Goldman Sachs said on Tuesday that it expected Beijing's retaliatory duties in response to the new U.S. sanctions against Chinese products to have a limited impact on energy costs.

The 10% tariff imposed by President Donald Trump on Chinese products went into effect at 12:01 am. China's Finance Ministry announced that it would impose tariffs of 15% on U.S. coal, LNG, and farm equipment.

Goldman Sachs stated in a report that the near-term impact of China's tariffs on commodity markets would be minimal, as neither the global supply nor demand for these commodities will change.

Goldman stated that China will replace impacted import volumes by alternative suppliers.

Goldman stated that U.S. LNG exports will likely increase while additional supply from other Atlantic Basin suppliers may head to Asia.

Goldman Sachs analysts said that "in coal, we expect U.S. volume to be redirected towards Japan and Korea which will likely free up local Pacific basin supply to go to China in place." They added that China crude oil imports are small enough to be easily reallocated.

It said that the impact on commodity freight rates would also be limited, as China's closest trading partner is the United States.

Goldman, however, said that the most significant effect of China's retaliatory actions on commodity markets will be a potential pause in long-term LNG contracts between China buyers and U.S. LNG Export Facilities.

The oil prices were divergent at the settlement on Tuesday, amid the tariff drama between Washington & Beijing. (Reporting and editing by Chris Reese, Marguerita Choy, and Brijesh Pattel in Bengaluru)

(source: Reuters)