Reuters says China’s 15% tariff on U.S. LNG is on the table before Xi Jinping’s White House visit. Removing it hands Chinese buyers back an option they never stopped owning, and leaves 24.5 million tonnes of uncontracted Gulf Coast capacity still looking for a signature.AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP via Getty Images)
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Washington and Beijing are discussing a plan to reduce or eliminate China’s tariffs on American liquefied natural gas before Xi Jinping’s September 24 White House meeting with Donald Trump. According to Reuters, the proposed relief sits inside a broader energy and agriculture package under which each side could cut tariffs on about $30 billion of goods. The talks aren’t final.
For Washington, the immediate attraction is a customer. U.S. exporters are adding a large wave of Gulf Coast capacity, and Reuters estimates that 24.5 million tonnes a year now under construction has no long-term buyer. For Beijing, the attraction is different. American LNG could widen China’s supply options and give it something useful to trade in the wider relationship, provided China can trust the United States not to turn a long contract into a future point of pressure.
That puts four linked questions behind the tariff headline. The United States has to establish policy reliability. China has to preserve optionality across countries, routes and contracts. A portfolio supplier or intermediary has to bridge the buyer’s demand for flexibility and the developer’s need for bankable revenue. Only then can an LNG commitment become useful leverage for Beijing without becoming the foundation of China’s physical gas security.
Reliability Is The Price Of Entry
Removing the LNG tariff would clear an immediate obstacle. It wouldn’t settle the risk carried over a fifteen- or twenty-year contract. The product-specific 15% tariff currently sits on top of Beijing’s 10% blanket levy on American goods, putting the landed tariff rate on a U.S. cargo at 25%. If negotiators remove only the LNG line, ten percentage points remain.
The larger problem is the durability of the opening. Chinese buyers have watched LNG trade rise and collapse with the political relationship. U.S. shipments to China fell to two vessels during Trump’s first-term trade dispute, recovered in 2020 and 2021, then effectively stopped again after China imposed its 2025 tariff. Several Gulf Coast cargoes have recently arrived in China or are heading there, Reuters reported, even with the tariff still in place. Those cargoes show that trade is possible. They don’t tell a utility whether policy will remain stable through 2040.
A Chinese buyer may see value in purchases that reduce friction with Washington or buy Beijing time. That logic works only if the contract itself doesn’t create a new vulnerability. Political reliability therefore comes before strategic leverage.
China Needs A Portfolio Intermediary
China isn’t searching for one replacement supplier. It is building optionality across several imperfect ones. Gulf supply brings scale, alongside exposure to regional conflict and a Strait of Hormuz operating through fees and permissions. Russian pipeline gas reduces marginal LNG demand, alongside sanctions and dependence on fixed infrastructure. Australia, Southeast Asia and Canada offer different routes and pricing. U.S. LNG adds Henry Hub exposure and destination flexibility, alongside American policy risk.
The 2026 supply reshuffle shows how quickly Beijing can move among those options. Banchero Costa data for January through July put Australia at about 36% of China’s LNG imports, Southeast Asian suppliers at 20%, Russia at 12% and Canada at 4% as a new source. Qatar fell to around 13% after Iranian strikes removed 17% of its liquefaction capacity for an expected three to five years. U.S. volumes were 0.2%. China absorbed a Gulf shock by spreading purchases rather than replacing Qatar with American gas.
A portfolio intermediary helps make that strategy commercial. It is a large trader or supplier that controls cargoes from several projects and can sell from the combined portfolio, rather than tying a Chinese utility to one terminal or train. The intermediary can redirect cargoes, combine origins and manage timing, destination and price exposure. In practice, it can sit between a U.S. developer and a Chinese buyer, or the Chinese company can act as the portfolio player itself.
The structure transfers risk instead of removing it. The intermediary charges for flexibility and must still be creditworthy enough to sign an obligation lenders will accept. A shorter contract reduces China’s exposure but may weaken project finance. A longer contract becomes easier for the buyer to carry when it includes flexible pricing, payment, volume and destination terms. McKinsey’s latest LNG buyer survey found that 83% of Chinese respondents intended to secure long-term contracts, while ranking pricing flexibility first. The evidence supports flexibility more strongly than shortness.
China Already Treats U.S. LNG As A Portfolio Asset
Chinese companies hold close to 25 million tonnes a year of U.S. LNG offtake signed since 2018, mostly under twenty- or twenty-five-year contracts. They don’t need to land those cargoes in China to extract value from them. In the year to February 2026, PetroChina, ENN, China National Offshore Oil Corporation, Sinochem and Sinopec chartered 3.3 million tonnes from U.S. terminals and sent almost all of it to Europe. PetroChina delivered 23 of 27 cargoes there. ENN sent all ten.
Free-on-board U.S. contracts give the buyer control of shipping and destination. That turns American LNG into tradable paper linked to Henry Hub, as well as a source of molecules. When tariffs make China unattractive, the cargo can move to Rotterdam. When Gulf supply is disrupted, the contract remains an option. Beijing can therefore retain commercial exposure to the United States without making U.S. gas the core of its domestic supply security.
The September 14 agreement between Venture Global and China Gas fits that model. China Gas agreed to buy 0.5 million tonnes a year for twenty years from 2030, taking its total Venture Global commitment to 2.5 million tonnes. The gas will be supplied across Venture Global’s Louisiana portfolio. The agreement is long rather than short, and it predates the Reuters tariff report. Its significance lies in the structure: a Chinese buyer preserved a U.S. option while the tariff and the destination of future cargoes remained unsettled.
The Option Gives Beijing Leverage
The tariff talks place LNG beside agriculture in a wider exchange, after the energy file had already moved to the center of the Trump-Xi relationship. That makes purchase commitments politically useful. Washington wants export revenue, Gulf Coast investment and visible progress on the trade balance. Developers and lenders want creditworthy customers. Beijing can offer some of that value through a contract, withhold it, or channel it toward projects whose terms preserve Chinese flexibility.
There is already a project-finance precedent. Cheniere’s 2022 PetroChina agreement covered 1.8 million tonnes a year through 2050, indexed to Henry Hub and sold free on board, with roughly half the volume conditional on a positive final investment decision for additional Corpus Christi capacity. Cheniere approved Midscale Trains 8 and 9 in June 2025. The Chinese contract was one part of a larger financing case, but it shows how an offtake commitment can support American capacity.
No public evidence establishes that buying LNG would cause Washington to ease its wider pressure on China. Beijing’s leverage is narrower and more concrete. It can grant or withhold a commercial benefit the United States wants while keeping its own physical supply diversified. A reliable U.S. policy environment would make that benefit larger because Chinese buyers could sign commitments that developers and lenders value more highly.
The contract details after September 24 will therefore matter more than a ceremonial purchase total. A portfolio deal would show China preserving optionality. An agreement tied to a named train, a final investment decision and firm credit support would show that a buyer is prepared to carry long-term U.S. political exposure. Destination rights, pricing, payment terms and the identity of the counterparty will show how the risk was divided.
The first post-summit contract will reveal how much of each side’s risk the other was willing to carry.
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