Specter of Trump Tariffs Spurs Interest in US Gas Contracts

President Donald Trump’s high-stakes bid to use natural gas exports as leverage to expand US influence in Europe and Asia appears to be gaining early traction.

Government officials and energy executives from countries such as India, Kuwait and Japan have been holding talks about procuring more US gas, according to people with knowledge of the matter.

The strategy, however, carries a significant risk. If Trump levies tariffs against China or other nations that balk against buying more LNG, he could drive them away from buying from US producers altogether.

The move to lock in American supply contracts began shortly after Trump’s Nov. 5 election victory, more than two months ahead of his actual swearing in, said the people, who requested anonymity discussing private matters.

He has  the European Union with tariffs multiple times if the bloc doesn’t purchase more from the US. Buyers from South Korea to Vietnam are considering procuring more American gas to avoid crippling trade levies.

“His threat to link EU tariffs to LNG purchases marks a stark departure from market-based principles,” said Claudio Steuer, a veteran energy consultant. The potential levies shift the US position on LNG from competitive pricing to “politically-driven trade that could undermine long-term market confidence,” he said.

Trump’s tactics are pushing away some other buyers, like those in China, the world’s top importer, said other people aware of ongoing negotiations with US exporters.

Trump, preoccupied with steep US trade deficits, has been clear about his intention to use the nation’s energy-superpower status to balance the equation. He’s actually reviving a  from his first term that relies on the nation’s vast trove of gas along with the fleet of multibillion-dollar plants that liquefy the fuel for export.

Since the start of Trump’s first term in 2017, US exports of liquefied natural gas have turned into a gusher, vaulting the nation to the LNG market’s top rank. By 2030, roughly one of every three LNG shipments worldwide will originate in the US.

The American LNG boom comes at a time when the world’s appetite for gas has never been more ferocious. Demand for the fuel used in several industries including power production, heating and fertilizer manufacturing, is at an all-time high, fed in no small part by aspirations to shift away from dirtier coal. Gas consumption could  as much as 12% by the end of the decade, according to the Oxford Institute for Energy Studies.

But despite American dominance of global LNG flows, Trump’s threats to use tariffs to cajole export deals may prove more complicated to execute than his recent arm-twisting of Colombian President Gustavo Petro, who caved to tariff threats within hours and agreed to accept repatriated migrants. US LNG is usually sold via long-term contracts from ports, where the fuel is picked up and essentially delivered to the highest bidders in Europe or Asia.

“The US administration lacks direct control over LNG volumes and cargo destinations — a crucial limitation given that buyers, not sellers, determine final delivery points,” said Steuer.

Instead, importers desperate to appeal to Trump could sign long-term purchase agreements with developers of yet-to-be-built US LNG complexes, or invest directly in such projects. This would provide a shot in the arm for the host of proposed plants vying to secure buyer commitments and financial backers.

One of Trump’s first acts of his second term was a moratorium on new approvals for LNG terminals implemented in the final year of former President Joe Biden’s term.

“What I’d like to see is rapid approvals,” Trump said during the World Economic Forum in Davos, Switzerland, a few days after his inauguration. “We’re going to get very rapid approvals in the United States.”

“Trump would be happy if Japan could show that they are buying more from the United States,” Mieko Nakabayashi, a professor at Waseda University in Tokyo and a former lawmaker, said on a Fuji TV program. “There is really no minus for Japan.” As the world’s second largest LNG buyer, Japan sourced about 10% of its supplies from the US last year. Japan’s Prime Minister Shigeru Ishiba may propose a deal to boost shale gas imports from the US in an upcoming meeting with Trump, the Nikkei reported.

Few other countries are able to unleash as much gas onto global markets as the US. Russia’s aspirations to expand LNG exports have been upended by Biden-era sanctions while new competitors from Mozambique to Papua New Guinea have been slow to mature.

Qatar, the world’s second largest LNG exporter after the US, aims to boost production by more than 80% through 2030. However, the emirate’s supplies are less flexible than those from US shale fields — a problem for countries uncertain about future demand amid the shift to the cleaner energy sources. And while Qatar is renowned for its reliability, its energy minister recently warned that Europe’s cross-border climate rules risked supply to the region.

US LNG exports are slated to grow to roughly 200 million metric tons per year by 2030, up from about 93 million, according to a  from BloombergNEF. That estimate may prove conservative if the Trump administration successfully prompts Asian or European importers to sign long-term deals.

“We are ready to buy more natural gas,” Uniper SE Chief Executive Officer Michael Lewis said during a panel at Davos. Germany began directly importing LNG in 2022 following the loss of Russian pipeline gas, with US supplies making up 92% of total seaborne deliveries last year.

US Secretary of State Marco Rubio has said LNG should be used as “leverage” in talks with China.

In bilateral talks over the weekend, Rubio encouraged Vietnam to address trade imbalances. The Asian country’s government had already said it would look to buy more US gas to not only avoid tariffs but also meet rising energy requirements.

Still, turning LNG into a political cudgel threatens to erode long-term market confidence in US reliability, Steuer said.

A stronger reliance on the US could mean “a form of blackmail that we had in Russia is being repeated,” warned German Economy Minister Robert Habeck. Europe should “meet the Trump administration with an outstretched hand, but not have our hand cut off.”