The Phase 1 trade agreement between the United States and China presents meaningful opportunities for liquefied natural gas carriers, though realizing these benefits depends on specific policy actions.
Current Limitations:
Despite the trade deal's signing, China maintains import tariffs on American LNG, which currently prevents significant increases in U.S. LNG shipments to China.
Growth Potential:
Should China reduce or eliminate these tariffs and source most of its 2020-2021 uncontracted LNG requirements from the United States, the impact could be substantial. The analysis suggests this scenario could increase LNG tonne-mile demand by 3-4% over current trading patterns.
Core Insight:
While the trade agreement creates theoretical capacity for growth in LNGC demand, actual market expansion hinges on tariff removal—indicating that political trade policy, rather than the deal itself, remains the critical variable determining shipping market outcomes.
