U.S.-China tariffs could reshape global coal trade in 2025
The U.S.-China trade war on coal could shift global trade dynamics, pushing China to meet its growing demand through alternative sources
Coal remains the highest polluting fossil fuel and despite tariffs, its trade remains uninterrupted.
China recently retaliated with a 15% on U.S. coal and liquefied natural gas (LNG), and 10% on crude oil, agricultural machinery, and large-engine vehicles, effective Monday, Feb. 10, 2025 in response to President Trump's 10% tariff imposed on its imports to the U.S.
While trade tensions can add fresh complexities to global coal trade, data shows there are many options to meet China's coal demand.
So, will tariffs impact either or any nation or will it push China to look for other coal alternatives? We looked at the numbers to find out.
Global coal supply and demand for U.S. coal
Indonesia remains world’s leading coal exporter but Australia, Russia, U.S., Colombia, and Canada are not too far behind.
According to the U.S. Energy Information Administration (EIA), the U.S. exports more coal to other countries than it imports from other countries.
Last year, its coal exports reached a six-year record high in June 2024. The U.S. coal exports are now projected to surpass 10 million short tons in select months in 2025 and 2026, according to EIA's analysis.
China’s coal dependence and the complicated status with its suppliers
Countries like India and China rely heavily on coal and the U.S. supplies a chunk of their annual coal needs. While China is the world's top coal importer, it isn’t the primary importer of the U.S. coal. India accounted for roughly a quarter of total U.S. coal exports in 2024, in comparison to China which imported 11 % of the U.S. coal.
Most of China’s coal imports come from Indonesia, Australia, Russia, and Mongolia. Coal imports from Indonesia and Australia are exempted under free trade agreements, making them more attractive for Chinese companies. In 2023, Australian coal imports into China also spiked after a two-year pandemic-related ban was lifted on Australian imports.
China has been relying less on Russian coal due to the latter’s dwindling shipments resulting from the U.S. sanctions on top Russian exporters. Last year, China reinstated tariffs, with 3% tariff on met/coking and 6%, on thermal coal imports from countries with ‘most-favored countries’ status, which included Russia, South Africa, U.S. and Mongolia.
However, a newly established rail link with Mongolia could offset any disruption due to reinstated tariffs and help diversify China’s coal supply, reducing the latter's dependence on U.S. and Russia and
Power polluters but who’s buying U.S. coal?
In 2024, for example, major coal importers like Netherlands slowed their coal imports from the U.S. by 25% from the previous year, China ramped up its U.S. coal imports by 75%—from 4.9 million short tons in 2023 to 8.5 million short tons in 2024—reflecting its growing reliance on it.
But coal demand fluctuates depending on its applications.
Rising demand in China for steam or thermal coal last year led to an increase in coal imports. This demand was primarily driven by coal-powered plants for electricity generation and also for heating homes. The U.S. coal exports include both steam coal and metallurgical coal, produced domestically and shipped to other countries.
Metallurgical (Met) coal is mainly used in steel production, with its demand closely tied to the steel industry’s needs. China’s growing coal appetite is met by its own domestic production of coal but that production is primarily of thermal coal. For high quality steel required for its increased manufacturing activity, it relies heavily on met coal imports.
Globally, Australia is the largest exporter of metallurgical coal, followed by the U.S., Russia, and Canada. But U.S. met coal is in high demand from international pig iron blast furnace steel producers due to its unique quality and uses. That’s one reason that India and China were leading U.S. met coal importers in 2024.
Uncertainty in trade relations
Uncertainty in U.S.-China trade relations can complicate supply chains for Chinese steelmakers, prompting them to seek alternative sources of coal. Due to tariffs, the U.S. could either choose to reduce coal exports to China by reducing production or diversify its coal export market. Speaking of U.S. coal then India could stand to gain if it increases its demand - this could be a win-win situation (U.S. filling the export gap created due to trade war and India might end up getting a good price for the volume it receives)
Meanwhile data reflects that some leading U.S. coal importers like the Netherlands are slowly moving away from coal—leaving exporters and importers to navigate an increasingly uncertain future.
More such stories on my website here.
Further reading on the climate impact of coal
The Dark: underreporting of coal mine methane is a major climate risk
Coal Power Impacts: Union of Concerned Scientists
Cut the Coal- United Nations
very insightful :)