US president-elect Donald Trump has threatened the European Union with tariffs if its member countries don’t buy more American oil and gas.
“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 on Truth Social.
The US is the world’s largest producer of crude oil and the biggest exporter of liquefied natural gas. LNG buyers – including the EU and Vietnam – have already talked about purchasing more fuel from the US, in part to deter the threat of tariffs.
EU officials and member states have been bracing for a trade offensive ever since Trump’s election victory last month.
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The bloc was largely caught off-guard in 2017 when Trump, citing national security concerns in his previous term as president, levied tariffs on European steel and aluminium. Since then, the EU has reinvented its trade doctrine and expanded its toolbox, giving it a range of options to counter coercive practices.
“We are well-prepared for the possibility that things will become different with a new US administration,” German foreign minister Annalena Baerbock said after a G7 meeting in Italy in late November. “If the new US administration pursues an ‘United States first’ policy in the sectors of climate or trade, then our response will be ‘Europe united.’”
European Commission President Ursula von der Leyen floated the idea last month that imports from the US could replace the bloc’s consumption of Russian LNG.
LNG “is one of the topics that we touched upon,” von der Leyen said after a phone call with Trump. “We still get a whole lot of LNG via Russia, from Russia. And why not replace it with American LNG, which is cheaper, and brings down our energy prices.”
The US is already Europe’s biggest provider of LNG, but imports from Russia remain solidly in the second spot. EU officials are looking for ways to curb Moscow’s role as the war in Ukraine continues, even while Russian pipeline gas and LNG are largely outside of the scope of sanctions. The bloc will explore potential measures when they discuss a new sanctions package next month but stringent restrictions remain difficult, according to a person familiar with the matter, who spoke on the condition of anonymity.
But the EU has still prepared for the possibility that it will end up in a trade war with Washington. The EU’s new anti-coercion instrument strengthens trade defences and enables the commission, the bloc’s executive arm, to impose tariffs or other punitive measures in response to such politically motivated restrictions.
The EU also adopted a so-called foreign subsidies regulation, which allows the commission to prevent foreign companies that receive unfair state handouts from participating in public tenders or merger-and-acquisition deals in the bloc, among other measures.
Trump has multiple grievances against the EU and has criticised Europe for not spending enough on defence and for the US-EU trade deficit. He once referred to Brussels, the seat of the EU institutions, as a hellhole, and more recently he said he’d once told a Nato member that he’d let Russia do “whatever the hell they want” to it if it didn’t hit defence spending targets.
Trump has threatened tariffs against countries from China to Canada, and is particularly focused on nations that have trade deficits with the US. Europe is already the top destination for American LNG, with more than half of the deliveries going to the Continent last year.
The US has also become a big exporter of crude oil over the past decade or so, sending so-called light as well as medium density varieties to Canada and also countries across Europe and Asia. – Bloomberg
