The newly elected president, Donald Trump, has published today on the social media Truth that the European Union must “make up their tremendous deficit with the United States” through the purchase of oil and gas or face tariffs “all the way”.
Since the onset of the Russia-Ukraine war, the European Union has sought to reduce its reliance on Russian gas. According to data from the European Commission, in 2021, Russia was the EU’s primary gas supplier, providing 150.000 million cubic meters. By 2023, this amount had dropped to less than 43.000 million cubic meters. As a result, Europe has become increasingly dependent on American gas, with imports from the United States tripling last year. In the first quarter of 2024, the U.S. became the EU’s largest gas supplier, accounting for 48% of total imports.
Regarding oil, as reported by the Statista Research Department, the United States became Europe’s largest oil supplier in the first quarter of 2024, accounting for 17.1% of total imports.
However, this did not cover the trade deficit in goods and services that affects the US in relation to Europe. Bea, an official website of the United States government, calculated that the figure for the deficit on goods was a total of 23.8 billion in September of this year. In other words, the US imported 54.4 billion of dollars from Europe while exporting 23.8 billion to the continent.
Parting from this situation, different scenarios might have place if Donald Trump carries on with his pressures. First, to avoid increases on energy prices, Europe may face a choice between accepting higher prices or seeking alternative suppliers. This could involve negotiating deals with other suppliers like the Middle East, Russia (if relations improve), or developing more domestic energy sources, though these alternatives would take time to scale and it could be difficult in the short term due to the existing infrastructure and contracts with the U.S.
If the European Union decides to increase the investment to cover the deficit, it could make it harder for Europe to meet its climate goals, as it may delay investment in renewable energy infrastructure in favor of more short-term energy solutions.
Finally, as tariffs could lead to higher costs, European consumers could face price hikes not only on energy but on a wide range of goods and services that depend on U.S. imports or energy.
