Key Takeaways
President Trump is trying to compensate for the time squandered during President Biden’s year-long “pause” on LNG permits by pushing to sell more American LNG worldwide, including in Asia.
Japan and China are investigating whether their purchase of more American LNG might lessen tariffs Trump has promised to level trade imbalances, which have ballooned with both nations.
Qatar and other countries, including Canada, made progress with customers during Biden’s LNG pause, taking away potential customers from U.S. LNG facilities.
China is the world’s largest LNG importer, and Japan is the second largest importer, so their decisions in world markets can have significant implications.
Asian countries, such as Japan and China, are compelled to buy more American liquified natural gas (LNG) if they want to avoid Trump’s tariffs. Japan, with a $71 billion trade advantage over the United States, has placed LNG in a more prominent role in the latest draft of its national energy plan. Japan is the world’s second-largest LNG market and has purchased LNG from the Freeport and Cameron LNG terminals on the U.S. Gulf Coast and the Cove Point facility in Maryland. China has agreed to buy a combined 14 million tons of U.S. LNG from 2026, 50% higher than the previous record in 2021, and may add more shipments to negotiate more favorable tariff considerations with the Trump administration.
On inauguration day, President Trump signed an executive order that reversed the Biden administration’s pause on new LNG export projects. Along with Trump’s tariffs, that reversal is expected to revive new gas projects and provide for more LNG purchases. Currently, there is weak LNG demand due to a surplus in Asia, a faltering recovery and massive coal consumption in China, and a nuclear restart in Japan. Some analysts believe those issues would cap LNG prices at $10 per million Btu.
China
China is the world’s largest LNG importer and is projected to increase natural gas consumption by over 50% by 2040. Its natural gas demand is growing due to urban heating, cooking, and industrial use. China is encouraging the use of more natural gas for heating and other uses in urban areas to displace uncontrolled coal emissions, which has led to choking pollution. Their generating plants use modern emission control technologies, sometimes outperforming U.S. coal plants. China is also expected to install 20 gigawatts of gas-fired power plants this year to bring its total natural gas capacity to 160 gigawatts. While its domestic gas production is increasing, it is also ramping up its construction of LNG infrastructure.
China imports natural gas by pipeline and LNG, which are expected to increase by about 200 billion cubic meters this year, up 10% from record 2024 imports of 181.8 billion cubic meters (131.7 million metric tons). China is expected to import a record high of 79 million to 86 million tons of LNG this year as new long-term contracts and new import terminals start up. China received 76.65 million tons of LNG last year, the most in three years but below a 2021 record. China imported 4.16 million tons of U.S. LNG in 2024, nearly double 2018 volumes. China placed tariffs on U.S. LNG in 2019, retaliating for the U.S.’s increase in tariffs on Chinese goods. China has also increased its reliance on Russian LNG, with imports increasing by 3.3% to reach 8.3 million metric tons in 2024, costing $4.99 billion. Russia was China’s third largest LNG supplier in 2024, after Australia and Qatar, and China is a major customer for piped gas from Russia.
Spot prices for LNG are around $14 per million Btu, so piped gas from Russia and Central Asia is more affordable for China. Weaker demand for building materials amid China’s property crisis also has industrial gas users such as glass and ceramics makers buying cheaper domestic pipeline gas and cutting LNG purchases.
Japan’s LNG Interest
Japan’s seventh draft energy plan includes a risk scenario requiring more LNG imports to ensure stable energy supplies, such as if emerging decarbonization technologies such as carbon capture and storage and hydrogen do not progress as expected. Japan’s electricity demand increased by 0.5% in 2024, partly due to a long period of warm weather extending past the typical summer months. The country is anticipating an increase in its electricity demand for the first time in two decades, driven by artificial intelligence, data centers, and semiconductors. Japan’s Kyushu region reported a 2% growth in its electricity demand due to a new semiconductor factory built by Taiwan Semiconductor Manufacturing. Tokyo and Kansai, hubs for the data center industry, reported increases of 1% and 0.8%, respectively.
Japanese firms Inpex, Jera, and Itochu have committed to 15- and 20-year offtake agreements with Venture Global’s CP2 and NextDecade’s Rio Grande projects, totaling 3 million tons per year, or about 0.42 billion cubic feet per day, despite regulatory uncertainty. Additionally, a Japanese consortium signed a heads of agreement for offtake with the Lake Charles project that was affected by the Biden administration’s pause on export licenses.
In Canada, Japanese trading house Mitsubishi owns a 15% stake in Shell’s 2.1 billion cubic feet per day LNG Canada project in Kitimat, British Columbia, that is due to start up later this year. Japanese buyers are interested in Canadian project developers due to British Columbia’s relatively short shipping distance to Japan and the country’s abundant natural gas resources.
U.S. and Canada LNG suppliers face competition from Qatar, who added LNG capacity and signed long-term contracts during Biden’s year-long pause on new LNG projects in the United States. Japanese buyers are negotiating with QatarEnergy for new term supplies to see whether both sides can resolve their differences over contractual terms such as destination restrictions, duration, and minimum quantity. Japanese buyers may also prefer not to over-commit to long-term supplies and turn to the spot market as a less costly option, as the country did after the Fukushima nuclear accident in 2011.
Conclusion
President Trump ended President Biden’s LNG pause through an executive order and threatened tariffs so that countries would buy more U.S. LNG. China and Japan are the two largest LNG importers, and President Trump would like them to buy more U.S. LNG. They are both considering doing so, with Japan adding stable LNG supplies to its national energy plan and China using more natural gas with 20 more gigawatts of natural gas capacity coming online. China, however, buys most of its LNG from Australia, Qatar, and Russia, from which it also gets natural gas via pipeline. Trump understands the importance of U.S. energy investment and infrastructure and its ability to spin off benefits throughout the economy.
