U.S. President-elect Donald Trump said he told the European Union it must reduce its trade gap with the U.S. through oil and gas purchases or face tariffs.
U.S. President-elect Donald Trump on Friday said he told the European Union it must reduce its trade gap with the U.S. through oil and gas purchases or face tariffs.
“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,” Trump posted on his Truth Social platform shortly after 1 a.m. ET.
According to U.S. figures, the country’s goods and services trade deficit with the European Union was $131.3 billion in 2022.
“The EU and U.S. have deeply integrated economies, with overall balanced trade and investment. We are ready to discuss with President-elect Trump how we can further strengthen an already strong relationship, including by discussing our common interests in the energy sector,” European Commission Spokesperson Olof Gill told CNBC in response to Trump’s comments.
“The EU is committed to phasing out energy imports from Russia and diversifying our sources of supply,” Gill added.
A senior EU diplomat, who did not want to be named due to the sensitivity of the topic, told CNBC that they were not surprised by Trump’s comment Friday and that energy was a “good option” for buying more U.S. goods.
Another EU official, who also did not want to be named for the same reason, told CNBC that German Chancellor Olaf Scholz spoke with Trump last night.
The U.S. is the biggest recipient of EU goods, accounting for nearly a fifth of the bloc’s exports. The U.S.′ biggest trade deficit with the EU is in machinery and vehicles, with a gap totaling 102 billion euros ($106 billion) in 2023. In energy, Washington had a trade surplus with the European bloc worth 70 billion euros; it also has a significant trade surplus in services.
The U.S. is the world’s top oil producer and accounted for 22% of global supply in 2023, according to the U.S. Energy Information Administration, which predicts record crude oil production in 2024. Producers anticipate even higher supply levels in a deregulatory environment under Trump.
The EU had already indicated it expects to purchase more U.S. energy in the coming years. Last month, European Commission President Ursula von der Leyen told reporters that replacing Russian liquefied natural gas (LNG) imports with U.S. volumes would be cheaper, and that the EU would look to engage and negotiate on the matter when Trump takes office in 2025.
European stock markets were sharply lower on Friday morning, while the euro strengthened 0.2% against the U.S. dollar to $1.038.
EU retaliation?
Trump has made threats of sweeping tariffs on U.S. trading partners including China, Mexico and Canada a signature part of his presidential campaign — and he’s continued the narrative as he prepares to enter office, despite economists warning of risks to domestic inflation.
Analysts say there is high uncertainty over the extent of the tariffs Trump will be willing — or able — to follow through with, and how much of his rhetoric is a starting point for striking deals.
His latest comment comes after EU heads of state held their final meeting of the year on Thursday, during which the topic of Europe-U.S. relations was discussed.
“The message is clear: the European Union is committed to continue working with the United States, pragmatically, to strengthen transatlantic ties,” European Council President António Costa said following the meeting.
Enrico Letta, former prime minister of Italy and dean of the IE School of Politics, Economics and Global Affairs, told CNBC’s “Squawk Box Europe” on Friday that the EU needed to be prepared to retaliate to Trump’s threat.
“I think it is a transactional approach, we have to respond to this transactional approach. [Trump] mixes together energy and tariffs on goods, manufacturing and so on. I think it’s incorrect because the two topics are completely different,” Letta said.
“If the deal is proposed by Trump — such an asymmetric deal on topics that are not linked one to the other — I think we have to do the same.”
“Considering that the most asymmetric part is the relationship on the financial side, we have to start considering that maybe replying on the financial side could be a solution,” he said.
Ahead of the U.S. election in November, EU officials spent months preparing for a lurch toward U.S. protectionism and for a more confrontational relationship with the White House, in the event of a Trump victory. The EU has also made moves toward strengthening its relationship with the U.K., which left the bloc in 2020, as a guard against potential clashes over trade and defense.
