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US President-elect Donald Trump delivers a speech at Mar-a-Lago in Palm Beach, Florida, US on December 16, 2024.
Brian Snyder | Reuters
US President-elect Donald Trump said on Friday that he told the European Union it must reduce its trade gap with the US by buying oil and gas or face tariffs.
“I told the European Union they need to make up their huge deficit with the US by buying our oil and gas on a massive scale. Otherwise it’s TARIFFS all the way,” Trump posted on his Truth platform Social shortly after 1 am. E.T.
according to US 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 named because of 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” to buy more American products.
Another EU official, who also did not want to be named for the same reason, told Amaro that German Chancellor Olaf Scholz spoke to 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 Europe-US relations was discussed.
“The message is clear: the European Union is committed to continuing to work with the United States, pragmatically, to strengthen transatlantic ties,” European Council President António Costa said after the meeting.
Trump has threatened broad tariffs on US trading partners including China, Mexico and Canada a signature part of his presidential campaign, and has continued the narrative as he prepares to take office, despite warning from economists of the risks for internal inflation.
Analysts say there is great uncertainty about the extent of tariffs Trump will be willing (or able) to pursue, and how much of his rhetoric is a starting point for deals.
Enrico Letta, a former Italian prime minister and dean of the IE School of Politics, Economics and Global Affairs, told CNBC’s “Squawk Box Europe” on Friday that the EU must be ready to retaliate against the threat from Trump
“I think it’s a transactional approach, we have to respond to that transactional approach. (Trump) is conflating energy and tariffs on goods, manufacturing, etc. I think that’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 maybe responding on the financial side could be a solution,” he said.
The United States is the largest recipient of EU goods, by far almost a fifth of the bloc’s exports. Those of the USA higher trade deficit with the EU is in machinery and vehicles, with a gap of 102 billion euros ($106 billion) by 2023. In energy, Washington had a trade surplus with the European bloc worth 70 billion euros.
The United States is the world’s top oil producer and accounted for 22% of global supply in 2023, according to the US Energy Information Administration, which predicts record crude 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 energy from the United States in the coming years. Last month, the president of the European Commission, Ursula von der Leyen he told reporters that replacing imports of Russian liquefied natural gas (LNG) with US volumes would be cheaper, and that the EU would seek to engage and negotiate on the matter when Trump takes office in 2025.
Ahead of the US elections in November, EU officials spent months preparing for a thrust toward American protectionism and a more confrontational relationship with the White House, should Trump win. The EU has done it too made moves to strengthen their relationship with the UK, which left the bloc in 2020, as a guard against possible clashes over trade and defence.
European stocks fell sharply on Friday morning, while the euro strengthened 0.2% against the US dollar to $1.038.
CNBC has reached out to the European Commission for comment on Trump’s remarks.
