The US LNG sector is pushing back against President Donald Trump’s attempt to force the industry to utilise US transport vessels through levying tariffs on Chinese-built ships using US ports, The Financial Times reported on April 27.

According to lobbying letters sent by the American Petroleum Institute (API) to the Trump administration, rules announced by US trade representative Jamieson Greer could wreak havoc on an industry that is vital to Trump’s attempts the energy sector.

Under the rules, a levy of $50 per net ton will begin being charged in six months to tankers and operators from China. The fee will be raised by a further $30 per net ton over the next three years as it seeks to wean US exporters off using Chinese vessels. By 2029, at least 1% of US LNG shipped abroad will need to be moved on US-built vessels.

While Trump seeks to give a shot in the arm to domestic shipbuilding, US LNG exporters are raising the alarm that the new policies would vastly increase the cost of hiring vessels and severely plague US LNG exports, which is $34bn-a-year industry.

An immediate shift to US-built and flagged tankers, would both be costly and impractical, the API warned given that no US-built tankers capable of shipping LNG currently exist and that there is no capacity at US shipyards to construct carriers for the super-chilled fuel ahead of the deadline of 2029.

Prior to the announcement of new rules by Greer on April 17, the Office of the US Trade Representative (USTR) had been allowing US exporters to phase-in US-built and flagged tankers over a lengthy 22-year period.

Failure to comply with the new rules, could also see authorities suspend the export licenses of suppliers.

Charlie Riedl, the Center for LNG’s executive director told The Financial Times that the plan could affect the profitability of long-term contracts and put the US’s position as top global LNG exporter into jeopardy.  

“That’s why we have urged USTR to exempt LNG shipping and LNG carriers from this action entirely,” he said.

The new rules put forth by the USTR originated from a petition by labour unions which demanded a federal investigation into Chinese shipbuilding. An investigation by the Biden administration concluded that Beijing had used unfair trade practices, such as subsidies to gain a stranglehold on the shipbuilding sector.