“Game of Chicken”: Tariffs and US LNG Exports

By Margaret A. Kidd

From Issue 4, 2025 of Breakbulk Magazine.

The U.S. Energy Information Administration (EIA) projects that global natural gas demand will rise 29% by 2050, driven by the industrialization of emerging economies and decarbonization efforts in regions dependent on coal. Shell’s LNG Outlook 2025 projects a 60% increase in global liquefied natural gas (LNG) demand by 2040, reinforcing the fuel’s growing importance.

As of April 1, 2025, the U.S. had eight Federal Energy Regulatory Commission (FERC) approved LNG export terminals operating, eight under construction, and 12 approved but not yet built. One of the most significant developments of the past fifty years is globalization – integrating national economies into a global economic system – which has driven exponential growth in international trade in general, particularly within the energy sector.

With abundant, low-cost gas, the U.S. is well-positioned to supply and dominate global clean energy needs for the long term despite current trade tensions attributed to the Trump Administration’s Executive Order for implementing reciprocal tariffs on major trade partners on April 9 of this year. While a full-scale trade war with China has officially launched, and potential short-term headwinds exist with other global trading partners, the U.S. remains a leading producer of LNG, delivering much-needed capacity to the world.

During 2024, the U.S. exported 4,367,305.54 MMCF of LNG (EIA). Europe accounted for 48% of U.S. global exports of LNG in 2024, of which 22% was exported to the Netherlands, 16.9% to France, 11.9% to the United Kingdom, 10.1% to Germany and 10% to Spain.

Within the Asia/ Asia Pacific markets, which represented 33.2% of U.S. LNG exports in 2024, 23.2% was exported to Japan, 20% to South Korea, 17.7% to India and 14.7% to China. The Middle East/Africa accounted for 9.6 % of U.S. LNG exports, and Central & South America/Caribbean accounted for 9.2%, respectively.

Game of Chicken

Piercing the veil as policymakers, money managers and corporate executives, along with supply chain, transportation, and trade professionals, digest the impact of U.S. reciprocal tariffs on 90 countries and the recent volatility of stock, bond and commodity markets globally, the economic sentiment has moved to a nexus that these tariffs are coming at a time when the global economy is showing signs of slowing. Without a doubt, many Americans support President Trump’s concern for fixing a global system of tariffs that sometimes is a disadvantage to some U.S. industries and exports.

However, fears of inflation, the slowdown in consumer spending, the delay or sidelining of business investment, the potential for canceled manufacturing orders and conceivably weak freight demand point to the growing concerns and probability of a recession.

Despite this backdrop and the concerns of leaders across the globe, a “game of chicken” is distinctly underway between China and the U.S., Europe and the U.S., and Canada and the U.S. It’s a game lacking transparent goals, rules, a fail-safe switch and off ramp.

The Pivot

In the week leading up to “Liberation Day,” equity markets in Asia, Europe and the U.S. were under pressure, along with the U.S. Treasury Bond market and energy prices. Less than 24 hours after implementing U.S. reciprocal tariffs on April 9, President Trump pivoted to simply imposing a 10% baseline tariff for a 90-day pause on countries versus reciprocal tariffs, except China, which was raised to a high of 145% but has settled at 55%.

It remains to be seen if this was the operationalization of the “Art of the Deal” or, more saliently, the power of a market meltdown and reflection of the impact of the 125% tariff China levied on U.S. imports and then reduced to 10%.

Energy Trilemma

U.S. LNG is key to supporting the energy security of countries that have historically been our allies. Following Russia’s invasion of Ukraine, the U.S. was able to replace substantive capacity in Europe due to sanctions on Russian energy.

Europe’s “energy trilemma” of balancing supply security, environmental sustainability and affordability has seen political efforts prioritizing renewable and zero-carbon energy systems versus gas infrastructure investment and negotiating long-term LNG contracts (Collins & Miles, 2023, p. 5). Table I below provides a breakdown of U.S. LNG exports in 2024 by destination country, volume of LNG delivered, U.S. reciprocal tariff and U.S. trade balance with export country (surplus/deficit).

The U.S. has a trade surplus. with several European countries in general, specifically the Netherlands, United Kingdom and Spain, which rank in the top 10 countries for U.S. LNG exports. While winter is over in Europe, now is the time to replenish next year’s heating.

While a gradual shift toward diversification is likely to occur, limited spot LNG availability from other regions and Red Sea disruptions affecting Qatari cargoes have reinforced U.S. LNG dominance in Europe; at the same time, African producers currently face production constraints that limit their market share (Drewry, 2025, “Short-term Scenario” section).

Nations aiming to reduce trade surpluses with the U.S. or avoid future targeted tariffs could consider a negotiating strategy to rebalance trade by committing to increased U.S. LNG purchases. Regardless of tariff timelines, U.S. LNG exports are poised to become one of the key bargaining tools in upcoming trade negotiations.

Conversely, China has not imported LNG from the U.S. in the last several months, opting to resell long-term contracts due to tariffs. According to the Institute for Energy Economics and Financial Analysis (IEEFA), LNG faces intense competition from coal, renewables and other gas sources in terms of both cost and energy security in China (IEEA, 2025, p. 1).

With the 55% tariffs imposed on Chinese imports to the U.S., China remains highly unlikely to be a destination for U.S. LNG. In contrast to China, other Asia/Asia Pacific nations appear more willing to negotiate trade deals with the U.S. versus retaliate with tariffs.

The Art of War

The Trump administration masterfully demonstrated the “Art of the Prestige” and the “Art of the Pivot” this April, igniting what could have been and might still be the most significant economic tsunami to hit global economies and the world order. As the administration tackles the trade war with China, perhaps a refresher on Sun Tzu’s The Art of War would be timely as they seek to maintain a strategy for U.S. energy dominance.

Margaret Kidd currently serves as the executive director of the Houston Maritime Center and Museum. She is also an instructional associate professor of supply chain and logistics technology at the University of Houston and a frequent speaker at Breakbulk events.

Top photo credit: Shutterstock.