WASHINGTON hawks latching on to the tanker attacks in the Strait of Hormuz to once again pile the heat on Iran are a telling sign that trade tensions between the US and China will not ease any time soon.

That does not bode well for the prospect of the two superpowers finding the light in their troubled trade talks through win-win liquefied natural gas deals.

The Trump administration on Thursday accused Iran of instigating unprovoked attacks on tankers in the Gulf of Oman. Secretary of State Mike Pompeo described these attacks as “a blatant assault on freedom of navigation and an unacceptable campaign of escalating tension by Iran”.

It is no secret that Iran is one major pain-point in the troubled trade relations between the US and China.

Trump wants to unwind the Iran nuclear deal and have sanctions re-imposed on the key oil and gas producer in the Middle East. But China, as the biggest buyer of Iran’s oil and gas, is not keen to play ball — a foreign ministry statement said Beijing opposes “unilateral sanctions” and wants to “maintain normal economic ties and trade”.

Prior to this, trade tensions between the world’s two largest economies had heightened on the back of disputes about the White House ban on Chinese leading telco Huawei.

The Huawei ban was said to be motivated in part by fears of the US losing out in the 5G race and on the potential opportunity to add up to three million jobs and $500bn to its gross domestic product.

The combined economic benefits billion-dollar LNG deals may bring to the US and China seem to pale by comparison.

Morgan Stanley’s analysts estimated the US stands to reduce its trade deficit with China by $17bn annually while China may shave $1.8bn annually from its energy costs by increasing LNG trade volumes between the two countries.

Even so, that does not stop LNG buyers and sellers on both sides of the negotiating table from calling out for a breakthrough in trade talks to pave the way for profitable trade deals between the fastest growing importers and exporters of the super-chilled fuel.

“Chinese buyers like the flexibility of US LNG and an opportunity to build Henry Hub into their portfolios to keep them competitive as the domestic gas market opens,” Wood Mackenzie’s vice chair, Gavin Thompson said in a blog entry.

By Oxford Institute of Energy Studies’s estimates, LNG now represents almost 60% of China’s gas imports, which supports its interest in potentially lower cost-Henry Hub indexed US LNG.

To US LNG developers, access to China, the soon-to-be largest LNG importer, brings the promise of accelerating economies of scale that will validate the US claim to throne as the world’s next largest LNG exporter.

The trade spat has also opened up more room for rival LNG exporters, Russia and Australia to expand trade with China at the expense of US LNG, which has lost ground after China raised tariffs on US imports from 10% to 25%.

Straight after China’s latest tariff hike on US imports came into force, Sinopec penned an agreement with its Russian counterpart, Novatek and Gazprombank to set up a joint venture in natural gas trading based out of China.

That said, the prolonged US-China trade tensions have already exerted pressure on economies around the world and this would eventually hurt the overall global LNG trade.

It’s unsurprising that even in Australia — a net beneficiary in the LNG space from the US-China tariff tiff — business leaders have come forward to appeal for rationality to prevail in the bilateral talks between the two economic powerhouses.

For now, however, that remains a remote possibility, with larger and murkier political forces dominating over business concerns in recent US-China dialogue.