President-elect Donald Trump has issued a bold ultimatum to the European Union (EU), calling for an increase in U.S. oil and gas imports or the imposition of hefty tariffs on EU exports, including cars and machinery. With the EU already the largest consumer of U.S. energy exports, this demand signals a potential shift in global energy and trade dynamics.
Trump’s Energy Ultimatum to the EU
In a recent Truth Social post, Trump stated,
“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!!!”
The EU has responded cautiously, with a spokesperson affirming its commitment to phasing out Russian energy imports and diversifying its energy sources.
“The EU is ready to strengthen our already robust relationship with the United States, particularly in the energy sector,” said the European Commission.
EU’s Current Energy Landscape
The EU has significantly ramped up its imports of U.S. oil and liquefied natural gas (LNG) since imposing sanctions on Russia in 2022.
- Oil Imports: The United States supplied 17% of the EU’s oil in the first quarter of 2024.
- LNG Imports: U.S. LNG accounted for 47% of EU imports in the same period, according to Eurostat.
The EU’s major importers of U.S. crude include the Netherlands, Spain, France, Germany, and Italy. However, experts note that Europe is nearing its maximum capacity for U.S. energy imports, with refinery closures in 2025 expected to limit future increases.
Trade Deficit and Tariff Threats
Trump has long criticized the U.S. trade deficit with the EU, which stood at €155.8 billion ($161.9 billion) for goods in 2023. However, this deficit is partially offset by a €104 billion surplus in services.
Under Trump’s proposed tariffs, European exports—dominated by cars, machinery, and chemicals—could face significant disruptions. Germany, one of the EU’s largest exporters, may be particularly affected, given its reliance on automotive and machinery exports.
Global Energy Dynamics and U.S. Production
The United States has solidified its position as the world’s largest oil and gas producer:
- Oil Production: Over 20 million barrels per day (bpd), accounting for a fifth of global demand.
- Gas Production: Over 103 billion cubic feet per day (bcfd), making the U.S. the largest global producer and consumer.
U.S. crude exports to Europe stand at two million bpd, representing over half of total U.S. crude exports, with the rest going to Asia. However, limited spare capacity means additional volumes would require a production boost or a reallocation of shipments from other markets.
Challenges to Increasing Energy Imports
Most European oil and gas companies operate independently of government directives, purchasing resources based on market prices and efficiencies. Without sanctions or tariffs to incentivize purchases, analysts believe there is little room for further increases in U.S. energy imports.
“Europe is taking close to its maximum capacity for U.S. crude, meaning there is little scope for stronger imports next year,” said Richard Price, oil markets analyst at Energy Aspects.
The Bigger Picture: U.S.-EU Relations
Trump’s demands for increased energy purchases reflect his broader trade policy. He has pledged to impose tariffs on several of the United States’ largest trading partners, including Canada, Mexico, and China, as part of his “America First” agenda.
While the EU remains a key partner for U.S. energy exports, this latest development underscores the delicate balance of trade relations. For European leaders, navigating Trump’s tariff threats while maintaining energy security will be a top priority.
What’s Next?
As President-elect Trump prepares to take office on Jan. 20, global markets are closely watching his next moves. Will the EU step up U.S. energy imports to avoid tariffs? Or will this standoff escalate into a trade war with significant implications for both economies?
Stay tuned for the latest updates on U.S.-EU trade and energy relations. Subscribe to our newsletter for real-time insights!
