U.S. President-elect Donald Trump has issued a strong call for the European Union (EU) to ramp up imports of American oil and gas or face steep tariffs on goods such as cars and machinery. Despite already being a major buyer of U.S. energy exports, Trump’s demands come as part of his broader agenda to address trade imbalances and bolster domestic energy production.
Trump, set to take office on January 20, declared on Truth Social, “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. Otherwise, it is TARIFFS all the way!!!” His proposed measures include a 10% tariff on global imports to the U.S. and a hefty 60% tariff on Chinese goods, a strategy that could significantly disrupt trade flows and lead to retaliatory measures.
The EU already sources 47% of its liquefied natural gas (LNG) and 17% of its oil from the U.S., according to Eurostat data for the first quarter of 2024. However, Trump’s push for increased purchases aligns with his commitment to expanding domestic oil and gas production. Currently, U.S. energy exports operate at near capacity, and any significant increase would require substantial investments in infrastructure, particularly LNG export terminals.
The European Commission has responded cautiously, expressing a willingness to discuss strengthening the already robust energy relationship. A spokesperson emphasized the EU’s ongoing efforts to phase out Russian energy imports and diversify supply sources, a shift driven by sanctions following Russia’s 2022 invasion of Ukraine.
Industry experts are divided on the implications of Trump’s ultimatum. While some, like Kevin Book of ClearView Energy Partners, view it as a tactical move to leverage existing European demand, others warn of the challenges. Many European energy companies are privately owned and driven by market dynamics rather than government directives, making large-scale shifts in purchasing patterns complex without significant price incentives or policy changes.
The U.S. has emerged as the world’s top oil and gas producer, supplying over 20 million barrels of oil liquids per day and producing 103 billion cubic feet of natural gas daily. Europe has become the largest destination for these exports, with countries like the Netherlands, Spain, and Germany leading as top importers. However, analysts suggest there is little room for increased capacity in the near term, given current infrastructure and refinery limitations.
As the EU works to balance its energy needs with its climate goals, Trump’s demands could prompt new trade negotiations or further investments in energy infrastructure. However, the long-term trajectory remains uncertain, especially as Europe continues its transition to renewable energy sources and the U.S. grapples with the economic feasibility of expanding production. Whether Trump’s strategy strengthens energy ties or fuels trade tensions will likely depend on how both sides navigate these competing priorities.
