Economy

Chinese tariffs on LNG, oil aim at U.S. energy dominance agenda

Chinese tariffs on LNG, oil aim at U.S. energy dominance agenda

The Trump administration last month enacted a 25% tariff on roughly $34 billion worth of Chinese goods, prompting Beijing to retaliate in kind, and then threatened to slap additional duties on almost all Chinese goods sent to the US.

The latest round of United States tariffs would range between five per cent and 25 per cent and would hit 5,027 products - a variety of agricultural goods such as beef, as well as small planes, chemical components, textiles, liquefied natural gas and condoms.

China immediately expanded its own list of types of US products to be tariffed, including farm products, cars and crude oil.

The tariffs would be imposed at four different tax rates, China's Ministry of Commerce said in a statement.

But Trump raised the stakes this week by asking the US Trade Representative to consider increasing the proposed tariffs on the US$200 billion worth of goods to 25 per cent.

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China called for an end to the trade dispute through talks with the United States, but on May 29, the United States announced another round of tariffs on about $50 billion in Chinese goods.

"The U.S. side has repeatedly escalated the situation against the interests of both enterprises and consumers", it said. "China has to take necessary counter-measures to defend the country's dignity and the interests of the people, defend free trade and the multilateral system, and defend the common interests of all countries in the world".

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Washington also wants China to stop subsidizing Chinese companies with cheap loans, claiming that this allows them to compete unfairly.

It also said that the date of implementation of the taxes will depend on actions taken by the U.S., while adding that consultation on the basis of mutual respect, equality and mutual benefit is an effective way to resolve trade differences.

Among U.S. products targeted in the latest Chinese salvo were a wide range of agricultural and energy products, including liquefied natural gas. The move was meant to bring China back to the negotiating table for talks over US demands for structural changes to the Chinese economy and a cut in the bilateral trade deficit.

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US Secretary of State Mike Pompeo (left) and China's Foreign Minister Wang Yi (right) shake hands during their bilateral meeting at the 51st Association of Southeast Asian Nations (ASEAN) in Singapore on Aug 3, 2018.

Answering a reporter's question about what was specifically said on trade, Wang said: "We did not speak in such details".

China received 103.4 million cubic feet of LNG from the USA last year, the Energy Information Administration says. So far this year, the trade gap is up more than 7 percent from January-June 2017.

"As the total value of goods under tariffs shoots up, China has little choice but to use LNG and others to top up the value", said Lin Boqiang, professor on energy studies at China's Xiamen University.

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