The escalating US-China tariff war is reshaping global LNG and LPG trade patterns, with potential long-term impacts on shipping demand, according to Drewry.
While the immediate effect on LNG shipping in 2025 is expected to be limited, prolonged tensions could reduce tonne-mile demand, exacerbate oversupply, and delay recovery in LNG shipping rates projected for 2027-28.
The Trump administration has imposed a 145% tariff on Chinese imports, prompting China to counter with a 125% tariff on US goods, including a 15% tariff on US LNG.
China has halted US LNG imports and begun reselling US cargoes to Europe.
China’s LNG imports from the US, which accounted for 5% of its total LNG imports in 2024, are projected to remain at 5-6 million tonnes (80-90 shipments) in 2025 if trade continues undisrupted.
However, current developments make this scenario unlikely. China is expected to substitute US LNG with supplies from Qatar, Russia, and Australia, reducing shipping demand due to shorter voyage distances.
Drewry Maritime Research estimates that US-China LNG trade via the Cape of Good Hope generates 80 billion tonne-miles, but substitution with Qatar, Russia, and Australia would yield 35 billion tonne-miles, resulting in a loss of 45 billion tonne-miles (approximately 45-50 LNG shipments).
In the LPG sector, the US-China trade war affects 14% of global LPG seaborne trade and 55% of global ethane trade.
China, which sourced over half of its LPG imports and all its ethane from the US in 2024, faces challenges in its petrochemical sector.
The 125% tariff on US LPG and ethane has led to a 20% drop in VLGC rates on the US-Japan route within a week.
China’s propane dehydrogenation (PDH) capacity is expected to contract in 2025 due to higher feedstock costs and reduced export demand for finished goods.
China plans to increase LPG imports from the Middle East and Canada by 6.5 million tonnes in 2025, but this will not fully replace US volumes.
Russia’s LPG exports to China, limited to 0.3 million tonnes in 2024 via rail and trucks, are constrained by the lack of a seaborne export terminal, though one is under construction at Port Sovetskaya Gavan for late 2025.
The US faces risks of inventory build-up and delayed terminal expansions, while China’s petrochemical operators contend with higher procurement costs.
Drewry Maritime Research notes that 35% of US-China LPG trade volumes could be lost year-on-year if tariffs persist.
In the long term, reduced LNG and LPG demand, coupled with potential global recession fears, could further depress shipping rates and hinder project developments.
China’s reselling of US LNG to Europe may ease European LNG prices, but this shift could face challenges as Europe’s restocking season ends and China’s summer demand rises.
Additionally, 18 US-China LNG contracts signed since 2021, totaling 28 mtpa with supplies extending to 2040, face uncertainty starting in 2026.
The Trump administration’s proposed $1 million to $3 million fees on Chinese-linked vessels per US port call could further increase import costs.
Drewry Maritime Research, a division of Drewry Shipping Consultants Limited, is a UK-based maritime research and consulting firm established in 1970. It provides market analysis, forecasting, and advisory services across shipping sectors, including LNG, LPG, containers, and dry bulk.
Wanhua Chemical Group Co., Ltd., headquartered in Yantai, China, is a leading global chemical company founded in 1998. It specializes in polyurethanes, petrochemicals, and performance chemicals, with a focus on propane dehydrogenation (PDH) and ethane cracking for propylene and ethylene production. Wanhua operates one of China’s largest PDH plants and has invested in very large ethane carriers (VLECs), such as the Gas Zhujiang, to support its US ethane imports.