President Donald Trump’s initiatives to support the U.S. coal industry are facing significant challenges as China ceases its imports of American coal. This decision has contributed to a 14% decline in U.S. coal exports for the year, as reported by the U.S. Energy Information Administration (EIA). The ongoing trade tensions between the two nations have created an uncertain environment for the coal sector.
Recent meetings between Trump and Chinese leader Xi Jinping have raised hopes for potential trade improvements. Yet, it remains unclear whether these discussions will lead to a revival in U.S. coal exports. According to coal analyst Seth Feaster from the Institute for Energy Economics and Financial Analysis, “It’s hard to tell whether that’s just going to maintain the status quo or if that’s going to be an increase in exports of coal and soybeans to China.”
Trump’s administration has implemented several measures to bolster the coal industry, including easing regulations and expanding mining on federal lands. Charlotte Taylor, a spokesperson for the Interior Department, emphasized the administration’s commitment, stating its efforts are intended to “keep our lights on, our economy strong, and America Energy Dominant.” A notable aspect of this initiative includes a pledged $625 million investment to enhance coal power generation, focusing on modernizing aging coal plants.
Despite these efforts, recent coal lease sales in states such as Montana, Wyoming, and Utah have not attracted bids that met the Interior Department’s standards. Currently, U.S. coal production has increased by approximately 6%, but this rise is attributed more to higher natural gas prices than to Trump’s policies, according to Feaster.
The decline in coal exports is particularly dramatic, with a reported 14% drop from January through September 2023 compared to the previous year. This downturn correlates with an additional 15% tariff imposed by China on U.S. coal in February, followed by a reciprocal 34% tariff in April. The EIA highlighted these tariff impacts in a report released on October 7, 2023.
While the U.S. exports about one-fifth of its coal production, the majority of these shipments are directed towards countries like India, the Netherlands, Japan, Brazil, and South Korea. Notably, China accounted for only a small fraction of U.S. coal exports last year—about one-tenth. However, its cessation of imports has had a disproportionate impact on the overall coal export market, according to coal analyst Andy Blumenfeld from McCloskey by OPIS.
In 2022, nearly three-quarters of U.S. coal exported to China was metallurgical coal, primarily used in steel manufacturing. The remainder was thermal coal utilized in power generation. Most metallurgical coal originates from the Appalachia region, while thermal coal is predominantly sourced from large open-pit mines in the Powder River Basin of Wyoming and Montana.
The resumption of coal exports to China would likely benefit Appalachia the most, Blumenfeld noted. Despite this, he added, “There is optimism. But there is little documentation to back that up right now.”
Historically, coal exports to China have primarily flowed through the Baltimore port, with smaller volumes shipped via the Norfolk, Virginia area, and the Gulf of Mexico. The export of thermal coal from the Western U.S. is limited due to high transportation costs associated with rail transit to the West Coast. Additionally, there has been political resistance to developing port facilities for increased coal exports.
As the U.S. coal industry grapples with international trade complexities, the future of coal exports remains uncertain. The evolving dynamics of U.S.-China trade relations will likely play a crucial role in shaping the industry’s prospects moving forward.
