Trump demands EU boost US energy imports, threatens tariffs

President-elect Donald Trump has issued a stark warning to the European Union, urging it to significantly increase its imports of US oil and gas or risk tariffs on key exports such as cars and machinery.

“I told the European Union that they must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas,” Trump declared in a Truth Social post on December 20. “Otherwise, it is TARIFFS all the way!!!”

The European Commission responded diplomatically, expressing its willingness to engage with Trump to strengthen the energy relationship between the US and EU. “The EU is committed to phasing out energy imports from Russia and diversifying our sources of supply,” a spokesperson said.

The EU has already made significant strides in increasing purchases of US energy. According to Eurostat, the US supplied 47% of the EU’s LNG imports and 17% of its oil imports in the first quarter of 2024. This surge followed the bloc’s decision to cut reliance on Russian energy after Moscow’s 2022 invasion of Ukraine.

Despite these efforts, Trump remains critical of the trade imbalance. He has vowed to impose tariffs on most imports, accusing Europe of benefiting from a longstanding goods trade surplus with the US. Eurostat data reveals a US goods trade deficit with the EU of €155.8 billion in 2023, partially offset by a €104 billion surplus in services.

Trump’s hardline stance on trade isn’t new; he has already pledged tariffs on Canada, Mexico, and China. His latest demand reflects a broader push to reduce the US trade deficit and boost domestic energy exports.

However, experts caution that Europe’s ability to increase US energy imports is limited. Richard Price, an oil markets analyst at Energy Aspects, noted, “Europe is taking close to its maximum capacity for US crude, meaning there is little scope for stronger imports next year.” He added that refinery closures in Europe by 2025 will further constrain capacity.

The United States has cemented its position as the world’s largest oil and gas producer, with crude oil output exceeding 20 million barrels per day and LNG exports averaging 12 billion cubic feet per day. Europe accounts for 66% of US LNG exports, with key importers including the UK, France, Spain, and Germany.

EU exports, meanwhile, are dominated by Germany, with cars, machinery, and chemicals being its primary goods. Any tariffs imposed by the US could significantly impact this sector, potentially escalating tensions between the two economic powers.

While Trump’s proposal is aimed at addressing the trade imbalance, the feasibility of increasing US energy imports remains uncertain. Most European oil refiners and gas firms are private entities that prioritize price and efficiency, leaving governments with limited control unless sanctions or tariffs are enforced.