China is lining up retaliatory tariffs against the US to hit one of its most successful export industries in recent years: energy.
Sales of US oil, gas and coal to China have been rising sharply, and the US energy sector has been running a bilateral trade surplus. But most of those exports, with the exception of liquefied natural gas, face the prospect of a 25 per cent Chinese tariff, as part of a second wave of duties threatened last week.
The impact is likely to erode US oil producers’ profitability. Oil is a liquid global market, and crude that is shut out of China will be able to find buyers elsewhere. The issue will be the discounts US oil exporters will have to accept to find those new customers.
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