As the U.S. and China do battle over trade, there's one sector that has been largely left out of the tit-for-tat for now — and that's energy.
The U.S. has plenty, and China wants more. China laid claim to 20 percent of U.S. oil exports last year and importantly, as the fastest growing importer of liquified natural gas in the world, it is a ready importer of U.S. LNG.
In fact, if not for the boom in U.S. energy production over the last decade, the U.S. trade deficit would have been larger by as much as $400 billion or more.
"The best way in my view to cut the trade deficit is to increase exports...whether it's LNG or cars or aluminum or whatever," said U.S. Commerce Secretary Wilbur Ross, in a recent interview with CNBC.com.
On a pure dollar basis, the deficit in petroleum and related products has shrunk to $46 billion in the fourth quarter of last year, just about a tenth of the peak deficit of $451.9 billion in the third quarter of 2008, according to Mark Zandi, chief economist at Moody's Analytics.
While the figures don't break out the fluctuation in oil prices, they do underscore the fact that the U.S. oil and gas sectors have boomed — using new technologies to find and drill oil and gas at a pace that should someday make the U.S. not only the largest gas producer but the largest oil producer in the world.
"If you look at the trade deficit, it's basically unchanged, but if you look underneath, there's been this dramatic decline in the petroleum trade deficit," said Zandi. "If the trade deficit in petroleum and products remained unchanged at their 2007 level, GDP would be 1.1 percent lower today."
Service sector growth has also been substantial, but no goods producers compare to the gains made by energy in holding down the trade deficit.
"It may be the single most important event of the last decade, not only on economic levels, but political levels," said Zandi of U.S. energy sector growth. "It's such an amazing story of the success of the market and technology. Here we thought 10 years ago we were going to be beholden to the rest of the world for oil and all the risks that poses and now we're in a very different place."
The U.S. oil sector last week produced a record 10.5 million barrels a day, and exported an all-time high of 2.2 million barrels a day of crude, according to the Energy Information Administration.
In 2008, monthly government data shows the U.S. produced at most 5.2 million barrels a day and would have exported very little under laws that then barred most exports. The U.S. has been exporting refined products — gasoline, jet fuel and diesel — for years. With changes in laws governing crude, the U.S. has been exporting more and more.
The U.S. EIA predicts the U.S. will become a net energy exporter by 2022.
"With the advent of shale, there's a whole new ball game going on in global energy. China last year imported 8.4 million barrels a day of oil. We were down to 7.8 and we're heading south from there. So that's a good thing," said Secretary Ross.
"Our oil trade has been a huge source of our trade deficit. Not that you could blame anyone for it, but think about it. … If you multiply 8.4 million by $60, we had more than $480 million a day going out the door. Multiply that by 365, and you get a pretty big number," Ross said.
Asked why energy isn't included in tariffs, Ross said energy is a topic that is discussed a great deal on the trade front.
"We're discussing it all the time. You saw the number of LNG deals we got with China from that trade mission I led back in November. It's huge and immense," he said.
China imported 26.1 million tons of LNG in 2016. The first ever long term contract between a Chinese state owned company and a U.S. LNG producer was signed by China National Petroleum Corporation this winter for 1.2 million tons per year from Cheniere's Sabine Pass export terminal.
The Chinese tariffs did not include oil, natural gas, or gasoline or diesel fuel, but they did include petrochemicals and propane, which could cause pain for those producers if the tariffs are imposed. The U.S. exported 1.4 million barrels a day of propane and propylene last week.
As for U.S. oil, China is also a ready customer for the burgeoning U.S. crude export business. It has also overtaken the U.S. as the world's largest oil importer.
"China imported over 81 million barrels of crude oil from the USA in 2017 (about 220,000 barrels per day) which represented 20% of our crude oil exports. They are the second largest importer for USA crude oil, behind Canada which imported 323,000 barrels per day," wrote Andrew Lipow, president of Lipow Oil Associates.
The U.S. increased exports of crude starting in 2016, after a 40-year ban on most exports was lifted. Crude exports had been permitted to Canada, and Canada is the largest source of U.S. oil imports.
"You'll probably see these exports continue at these very high levels because the difference in price between light sweet crude on the Gulf Coast compared to the rest of the world is encouraging record amounts of exports," said Lipow, in a phone interview. "From a political standpoint, every VLCC [super tanker] that carries 2 million barrels of crude oil lowers our trade deficit to China by over $120 million."
Besides oil, the U.S. exported 1.2 million barrels a day of diesel and other distillates, and 966,000 barrels a day of gasoline last week.
— CNBC's Steve Liesman contributed to this article.