(Reuters) -Newly elected U.S. President Donald Trump said on Friday that the European Union must increase imports of U.S. oil and gas or face tariffs on the bloc’s exports, including goods such as cars and machinery.
According to US government data, the EU already buys the lion’s share of US oil and gas exports.
No additional volumes are currently available as the United States is exporting at full capacity, but Trump has pledged to continue growing the country’s oil and gas production.
“I told the European Union that they must make up their massive deficit against the United States through massive purchases of our oil and gas,” Trump said in a post on Truth Social.
“Otherwise it’s all RATES!!!,” he added.
The European Commission said it was ready to discuss with Trump how to strengthen the already strong relationship, including in the energy sector.
“The EU is committed to phasing out energy imports from Russia and diversifying our energy sources,” a spokesperson said.
According to data from the EU statistical agency Eurostat, the United States already supplied 47% of the European Union’s liquid fuel imports and 17% of its oil imports in the first quarter of 2024.
TARIFF THREATS
Trump, who takes office on January 20, has pledged to impose 10% tariffs on global U.S. imports, along with a 60% tariff on Chinese goods – tariffs that trade experts say would disrupt trade flows, raise costs and would provoke retaliation against American exports.
According to data from the US Census Bureau, the US had a goods trade deficit of $208.7 billion with the EU in 2023. Although the US has a surplus with the EU in services, Trump has focused on goods trade, often complaining about the bloc’s car exports to the US, while few vehicles move east across the Atlantic were shipped.
German and Italian car exports currently face a US tariff of 2.5%, which could quadruple if Trump makes good on his threats.
Trump has also vowed to impose hefty tariffs on the top three US trading partners, Mexico, Canada and China, on his first day in office if they fail to curb illegal border crossings into the US and trade in the deadly opioid to put a stop to fentanyl.
William Reinsch, a trade expert at the Center for Strategic and International Studies, said the EU could talk its way out of Trump’s tariffs.
“This could be a win-win situation, telling them to buy something they want and need anyway,” Reinsch said.
However, most European oil refineries and gas companies are private and governments have little say over where their purchases come from unless authorities impose sanctions or tariffs. The owners usually purchase their resources based on price and efficiency.
The US already produces and exports record volumes of oil and gas and increasing that would require significant investment, especially for LNG export terminals.
Reinsch noted that while there is now demand in Europe for U.S. oil and gas to replace shunned Russian supplies, long-term demand is unclear with the transition to renewables. Companies will be reluctant to invest if they think current demand is transitory, Reinsch said.
Buy MORE American energy
The EU has sharply increased purchases of US oil and gas following the bloc’s decision to impose sanctions and reduce dependence on Russian energy after Moscow invaded Ukraine in 2022.
The United States has become the largest oil producer in recent years, producing more than 20 million barrels of liquid oil per day, or one-fifth of global demand.
Exports to Europe amount to approximately 2 million barrels per day, representing more than half of total US exports, with the rest going to Asia.
According to US government data, the largest importers are the Netherlands, Spain, France, Germany, Italy, Denmark and Sweden.
“Europe is nearing maximum capacity for US crude, meaning there is little room for stronger imports next year,” said Richard Price, oil market analyst at Energy Aspects. He also said the closure of refineries in Europe in 2025 will not help increase imports.
The United States is also the largest gas producer and consumer in the world, producing more than 103 billion cubic feet per day.
The U.S. government expects U.S. LNG exports to average 12 bcfd by 2024. In 2023, Europe accounted for 66% of US LNG exports, with Britain, France, Spain and Germany the top destinations.
According to the International Energy Agency, U.S. oil production growth is likely to be slow through 2030.
Gas production, meanwhile, could rise further to meet record US domestic demand, and LNG exports could also increase if the government approves more LNG terminals.
The EU imported about $2 billion of Russian LNG in 2024 and could take action to ban these supplies and seek replacements from other sources, said Alex Froley, LNG analyst at ICIS.
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