US LNG industry warns Trump’s new shipping rules could undermine energy dominance

US LNG industry warns Trump shipping rules threaten $34 billion exports.

The US liquefied natural gas (LNG) industry is alerting the Trump administration that new shipping regulations have the potential to harm a $34 billion-a-year export industry vital to the president's "energy dominance" strategy. LNG producers, in lobbying letters to the American Petroleum Institute (API), say they are unable to adhere to the new rules mandating increased use of US-constructed vessels or risk losing export licences, the Financial Times reported.

The regulations, which were released on April 17 by US Trade Representative Jamieson Greer, are a component of an overall strategy aimed at pressuring China on trade practices and strengthening American shipbuilding. But they have raised fundamental alarm throughout the energy industry, which depends substantially on Chinese constructed and foreign vessels to supply worldwide LNG demand.

Industry confronts logistical impossibility

API contends that no US-built LNG carriers are available to serve exports, nor is there enough shipbuilding capacity to serve the first 2029 compliance deadline. Even with a three-year phase-in and a 22-year gradual phase-in period, industry executives caution that the rules will disable America's ability to continue its new status as the world's top LNG exporter.

The US surpassed Australia in 2023 to rank as the leading LNG exporter, exporting 11.9 billion cubic feet per day—sufficient to satisfy the combined natural gas demand of Germany and France. The sector hopes to double exports by the end of the decade, but officials now worry that increasing shipping costs and interrupted supply chains will slow that expansion.

"The new regulations would undermine US producers' capacity to reign supreme in the global LNG market," the API warned, noting that it could also open the door for future administrations to defer export licences through analogous trade mechanisms.

Requests for wider exemptions

Aside from LNG, industry associations are campaigning for crude oil, refined product such as gasoline, and liquefied petroleum gas (LPG) to be exempted from the maritime tariffs, arguing fees would interfere with highly calibrated supply chains and damage American competitiveness.

Charlie Riedl, Center for LNG executive director, reiterated that the actions threaten to destabilize long-term contracts and increase costs for international consumers and directly jeopardize the US's leadership role in the LNG market.

"That's why we have urged USTR to exempt LNG shipping and LNG carriers from this action altogether," Riedl said.

The oil and gas industry, a key supporter of Trump's campaigns, has traditionally been successful in obtaining tariff exemptions. Yet the new seaborne levies pose a major challenge, even to an industry that has overall benefited from favourable treatment by the administration.

Tariffs aimed at China, but with global implications

The tariffs charge a fee of $50 per net ton on Chinese-owned, operated, and built ships entering US ports, with increases of $30 per ton in the next three years. Non-Chinese-operated ships but Chinese-built ships would be charged less, but the effect is still expected to increase freight prices across industries.

While the government has framed the new regulations as an effort to counter China's abusive trade practices and revive US shipbuilding, numerous exporters contend that the measures risk collateral harm to key sectors such as energy, agriculture, and manufacturing.

Aaron Padilla, API vice-president of corporate policy, stated that although the industry welcomes the ending of discriminatory trade practices, it wishes to collaborate with the administration on "feasible and lasting policies that are good for consumers and promote American energy leadership."

Energy sector readies itself for disruption

While the world's hunger for LNG grows, US shippers are fearful of losing market share as a result of transportation bottlenecks. The aggressive growth plans in the industry now hang in balance, and unresolved, the shipping regulations will prove to be a significant setback for Trump's foreign policy strategy relying on American exports of energy to be the linchpin of global economic clout.

With a huge lobbying campaign afoot and nerves on edge within the energy industry, the future of the new shipping tariffs—and the fate of US LNG supremacy—rests in the balance.