President-elect Trump is threatening more tariffs, this time directed at Europe. "I told the European Union that they must make up their tremendous [trade] deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way," Trump wrote early Friday on Truth Social. The statement came shortly after Trump spoke with German Chancellor Olaf Scholz, according to CNBC's sources. The US' goods and services trade deficit with the EU was $131.3 billion in 2022.
In a statement, European Commission rep Olof Gill said there was "overall balanced trade and investment" but added the EU is "committed to phasing out energy imports from Russia and diversifying our sources of supply." At least one EU official views Trump's threat as "odd," per the Financial Times, given that just last month, European Commission President Ursula von der Leyen said the EU would look to negotiate with the incoming Trump administration on replacing Russian liquefied natural gas imports with cheaper US imports.
The US, which receives nearly a fifth of EU exports, is the biggest supplier of LNG and oil to the EU. It supplied 15% of EU oil imports in the third quarter, per FT, and about 48% of the EU's LNG imports in the first half of 2024, compared to 16% from Russia in the second spot. But as Bloomberg reports, the US "doesn't have much more capacity to increase [LNG] shipments" in the short-term. "And since LNG is sold through long-term contracts, adding shipments to Europe would require original buyers of the gas to agree to divert its shipments to Europe—but that wouldn't boost the amount being exported by the US."
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The euro was trading up 0.3% Friday in what Bloomberg views as "a sign investors believe the bloc will be able to meet [Trump's] demands and avoid punitive measures." But if it does come to tariffs, EU officials are ready to respond. While "capitals are keen to avoid a spiraling economic conflict with the White House given other areas of reliance on the US, such as defense," per FT, they've also reportedly prepared a list of American goods that could be targeted with tariffs. (More Donald Trump stories.)
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