During the Cold War, there were countless thousands of words written about the theory of nuclear escalation: the prospect of conflicts flaring up into increasingly intense attacks, culminating in all-out nuclear war. The series of tariff disputes launched by US President Donald Trump suggests that we need an equally thorough investigation of the logic of trade war escalation.

The US and China last week took further steps to intensify their trade dispute, with the Trump administration saying it was considering more than doubling its proposed tariffs on $200bn in annual imports from China, and Beijing responding with plans for new tariffs on $60bn worth of imports from the US. Those plans have important implications for energy markets: liquefied natural gas, which was spared under previous Chinese tariff proposals, will now face a 25 per cent tariff. China is expected to cut its imports of US LNG on the spot market quickly, but the broader significance of the announcement is that it is a blow to companies seeking to develop new LNG export projects in the US. China is already the world’s second-largest LNG importer, and has been the third-largest market for US LNG exports, even though the first long-term sales contract for shipments between the two countries was signed only in February. China is also expected to be by far the largest source of additional demand for gas over the next couple of decades, accounting for more than a quarter of all the worldwide growth in gas consumption over 2015-40, according to the US Energy Information Administration. The future of the Chinese tariff is uncertain, and there are other growing markets for US gas, but even so, billions of dollars worth of potential investment in LNG export plants along the Gulf of Mexico is being put at risk, the Houston Chronicle warned.

It is an ill wind that blows nobody any good, and the difficulties facing US projects will provide a boost for other aspiring LNG exporters around the world, including in Canada, where companies and governments have quietly been making progress towards becoming competitive in world markets.