President-elect Donald Trump threatened to impose tariffs on the European Union unless it purchases more oil and gas from the United States – an intimidation tactic that Trump has wielded against other countries as well.
After announcing a 25 percent tariff on the U.S. largest trading partners, Canada and Mexico, and threatening to increase tariffs on China, Trump has now targeted the E.U.
“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 wrote on Truth Social around 1 a.m. Friday.
The E.U. and U.S. have deep-rooted economic ties with more than $1 trillion in goods and services exchanged. However, in recent years, the U.S.’s trade deficit with Europe has increased as it imported more than it exported.
Threatening to impose tariffs could increase political and economic tensions. At worse, it could escalate into a trade war – something economists heavily warn against.
But more than likely, it will force the E.U. and U.S. to engage in some kind of negotiation about oil and gas trading.
European Commission Spokesperson Olof Gill told CNBC the E.U. and U.S. have “deeply integrated economies, with overall balanced trade and investment.” But that it is “ready to discuss” how it can strengthen ties with the U.S. “including by discussing our common interest in the energy sector.”
The U.S. is the world’s largest oil producer, accounting for 22 percent of global supply and Europe is the largest importer of American gas. That is, in part, due to Europe trying to phase out its energy imports from Russia.
The E.U. was already expected to purchase more U.S. liquefied natural gas, in part to appease Trump – a well-known fan of tariffs – and in part to replace its reliance on Russian energy.
Though the threat of tariffs is meant to bolster the U.S.’s global standing and reduce trade deficit, when Trump imposed tariffs on Europe for aluminum and steel, they issued retaliatory tariffs – specifically targeting products like Harley-Davidson motorcycles and Jack Daniel’s whiskey – something that increased the trade deficit.
For now, it appears the E.U. is open to talks but it is unclear how they will approach negotiations – or potential tariffs.
