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Topic: Oil and Gas, and Trade Blog Brand: Energy World Region: Americas, Asia, and Europe Tags: China, Donald Trump, Liquefied Natural Gas (LNG), North America, Russia, United States, and Xi Jinping Can US–China LNG Trade Reach a New Balance? April 20, 2026 By: Gökçe Nur Ataman
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The Trump-Xi meeting in May could reopen dialogue on LNG trade, but any reset is likely to favor flexible, market-driven energy flows over fixed purchase commitments.
President Donald Trump’s planned meeting with Chinese President Xi Jinping in May 2026 stands out as a particularly noteworthy development, especially when considered against the backdrop of the prolonged diplomatic gap between the two leaders. Following their last face-to-face meeting at the G20 Osaka Summit in 2019, the absence of direct high-level engagement for several years has created a significant zone of uncertainty not only in political relations but also in global energy markets. This rupture has generated a more visible impact in the liquefied natural gas (LNG) trade, which remains highly sensitive to geopolitical trust due to its long-term contract structures and pricing mechanisms.
LNG trade between the United States and China represents one of the most striking examples of energy geopolitics over the past decade. One of the most notable features of this relationship is that LNG trade between the two countries has effectively come to a standstill twice, first during the 2018 to 2019 trade war period and second during the renewed tensions of 2025 to 2026. The year 2019 stands out as a period in which the US-China LNG trade declined to near-zero levels. China imported less than 0.3 million tons of LNG from the United States during this period, with this volume accounting for well below one percent of its total LNG imports. The primary driver of this collapse was not technical or market-based factors, but rather the trade war and tariff measures. Tariffs of up to 25 percent imposed by China on US LNG rendered American gas commercially uncompetitive and brought trade flows to a near halt. During this period, China largely met its LNG demand through alternative suppliers such as Australia and Qatar.
The Phase One Agreement and the Resumption of Energy Interdependence
The signing of the Phase One Trade Agreement in 2020 rapidly transformed this picture. The Phase One Trade Agreement marked a critical turning point in economic and energy relations between the United States and China. Under this agreement, China committed to increasing its purchases of US goods, including energy products. By 2021, China’s LNG imports from the United States had risen sharply to approximately 7.04 million tons, marking a dramatic rebound from near-zero levels within just two years. This increase was driven not only by spot purchases but also by long-term contracts signed between Chinese companies and US exporters, with total contracted capacity estimated at around 20–25 million tons per year. This period stands out as the phase during which US LNG achieved its strongest position in the Chinese market.
The Illusion of LNG Recovery Fades
However, after 2022, this growth did not evolve into a sustained upward trend. China’s dependence on US LNG remained limited, and imports followed a volatile trajectory. For example, from 2023 to 2024, US LNG exports to China declined again, reaching approximately 4 million tons in 2024. During the same period, although China’s total LNG imports remained high, the United States’ share remained relatively limited. This indicates that China has deliberately diversified its supply portfolio and has not positioned US LNG as a primary source of supply.
The year 2025 represents another major turning point. China’s total LNG imports fell to approximately 65 to 67 million tons, marking a notable decline compared to the previous year. At the same time, trade relations with the United States deteriorated once again. With the reintroduction of mutual tariffs starting in early 2025, China’s LNG imports from the United States declined rapidly, and after the last cargo deliveries during the year, trade effectively came to a halt.
By 2026, the situation has become even clearer. China has maintained LNG imports from the United States at negligible levels for an extended period of time. This outcome is not driven by technical supply constraints but is entirely the result of geopolitical and economic considerations. The reasons behind this pause in 2026 are multi-layered. However, the critical distinction here is not the suspension of contracts or the complete disappearance of trade, but rather the commercial redirection of volumes under long-term agreements. Chinese companies continue to exercise their offtake rights under long-term contracts for US LNG. However, a significant portion of these volumes is not physically delivered to China. Instead, they are redirected to higher margin markets, particularly Europe, where spot and short-term opportunities offer more attractive returns. This dynamic highlights how LNG trade is increasingly shaped by portfolio optimization, price arbitrage, and contractual flexibility.
LNG Cargoes Redirected, Not Consumed
Major Chinese buyers, including PetroChina, ENN Natural Gas, China National Offshore Oil Corporation (CNOOC), Sinochem, and Sinopec, have been actively involved in this process. Over the most recent 12-month period, these companies have lifted and redirected US LNG cargoes totaling several million tons. A substantial share of these volumes has flowed into European markets rather than into China. In some cases, the majority of cargoes contracted by these companies have been delivered to Europe, with only limited volumes reaching alternative destinations such as Brazil or Bangladesh. This pattern suggests that the redirection of LNG cargoes is not incidental but has become a systematic commercial strategy. The resurgence of geopolitical tensions in the Middle East, particularly rising security risks around the Strait of Hormuz, has once again brought China’s behavior in global LNG markets under scrutiny. However, the assumption that such shocks would automatically redirect China toward US LNG appears to be an oversimplification when assessed within the context of China’s current supply architecture.
Toward a Phase One 2.0 Moment in Energy Diplomacy
The anticipated meeting between Donald Trump and Xi Jinping in May 2026 has the potential to open a new chapter in US-China trade relations, while also being closely monitored from the perspective of energy markets, particularly LNG. However, any potential agreement emerging from this meeting is unlikely to replicate the Phase One model signed in 2020. A more probable scenario would involve a framework that touches upon LNG trade but remains limited in scope, flexible in structure, and aligned with commercial realities.
By 2026, the global LNG market has evolved into a significantly different structure. The expansion of spot trading, Europe’s continued dependence on LNG, and the growing role of portfolio players have made a more flexible trade architecture not only preferable but necessary. In this context, a potential Phase One 2.0 scenario would likely be structured not around mandatory purchase commitments, but around mechanisms that facilitate commercial flows. Chinese companies’ reengagement with US LNG will largely depend on the flexibility embedded in long-term contracts. Therefore, any new agreement is more likely to provide a framework that reduces political and tariff-related uncertainties rather than one that obliges China to import US LNG directly. Such a structure would encourage Chinese buyers to expand their US LNG portfolios while leaving the final destination of cargoes to market conditions.
In other words, LNG trade is increasingly moving away from a model based on state-to-state mandatory purchases toward one defined by company-level flexibility, commercial optimization, and cargo redirection. Within this evolving system, Europe will continue to play a critical role. As the continent’s dependence on LNG increases in the context of declining Russian pipeline gas supplies, it remains a key arbitrage market for Chinese portfolio players. The redirection of US contracted LNG cargoes to Europe, often without physically entering China, will continue to function as a mechanism that both maximizes commercial profitability and reshapes global gas flows.
About the Author: Gökçe Nur Ataman
Gökçe Nur Ataman is an energy analyst and columnist specializing in natural gas, LNG markets, hydrogen economics, and US energy markets. She conducts academic research on the impact of hydrogen on industrial transformation, with a particular focus on Europe and Turkey. Her work analyzes global LNG trade dynamics, contract architecture, energy security, and geopolitical risk, particularly in relation to US LNG strategy, Henry Hub pricing structures, and transatlantic energy relations. Ataman’s research explores the intersection of energy markets and strategic policy, with a focus on supply security, long-term contracting models, and the evolving global energy order.
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Источник: nationalinterest.org