Trump adds Europe to list of US trade partners facing tariff threats

In 2023, the United States' trade imbalance with the EU on goods was $209 billion

President-elect Donald Trump on Friday added the 27 countries that make up the European Union to the list of trade partners he's threatening with tariffs unless the group takes steps to import more US goods.

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, Trump posted shortly after 1 a.m. on social media. Otherwise, it is TARIFFS all the way!!!  In 2023, the United States' trade imbalance with the EU on goods was USD 209 billion, according to the Census Bureau. There were USD 576 billion in imports from Europe and USD 367 billion in exports from the United States.

Trump's transition team did not respond to questions seeking greater clarity on the message, which for all its bluntness was unclear on next steps.

When Trump threatened Canada and Mexico with 25 per cent tariffs in November, the leaders of both countries spoke with him to try and resolve any tensions. But the European Union lacks a single figure who can make the purchase commitments of natural gas and oil on behalf of its 27 member states that Trump is seeking.

EU Commission spokesman Olof Gill said in reaction to Trump's post that "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.

Gill noted that the EU is already committed to phasing out energy imports from Russia and diversifying our sources of supply. We're not going to go into any details about what that might entail in the future, given that the new administration isn't even in place yet.

Scott Lincicome, a vice president at the libertarian Cato Institute, said it was difficult to parse what Trump was trying to say relative to European trade, given that natural gas exports to the continent are already up after Russia's 2022 invasion of Ukraine.

"What we really need to chalk all of this up to is Trump laying the groundwork for future negotiations, Lincicome said. This is for better or worse a lot of what we're going to see for the next four years.

While there is a USD 209 billion trade imbalance, a more complicated relationship lies beneath those numbers. A company such as German automaker BMW can import parts needed to assemble vehicles at its factory in South Carolina, such that the trade totals also reflect the flow of goods within European companies that employ US workers.

More than half of the liquified natural gas imported by the EU and the United Kingdom in 2023 came from the United States, according to the US Energy Information Administration. The volume of LNG going to the EU and UK has tripled since 2021.

On Tuesday, Energy Secretary Jennifer Granholm issued a statement based off a new study that unfettered exports of LNG could increase prices domestically and increase carbon emissions. Trump ran for president on the idea that increased oil and natural gas production would reduce costs for US voters who were left frustrated by a 2022 inflationary spike that still lingers.

Trump's demands on Europe to buy more oil and natural gas were not especially new. He also made them during his initial term as president and in 2018 reached a deal with Jean-Claude Juncker, then-president of the European Commission, to sell more LNG to Europe.

The problem with that agreement, as noted by the University of Pennsylvania's Kleinman Center for Energy Policy, is that the US cannot force companies to send products to a specific region or country and the EU cannot force its members to buy American fossil fuels.