China and US Open Talks to Cut LNG Tariffs Ahead of Summit

China's Ministry of Commerce said Sept. 19 that Vice Premier He Lifeng traveled to the United States for economic consultations aimed at easing retaliatory tariffs, including levies on liquefied natural gas.

The talks prepare for a bilateral summit between President Donald Trump and President Xi Jinping scheduled for Sept. 24 in Washington. Both governments are examining reciprocal tariff reductions across $30 billion in non-sensitive trade.

The agenda centers on easing or lifting a 15% retaliatory tariff that Beijing placed on American liquefied natural gas in February 2025. That duty halted direct Chinese purchases of prompt Gulf Coast cargoes.

The tariff review forms part of negotiations to extend a broader bilateral tariff truce before it expires Nov. 10. A renewal would maintain existing duties while opening exemptions for energy and agricultural shipments.

Treasury Secretary Scott Bessent and United States Trade Representative Jamieson Greer represent the American administration during the meetings in Washington. Bessent confirmed the schedule during congressional testimony in the House on Sept. 16.

The discussions conclude Sept. 23, one day before the two heads of state meet. Trade officials seek an agreed framework on energy purchases to announce alongside the summit.

Commercial energy firms have moved ahead of the diplomatic schedule. Venture Global and China Gas Holdings announced a 20-year sales and purchase agreement on Sept. 14 at the Gastech conference in Bangkok.

Under the contract, China Gas will receive 500,000 tonnes per annum of American fuel beginning in 2030. The agreement expands the total volume China Gas procures from Venture Global to 2.5 million tonnes per annum.

Venture Global supplies the gas on a free-on-board basis from its export terminal portfolio in Louisiana. The Virginia-based producer holds roughly 50 million tonnes per annum of production committed under 20-year customer contracts.

For China Gas Holdings, the transaction raises its contracted long-term import portfolio toward 3.5 million tonnes per annum. The company distributes piped gas to industrial facilities and residential districts across more than 300 Chinese municipalities.

Direct trade between the two countries stopped after Beijing enacted the 15% import surcharge. Chinese customs recorded more than $6 billion in American gas arrivals during 2021 before flows fell near zero in 2025.

Most American export contracts tie cargo prices to the domestic Henry Hub benchmark plus a fixed liquefaction fee. The 15% duty added roughly $1.50 per million British thermal units to delivered gas prices in southern China.

That border surcharge made American volumes uncompetitive against domestic pipeline supplies and Russian gas. Chinese state importers subsequently diverted their long-term American contracted cargoes to third-party terminals in Europe and East Asia.

State traders including Sinochem and PetroChina retained off-take rights while redirecting physical ships. The resale strategy allowed state utilities to collect trading margins without paying import duties at domestic coastal regasification plants.

Lowering the retaliatory tariff would let Chinese gas distributors bring those contracted vessels directly to mainland berths. Direct discharge provides immediate feed gas to industrial consumers in coastal provinces such as Zhejiang and Jiangsu.

A resumption of direct deliveries would also affect regional pricing across East Asia. Diverting flexible Atlantic and Gulf Coast supply into Chinese ports reduces surplus spot volumes that Asian traders sell to secondary buyers.

Utilities in Japan and South Korea watch the tariff negotiations for clues on winter fuel costs. State buyer Korea Gas Corporation and Japanese power producer JERA buy uncommitted spot cargoes when regional temperatures fall.

A tighter spot market raises procurement costs for North Asian utilities that lack pipeline connections. South Korea and Japan import almost all natural gas as liquefied fuel and remain vulnerable to regional supply shifts.

American export project developers also need Chinese commercial commitments to finance new liquefaction trains. Capital providers require firm 20-year off-take agreements before underwriting multi-billion-dollar construction loans along the Gulf Coast.

Chinese national oil companies froze new long-term commitments with American projects following the 2025 tariff round. Instead, Beijing signed multi-decade supply deals with QatarEnergy and expanded pipeline flows through the Power of Siberia conduit.

A formal tariff waiver would revive contract talks between Chinese utilities and pending American export terminals. Developers such as Venture Global and Cheniere Energy rely on Asian demand to back liquefaction expansion beyond 2028.

The proposed $30 billion non-sensitive goods package pairs liquefied natural gas with agricultural commodities and specialized industrial machinery. Both negotiating teams designed the package to secure immediate economic gains without altering strategic high-technology restrictions.

The ministry announcement does not state the exact tariff reduction schedule for liquefied natural gas, and neither government has published the final list of non-sensitive tariff lines.

He Lifeng concludes the preparatory meetings in Washington on Sept. 23 before the bilateral summit convenes the next morning. The existing bilateral tariff truce remains in effect through Nov. 10.