US oil and gas producers are the newest target in an escalating trade battle between China and the US, and while the short-term impact might be limited, the tariffs just slapped on US liquefied natural gas (LNG) by Beijing might change the equation for prospects down the road.

Building up America’s fossil fuel industry to become a dominant player globally is one of the Donald Trump administration’s signature policy initiatives, and there are some good reasons to think being shut off from the world’s fastest-growing market will make that harder.

“Uncertainty is not good for LNG,” Robert Ineson, global director of LNG for the research and consulting firm IHS Markit, was quoted by The Houston Chronicle as saying. “These are very large capital projects that are international in nature, and they are dependent on confidence that these long-term commitments are going to hold,” he added.

Bloomberg columnist Liam Denning got into the weeds of the long-term impact of the tariffs, explaining on Monday that stifling investment in new capacity will also undercut US competitiveness.

“If this trade war is extended, then the combination of lower margins, likely lower utilization of terminals and the shadow hanging over trade policy in general is a strong deterrent to anyone thinking of financing or contracting with new US capacity. China is, after all, expected to account for almost half the growth in global LNG demand over the next five years, and a fifth through 2030.…

“In weighing on US competitiveness, tariffs would also encourage rival producers to invest in new capacity. ‘If Qatar had any doubts about expanding, they won’t now,’ says Marianne Kah, a former chief economist of ConocoPhillips, now on the advisory board of the Columbia Center on Global Energy Policy.’”

Some were expecting China to spare LNG imports from the trade battle as it makes efforts to transition to cleaner energy. But Beijing has taken the gloves off in the fight, and, while the move could be a big problem for US oil, it likely won’t be for China, as Caixin explained in a newsletter on Monday:

“In spite of China’s increasing consumption of LNG, we think the impact of tariffs on the domestic market will be limited. This is because China’s LNG imports largely come from Australia (47% in 2017), Qatar (22% in 2017), and Malaysia (9% in 2017), according to official statistics. Imports from the US made up only 3.5% of the total last year.

“Increased imports from Qatar and Australia – which the government in Canberra estimates could overtake Qatar as the world’s biggest LNG exporter by 2020 – will likely offset any decline in imports from the US. Russian gas imports – both via the delayed ‘Power of Siberia’ pipeline, due to come online in 2019, and, in LNG form, along a newly opened Arctic route – are also likely to increase.”