheap whatever, we should be grateful.
Once again, this is indisputable: Standards of living rise when more goods are available at a cheaper price.
Please China, make us pay more! How stupid is that? There is not a damn thing to fight!
There are concerns about theft of IP, but nothing forces companies to do business with China if they believe the threat is real. Anyway, tariffs are not the proper way to deal with such issues.
In regards to the EU, it will take at least a decade to work out another treaty because all 27 nations will have to sign on and ratify the package. It will not happen under Trump.
Finally, and as I have also stated before, trade imbalances started when Nixon closed the gold window. It is absurd to expect tariffs will solve that problem.
- Trump's Lies Won't Make Farmers Great Again: There Was No Deal on Agriculture
- Hey Mr. Juncker, About That Bean Order
- US Trade Policy: Not Only are We Stupid, We are Hypocrites
This is not about beating up on Trump, this is about beating up on blatantly foolish ideas.
Mike "Mish" Shedlock