Trump says EU must buy US oil and gas in trade ultimatum

US President-elect Donald Trump said Friday that he told the European Union it must narrow its trade gap with the United States 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 purchasing our oil and gas on a large scale. Otherwise it will be TARIFFs in every way,” Trump posted on his Truth Social platform shortly after 1 in the morning. Eastern time.

According united states figuresThe country’s trade deficit in goods and services with the European Union was $131.3 billion in 2022.

A senior EU diplomat, who did not want to be identified due to the sensitivity of the issue, told CNBC’s Silvia Amaro that they were not surprised by Trump’s comment on Friday and that energy was a “good option” for buying more American products. .

Another EU official, who also did not want to be identified for the same reason, told Amaro that German Chancellor Olaf Scholz spoke with Trump last night.

The comment comes after EU heads of state held their last meeting of the year on Thursday, during which the issue of relations between Europe and the United States was discussed.

“The message is clear: the European Union is committed to continuing to work with the United States, in a pragmatic way, to strengthen transatlantic ties,” said the president of the European Council, António Costa, after the meeting.

Trump has made threats to impose sweeping tariffs on America’s trading partners, including China, Mexico and Canada, a signature part of his presidential campaign, and has continued that narrative as he prepares to take office, despite that economists warn about the risks to domestic inflation.

Analysts say there is great uncertainty about the extent of tariffs that Trump will be willing – or able – to apply, and how much of his rhetoric is a starting point for reaching agreements.

Enrico Letta, former prime minister of Italy and dean of IE’s School of Politics, Economics and Global Affairs, told CNBC’s “Squawk Box Europe” on Friday that the EU had to be prepared to retaliate against Trump’s threat.

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

“If the agreement is proposed by Trump (such an asymmetric agreement on issues that are not linked to each 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 perhaps responding on the financial side could be a solution,” he said.

The United States is the largest recipient of goods from the EU and represents almost a fifth of the bloc’s exports. the united states higher trade deficit with the EU is in machinery and vehicles, with a gap that will amount to 102 billion euros (106 billion dollars) in 2023. In energy, Washington had a trade surplus with the European bloc worth 70 billion euros .

The United States is the world’s leading oil producer, accounting for 22% of global supply in 2023, according to the US 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 has already indicated that it expects to buy more American energy in the coming years. Last month, the president of the European Commission, Ursula von der Leyen told reporters that replacing Russian imports of liquefied natural gas (LNG) with US volumes would be cheaper, and that the EU would seek to engage and negotiate on the issue when Trump takes office in 2025.

Before the US elections in November, EU officials spent months preparing for a shift towards US protectionism and a more contentious relationship with the White House, in the event of a Trump victory. The EU has also taken steps to strengthen its relationship with the United Kingdom, which left the bloc in 2020, as a safeguard against potential clashes over trade and defense.

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

CNBC has contacted the European Commission for comment on Trump’s comments.