https://in.reuters.com/article/colum...-idINKBN1JE0JA

LAUNCESTON, Australia (Reuters) - China’s threat to impose tariffs on U.S. crude oil, certain refined products and coal is possibly the only sign of clear thinking in the increasingly muddled escalating trade dispute with the administration of President Donald Trump.

The tariffs on energy imports were mooted by the Chinese on June 15 as part of their response to the U.S. announcement of tariffs on $50 billion worth of imports.

To be clear, the tariffs on crude oil and products and coal are still in the realm of the possible, and it will likely take a further deterioration in the relationship between the world’s two largest economies to turn them into a reality.

It was also curious that the list of potential targets for customs included natural gas in its gaseous form, but not as liquefied natural gas (LNG). China imports zero gaseous natural gas from the United States, but is a major buyer of its LNG.

The Chinese threat to impose tariffs on energy imports makes sense from two perspectives.

The first is that in economic terms it’s generally best to put tariffs on goods with high elasticity, in other words goods you can subs ute relatively easily from other suppliers.

The second is that if the aim of your tariffs is to inflict sufficient pain on the other country, it’s best to target them where they can do the most damage to the economy, or the politicians promoting the trade war.

The current escalation will almost certainly trigger more tariffs on US energy. Koch brother will not be happy.