Trump says EU must buy U.S. oil, gas as trade ultimatum

US President-elect Donald Trump delivers a speech at Mar-a-Lago in Palm Beach, Florida, USA on December 16, 2024.

Brian Snyder | Reuters

U.S. President-elect Trump told the European Union on Friday that it must reduce its trade deficit with the United States by buying oil and natural gas or face tariffs.

“I told the European Union that they must pay for their huge deficit with the United States by buying our oil and gas on a massive scale. Otherwise, it will always be tariffs,” Trump posted on his Truth social platform shortly after 1 a.m. .

according to US dataIn 2022, the country’s trade deficit in goods and services with the EU was US$131.3 billion.

Trump’s threat to impose sweeping tariffs on U.S. trading partners such as China, Mexico and Canada was a signature part of his presidential campaign – a rhetoric he continued as he prepared to take office even as economists warned of domestic inflation risks .

Analysts say there is considerable uncertainty about the extent of tariffs Trump is willing or able to impose and the extent to which his rhetoric is a starting point for a deal.

U.S. President Trump arrives in Buenos Aires to sign a new agreement with Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau during the G20 Leaders Summit on November 30, 2018. Free Trade Agreement heads of state issued a statement.

Trump vows to impose 10% tariffs on China and 25% tariffs on Canada and Mexico

Enrico Letta, 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 needs to be prepared to retaliate against Trump’s threats.

“I think it’s a transactional approach, and we have to respond to that transactional approach. (Trump) lumps energy and commodity tariffs, manufacturing, etc. together. I don’t think that’s right because those two topics are completely different, “Letta said.

“If this deal is proposed by Trump — such an asymmetric deal on unrelated issues — I think we have to do the same.”

“Given that the most asymmetrical part of the relationship is the financial side, we have to start thinking that maybe responding on the financial side might be a solution,” he added.

In 2023, the United States was the largest recipient of EU goods, accounting for Accounting for 19.7% of exports.

CNBC has contacted the European Commission for comment.

This breaking news story will be updated soon.