Donald Trump has threatened European Union member states with punitive tariffs if they fail to buy American oil and gas, rekindling the prospect of a transatlantic trade war.
On Friday, the president-elect announced on social media: “I told the European Union that they must pay their big bill to the United States for the big purchases of our oil and gas. Besides, it’s TARIFFS all the way!!!
The warning comes as Mr Trump insists the EU has reduced its trade surplus with the US, which stood at $131 billion (£105 billion) last year. He is expected to press for balanced trade relations, using the threat of tariffs on European imports unless the EU buys more American goods and services.
This situation may be a serious challenge for Britain, as the US ambassador Lord Mandelson may use a major effort to prevent trade conflicts while trying to keep both the EU and the US in harmony.
Mr Trump’s tough rhetoric recalls his previous presidency, when he imposed tariffs on EU steel and aluminum and threatened to continue with duties on German car imports. That period sparked transatlantic tensions, anti-EU measures on products such as Harley-Davidson motorcycles and denim, and an interim agreement in 2018.
These recent increases indicate a possible return to tit-for-tat costs. After being caught off guard, EU officials have since adjusted their trade defense capabilities to quickly respond to US pressure, if possible. In November, German Foreign Minister Annalena Baerbock noted that Europe is “well prepared” for a situation where Washington renews its “America first” policies, vowing a united European response.
The EU has also introduced rules allowing it to exclude foreign firms that benefit from government subsidies from tendering public contracts or pursuing takeovers within the bloc—an insurance policy against what it sees as unfair competition.
Mr Trump has regularly criticized European countries for relying on America’s security umbrella while spending too little on defence, and has accused them of taking advantage of America’s economic generosity through trade surpluses. Brussels, the political heart of the EU, has been called “hell” by the president-elect, who has threatened to back down and let Russia “do whatever the hell it wants” if Nato countries fail to invest enough in their military.
These latest tax threats are not only aimed at the EU. Mr Trump also targeted China and its allies such as Canada, which he jokingly described as “another country in America.” In an effort to counter these threats, some buyers of LNG (liquefied natural gas), including EU member states and Vietnam, have already discussed increasing their purchases from the US.
The US remains the largest producer of crude oil and the leading producer of LNG. More than half of US LNG exports went to Europe last year, although the EU has sought to diversify its energy supply, signing deals with other producers such as Qatar. The urgency for alternatives grew after Russia’s invasion of Ukraine exposed the vulnerability of the EU due to its previous reliance on Russian power.
Given Mr. Trump’s well-known fascination with the word “tariff,” which has long been seen as an important strategic tool, European governments may find themselves caught between diplomatic negotiations and the threat of sudden trade sanctions. This state of uncertainty raises problems for EU leaders, who must balance the need to secure stable energy supplies with the need to maintain good trade relations with Washington.
