The tariffs announced by US President Trump against Mexico, Canada and China came into force at the beginning of March.
This also affects the Americans themselves, at least when it comes to LNG exports: Some US companies export liquefied natural gas via Mexico.
Mexico is becoming an important location for the export of US LNG, as the gas enters the country via pipelines from Texas, Arizona and New Mexico. Several LNG projects are being planned, including terminals in Altamira, Costa Azul and Salina Cruz.
Export licenses for US gas were suspended under Joe Biden, but were reopened on the first day of Donald Trump’s return to the White House. Nevertheless, uncertainties remain as the trade war instigated by US President Donald Trump and potential tensions with Mexico over trade and tariffs, migration and a range of other issues could affect LNG exports. If trade relations between the US and Mexico deteriorate, blanket punitive tariffs on Mexican exports could also affect US companies that ship LNG via Mexico. Trump could therefore cut his own throat.
LNG by no means a clean alternative
Environmentalists also warn that LNG is by no means a clean alternative, as emissions are outsourced along the supply chain. Analysts warn that the global LNG boom could turn into a bubble, as there is a risk of oversupply by 2026. While Europe’s demand for LNG is falling again after the initial increase caused by the war in Ukraine, economic challenges in Asia and China’s policy of promoting domestic industries could limit imports.
Critics also complain that the industry is deliberately promoting oversupply in order to create artificial demand. Demand is falling, but most players are buying LNG with the intention of selling it on, creating an artificial market. At the same time, the infrastructure continues to expand.
Investments in LNG infrastructure with long payback periods carry risks, especially for institutional investors such as pension funds. In another sweeping move, the Trump administration is planning massive port fees of up to $1.5 million (€1.43 million) per call for Chinese and Chinese-built ships to curb the Middle Kingdom’s dominance in shipbuilding and shipping. However, according to the Dutch financial institution ING, these costs would ultimately affect US companies in particular, as they are passed on by shipping companies to American importers and exporters.
Trump is jeopardizing the competitiveness of US exporters
As China produces 60% of the world’s container ships, many non-Chinese shipping companies that use Chinese-built vessels would also be affected. As port charges are calculated for a shipping company’s entire fleet, it is not enough to divert individual Chinese-built ships to other routes. The additional costs would therefore be passed on to the overall transportation prices, which would weaken the competitiveness of US exporters. Since Canadian ports such as Prince Rupert and Vancouver are not subject to the planned fees, American ships could be diverted there. From there, goods could be transported to the USA by rail. This would also increase transportation costs.
In addition, Trump proposes that at least 15% of US exports would have to be transported on US-flagged ships by 2032, 5% of which would have to be US-built ships. However, according to ING, US shipyards have neither the capacity nor the workforce to build enough ships in a short period of time. (rup)
