Expanded US LNG production and exports could be used as a bargaining chip by the Trump administration in trade negotiations with Europe, Russia and other major economies in Asia. “Europe is still searching for reliable, long-term alternatives to Russian piped gas and LNG supply, while China-US LNG trade is likely to be affected by tariffs,” commented Rystad Energy’s head of North America Gas & LNG Research, Emily McClain.
European leaders have already hinted at using US LNG purchases as a bargaining tool to avoid potential trade tariffs under Trump’s administration. “By aligning energy policies and prioritizing US imports, Europe could secure a stable energy supply while fostering stronger transatlantic relations,” analysts at the Oslo-based consultancy suggested.
Trade tariffs 2.0 risk to push up energy prices
Trump has a legacy of levying trade tariff during his first administration which has been a great cause of concern about policy risks on the future cost of LNG and global trade. A 25 percent steel tariff, for instance – as implemented in 2018 – led to significant price increases for LNG projects. And this trend that could repeat under Trump 2.0.
Another trade war with China, meanwhile, could disrupt the flow of LNG between the two countries, just as it did in 2019 when LNG exports were halted. “Such tariffs would not only elevate capital expenses for LNG projects,” McClain warned, “[they would] also risk slowing contracting activity with key buyers like China, jeopardizing long-term export growth.”
On the other hand, there is a risk of oversupply on global LNG markets especially if multiple new US LNG projects move forward simultaneously. An oversaturated market could erode prices, disadvantaging US producers compared to competitors like Qatar and Australia. Reliable US supply, on the other hand, would also unlock new demand, particularly from price-sensitive markets in Asia – if executed strategically.
