Trump says the European Union must buy American oil and gas as a part of a trade ultimatum

US President-elect Donald Trump said on Friday he had told the European Union it must narrow its trade gap with the US through oil and gas purchases or face tariffs.

“I have told the European Union that it must make up its enormous deficit with the United States by purchasing our oil and gas on a large scale. Otherwise it’s tariffs everywhere,” Trump posted shortly after 1 a.m. on his Truth Social UND platform.

Accordingly US numbersThe country's trade deficit in goods and services with the European Union amounted to $131.3 billion in 2022.

“The EU and US have deeply integrated economies with overall balanced trade and investment. “We stand ready to discuss with President-elect Trump how we can further strengthen an already strong relationship, including by discussing our shared interests in the energy sector,” European Commission spokesman Olof Gill told CNBC in response to Trump’s comments.

“The EU is committed to ending energy imports from Russia and diversifying our sources of supply,” Gill added.

A senior EU diplomat, who didn’t need to be named due to the sensitivity of the difficulty, told CNBC that they weren’t surprised by Trump's comments on Friday and that energy was a “good option” for purchasing more U.S. goods.

Another EU official, who also didn’t need to be named for a similar reason, told CNBC that Chancellor Olaf Scholz spoke to Trump last night.

The USA is the biggest recipient of EU goods almost a fifth of the bloc's exports. The USA largest trade deficit The deficit in comparison with the EU in machinery and vehicles will total 102 billion euros (106 billion US dollars) in 2023. In energy, Washington had a trade surplus with the European bloc value 70 billion euros; it also has one significant trade surplus in services.

According to US Energy Information Administration forecasts, the US is the world's largest oil producer, accounting for 22% of worldwide supply in 2023 Record petroleum production in 2024. Producers expect even higher supply in a deregulatory environment under Trump.

The EU had already indicated that it expected to purchase more US energy in the approaching years. Last month: EU Commission President Ursula von der Leyen told reporters that it might be cheaper to exchange Russian imports of liquefied natural gas (LNG) with US quantities and that the EU would seek to interact and negotiate on this issue when Trump takes office in 2025.

European stock markets fell sharply on Friday morning, while the euro gained 0.2% against the US dollar to $1.038.

EU retaliation?

Trump has made threats of sweeping tariffs on U.S. trading partners similar to China, Mexico and Canada a central a part of his presidential campaign – and he has continued that narrative as he prepares to take office, at the same time as economists warn of risks to domestic inflation.

Analysts say there may be much uncertainty about how high the tariffs Trump will probably be willing or in a position to impose and the way much of his rhetoric is a place to begin for striking deals.

His latest comments got here after EU leaders held their final meeting of the 12 months on Thursday, where the difficulty of Europe-US relations was discussed.

“The message is clear: the European Union is committed to continuing to work pragmatically with the United States to strengthen transatlantic relations,” said European Council President António Costa following the meeting.

U.S. President Donald Trump arrives alongside Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau to make a statement on the signing of a new free trade agreement on the sidelines of the G20 leaders meeting in Buenos Aires on November 30, 2018. Summit.

Trump is promising additional tariffs of 10% on China and 25% on Canada and Mexico

Enrico Letta, former Italian prime minister and dean of the IE School of Politics, Economics and Global Affairs, told CNBC's “Squawk Box Europe” on Friday that the EU have to be prepared for retaliation to Trump's threat.

“I think it’s a transactional approach, we have to respond to that transactional approach.” [Trump] mixes energy and tariffs on goods, production, etc. “I think this is wrong because the two issues are completely different,” Letta said.

“If the deal is proposed by Trump – such an asymmetrical deal on issues that are unrelated – I think we need to do the same thing.”

“Considering that the most asymmetrical part is the relationship on the financial side, we have to think about whether an answer on the financial side could perhaps be a solution,” he said.

US President-elect Donald Trump delivers a speech at Mar-a-Lago in Palm Beach, Florida, USA on December 16, 2024.

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In the run-up to the US election in November, EU officials prepared for months for a shift to US protectionism and a more confrontational relationship with the White House within the event of a Trump victory. The EU has also taken steps to strengthen its ties with the United Kingdom, which left the bloc in 2020, to go off potential trade and defense conflicts.

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