The US president-elect, Donald Trump, has warned the EU that it will face trade tariffs on its exports to the US unless its member states buy more American oil and gas.
Trump reignited fears of a looming trade war between the US and the EU in his first public statement regarding trade since he was elected president in November.
“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!!!,” he said in a post on his social media site Truth Social.
The US is the world’s largest producer of oil and has also emerged as the biggest supplier of liquefied natural gas (LNG) to the bloc since Russian supplies of pipeline gas to its European customers petered out after the full-scale invasion of Ukraine in early 2022.
This week, a US government study, commissioned by the Biden administration, found that increasing US exports of LNG could lead to a gas price increase of up to 30% for domestic gas customers.
The study, which analysed the economic, environmental and other costs of growing the US’s LNG capacity, also found serious consequences for the climate because of its high carbon emissions. The report is expected to complicate Trump’s pre-election promise to quickly approve more exports of LNG.
There is expected to be strong demand for US gas imports from EU economies. The European Commission president, Ursula von der Leyen, said last month that gas from the US could be used to replace the bloc’s remaining imports of Russian LNG as the EU struggles to end its reliance on Russian fossil fuels.
“We still get a whole lot of LNG via Russia, from Russia,” von der Leyen said. “And why not replace it with American LNG, which is cheaper, and brings down our energy prices.”
The International Gas Union, which represents the gas industry, has also warned the US that restricting its gas flows while global demand continues to rise could be “highly detrimental” to economies that are largely gas-importing, including the UK and the EU.
The US provided about 48% of the EU’s LNG imports in the first half of the year, with only 16% coming from Russia. America also accounted for 15% of oil imports in the three months to September, according to the latest figures from Eurostat.
David Oxley, the chief climate and commodities economist at Capital Economics, said Trump’s demand would ultimately align with the bloc’s energy import strategy.
“President-elect Trump’s social media outburst warning the EU to buy more US oil and gas won’t cause sleepless nights in Brussels. After all, whereas EU officials might have balked had they been implored to buy armfuls of Trump’s fragrances or watches, it’s firmly in the bloc’s interest to purchase US LNG as part of the continued shift away from Russian gas molecules,” Oxley said.
“The key point is that the surge in global LNG exports over the coming years will help to reduce the prices of natural gas in Europe and Asia.”
Trump has weaponised trade and threatened taxes on imports from other countries before his second presidential term. He announced on Monday night that he intended to hit Canada, Mexico and China with tariffs on all their exports to the US – until they reduced migration and the flow of drugs into the country.
That is despite a potential hit to the American public. Economists at ING have estimated that Trump’s broader campaign proposals on trade – which include a universal tariff of between 10% and 20% on all imports, and a 60% tariff on all goods from China – could cost each US consumer up to $2,400 (£1,914) each year.
In 2018, the then European Commission president, Jean-Claude Juncker, agreed to buy billions of dollars worth of American exports, including natural gas, averting an all-out trade war during Trump’s last term in the White House. It came months after the EU threatened to target US exports including Harley-Davidson bikes, Levi’s jeans and Kentucky bourbon, if the US pushed ahead with punitive tariffs on foreign steel.
