After BRICS, Donald Trump issues ultimatum to European Union: ‘Buy US oil and gas or face tariffs’

Source: Mint | Original Published At: 2024-12-20 11:26:00 UTC

Key Points

• Trump threatens EU with tariffs unless it increases US oil/gas purchases to reduce trade deficit
• EU already accounts for 47% of US LNG exports and 17% of oil exports in Q1 2024
• EU private sector controls energy purchases, limiting government intervention
• Previous BRICS sanctions threats linked to dollar defense and currency restrictions
• Potential global economic impacts from Trump's tariff threats against multiple regions

US President-elect Donald Trump has threatened to impose tariffs on the European Union unless they commit to a “large-scale” purchase of US oil and gas. The ultimatum came just days after the Republican leader warned the BRICS nations of crushing sanctions if they chose to challenge the dollar.

“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 wrote on his Truth Social platform.

EU countries have already discussed the possibility of additional purchases as the bloc seeks to avoid a trade war with the incoming president. Officials from the bloc said they are ready to explore ways to strengthen the already strong relationship — including in the energy sector — with the president-elect.

The European Union has steeply increased its US oil and gas purchases amid the Russia-Ukraine war in the past three years. According to a Reuters report citing US government data, the group is already buying the lion’s share of US oil and gas exports. No additional volumes are currently available unless the United States increases output or volumes are re-routed from Asia.

Data from Eurostat also indicated that the US supplied 47% of the European Union’s LNG imports and 17% of its oil imports in the first quarter of 2024. The country has grown to become the largest oil producer in recent years, with output of over 20 million barrels per day of oil liquids or a fifth of global demand.

However most European oil refiners and gas firms are private and the governments have no say on where the purchases are coming from unless authorities impose sanctions or tariffs. The owners usually buy their resources based on price and efficiencies.

The remarks come mere weeks after the US President-elect — who takes office in January — threatened to impose a 100% tariff against the BRICS nations if they tried to replace the US dollar with another currency. The grouping was also asked to provide a commitment that they would neither create a new BRICS currency or back another one against the dollar.

Trump has also made sweeping threats of slapping tariffs on US trading partners such as Canada, Mexico and China which could send reverberations across the global economy.