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The liquefied natural gas (LNG) sector has expressed concerns to the Trump administration regarding new guidelines that would mandate the use of U.S. transportation vessels by enforcing fees on ships built in China that dock at U.S. ports.
Letters sent by the American Petroleum Institute (API) this week indicate that these measures, announced by U.S. Trade Representative Jamieson Greer on April 17, could significantly harm a $34 billion annual export industry vital to the president’s “energy dominance” strategy.
This initiative is part of the U.S. strategy to intensify pressure on China for what Washington deems to be unfair trade practices while promoting the domestic shipbuilding industry.
However, U.S. exporters are alarmed, fearing that these regulations would substantially raise the costs of securing vessels.
The LNG sector has already benefited from a three-year delay in the enactment of these rules, as it heavily relies on foreign and Chinese-built ships.
The U.S. Trade Representative is permitting LNG producers a gradual transition to using U.S.-built and flagged vessels over a span of 22 years, but there remains the possibility that U.S. authorities could revoke LNG export licenses if compliance with the new regulations isn’t achieved.
Yet, the API cautions that adherence to the rules is impractical for LNG producers.
Currently, there are no U.S.-built vessels capable of transporting LNG, and U.S. shipyards lack the excess capacity to construct LNG carriers by the 2029 deadline, as per sources familiar with the correspondence.
The API argues that these regulations would impede U.S. producers’ competitiveness in the global LNG landscape and undermine America’s standing as an energy powerhouse.
This governmental action could inspire future U.S. administrations to creatively utilize similar trade measures to revoke export licenses, the group points out.
The industry has also asked the administration to exempt shipments of crude oil and refined products, like gasoline and liquefied petroleum gas, from these maritime tariffs, as such fees would disrupt a well-balanced supply chain and reduce industry competitiveness.
In response to inquiries about the letter, the API conveyed to the Financial Times that while it recognizes the importance of addressing discriminatory trade practices from China and boosting U.S. shipbuilding, it harbors concerns about the proposed rules.
“We remain committed to collaborating with USTR and the Department of Energy to pursue effective and sustainable policies that benefit consumers and advance American energy supremacy,” stated Aaron Padilla, API’s vice president of corporate policy.
Charlie Riedl, executive director at the Center for LNG, an industry group, voiced that these measures could jeopardize long-term contracts, escalate costs for global buyers, and endanger America’s leading role as an LNG exporter.
“That’s why we have urged USTR to completely exempt LNG shipping and LNG carriers from this initiative,” he mentioned.
The U.S. surpassed Australia in 2023 to become the largest LNG exporter, shipping 11.9 billion cubic feet daily last year—sufficient to meet the combined gas requirements of Germany and France. The industry aims to double its exports by the decade’s end.
The new guidelines regarding Chinese-built, owned, and operated vessels have incited considerable lobbying from the U.S. industry, including farmers and other exporters, who have cautioned about rising freight costs.
According to the regulations, the U.S. will impose fees of $50 per net ton on vessel owners and operators from China starting in 180 days, with an increase of $30 per net ton over the subsequent three years. Vessels from other countries using Chinese-built ships would incur a lesser fee.
The oil and gas sector, which significantly supported Trump’s election campaign, has managed to secure various concessions from the administration, including the exclusion of oil and gas imports to the U.S. from tariffs.
