Trump says European Union must buy U.S. oil and gas in trade ultimatum
By: Jenni Reid,Silvia Amaro (CNBC)
Trump is irrational and irresponsible.
S E E D E D C O N T E N T
U.S. President-elect Donald Trump delivers remarks at Mar-a-Lago in Palm Beach, Florida, U.S., December 16, 2024.Brian Snyder | Reuters
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 Antonio Costa said following the meeting.
Trump vows an additional 10% tariff on China, 25% tariffs on Canada and Mexico
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.
How Trump could affect the oil market in 2025 and which stocks might benefit
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.
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Trump is going to keep doing this until Trump supporters stop acquiescing to his insanity. He either does not care or is unable to comprehend the effects such moves will have on the lives of the everyday American.
He doesn’t care, IMO. He wants to look like a tough guy, it’s been his MO for decades.
The (insecure) 'tough guy' will have to find some way to persuade his supporters that the higher prices they are paying is not his fault.
Given what has taken place thus far, seems all he has to do is declare this and they will believe it.
based upon the recent past, that shouldn't be too difficult ...
Yep, seems like it. Appears to be working. Gets the conversations going anyway
It's called negotiating. Having a couple successful businessmen around as advisors can't hurt.
Trump is neither insane nor insecure. Wouldn't have won so decisively of 'twer true,
The 'they' are his supporters.
No, that is not how rational people negotiate. Negotiation is a process of compromise. The objective is to reach a position where both sides are content (enough). Typically, the result of a successful negotiation leaves both sides wanting, but able to justify proceeding with the deal.
Negotiation does not start with a public threat ... attempting to bully the other side into capitulation before any private discussions have taken place. If that is your concept of negotiation then you clearly have not engaged in the process.
Even when Trump makes brain-dead stupid moves, people flock to defend him. The presidency should not be based on a demagogue cult.
Trump is one of the worst business boys around...
winning by 1.5% isn't decisive, nor is it a mandate ...
You should be used to Trump's rhetoric by now. Threats of tariffs simply get their attention.
Threats put our trade partners on defensive and furthers mistrust. Part of the objective of negotiation is to secure some level of trust. The absence of trust makes it more difficult to reach a compromise.
Also 'threats' and 'bluffs' have a distinction of getting another's attention, but these can fail as a tactic if it carries along messaging (and it is being called 'simply rhetoric' by some conservatives even before Trump takes office) as the boy crying: "Wolf!"
Of course.
And that is just what the USA wants ... to threaten our allies, harbor more mistrust, and encourage retaliation.
I'm tickled pink that trump thinks he's invincible and protected by divine providence ...
every stupid thing he says just increases the number of political targets on him ...