The victory of Donald Trump in the 2024 presidential election could bring many challenges for the European Union. The elected president recently warned the EU to buy more oil and gas from the United States otherwise face high tariffs on crucial imports. This tariff would be applied to cars and machinery especially. The European Union already buys more oil and gas from the US but Trump has a desire to increase this buying rate. He made commitments to boost US oil and gas production in the future.
This growing production will meet the demands of the nations. Recently, he posted on Truth Social. He emphasized that the European Union should buy more American energy as this is the only way for the EU to reduce its trade deficit with the United States. However, if the EU denied accepting this demand from the US then it should be ready to face the high tariffs on various European goods. On this warning, the European Commission responded and said that Europe is ready to find a solution to strengthen the strong partnerships between the United States and the European Union. This highlights the growing tension between the fragile relationship between Europe and the United States especially regarding energy trade. This tension between these two nations also impacts on global markets.
European Union seeks to reduce its dependence on Russian energy market
It seeks to reduce its dependence on Russia for energy and search for new sources of supply. In the first two months of 2024, the United States had become the EU’s leading supplier of energy, exporting 47% of liquefied natural gas to the EU and 17% of oil, said Eurostat.
Meanwhile, former President Trump is going to introduce tariffs on global imports to the US, including a 10% tariff on all goods and a 60% tariff on Chinese products. Experts say these tariffs could disrupt trade, raise prices, and lead to retaliatory measures against U.S. exports. By 2023, the trade deficit of the US with the EU had amounted to $208.7 billion, largely due to the importation of goods, notably cars. Despite a trade surplus in services, which the US boasts of having with the EU, Trump often laments that the EU is sending too many cars to America without reciprocal exportation to Europe of US vehicles.
US high tariff on various trading partners
Trump has threatened to impose substantial taxes on China, Canada, and Mexico—the United States’ biggest trading partners if they do not curb fentanyl trafficking and illegal border crossings. William Reinsch, a trade expert, thinks the EU might negotiate with the US and maybe consent to purchase gas and oil, which they need anyhow, to get around these tariffs. However, unless sanctions or tariffs are applied, governments have little control over the suppliers of European oil and gas corporations, which are primarily privately held. Even if the United States creates more gas and oil than ever before, increasing exports is going to cost a lot of money, especially to build LNG terminals.
Reinsch also emphasizes that the continent’s move to renewable energy raises questions about the long-term demand for American energy. If organizations think that there will only be a short-term need for fossil fuels, they might not want to invest. Following the sanctions imposed on Russia for its 2022 invasion of Ukraine, the European Union has significantly increased its purchases of U.S. gas and oil. With a monthly output of more than 20 million barrels, or roughly one-fifth of the world’s demand, the United States is currently the world’s largest producer of oil. Europe purchases a great deal of U.S. oil exports, with the Netherlands, Spain, France, and Germany being the top consumers.
But according to specialists, Europe is already at its maximum when it comes to importing U.S. oil, meaning there isn’t much space for more. The United States is also the world’s largest producer of natural gas, much of which is sent to Europe, particularly to France, Spain, and the United Kingdom. Although U.S. oil production will continue to rise gradually until 2030, U.S. LNG exports may expand. In the upcoming years, Europe also plans to make the move from Russian LNG to alternative supplies.
