President-Elect Trump Tells EU to Buy More Oil, Gas or Face Tariffs

What Happened?

President-elect Donald Trump introduced tariff warnings on the European Union (EU) Friday in an effort to offset the growing economic deficit within the U.S.

According to reports, Trump warned the EU about the possibility of trade tariffs on its exports unless its member states buy large amounts of American oil and gas.

Trump took to Truth Social and said, '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!!!'

U.S. stocks were slightly lower in pre-market trading Friday as European stocks fell sharply.

European Commission Spokesperson Olof Gill acknowledged the EU and U.S. have 'deeply integrated economies,' in a response to CNBC surrounding Trump's comments.

Gill told the network:

'We are ready to discuss with President-elect Trump how we can further strengthen an already strong relationship, including by discussing our common interests in the energy sector.'

Concerns of a potential U.S. and EU trade war stem from November during Trump's first public statement regarding trade since being elected president.

Europeans reportedly have just a month to clinch a deal to prevent an all-out trade war.

Why it Matters

The U.S. is the world’s top oil producer and has emerged as the biggest supplier of liquefied natural gas (LNG) to the EU, taking over from Russia in 2022 following their ongoing conflict with Ukraine.

Many suggest this tension builds from Trump's broader frustrations with Europe and its trade deficit of $131.3 billion in 2022 in the U.S.

Trump accused the European Union of 'taking advantage of us on trade' during an interview.

But reports state that the EU already buys the lion's share of U.S. oil and gas exports, as no extra volumes are currently available without increasing production.

The threat of tariff increases has also been directed toward other U.S. trading partners such as China, Mexico, and Canada as part of Trump's presidential campaign push.

Chief U.S. economist Ryan Sweet said in a report that 'tariffs are a two-way street.'

He added that more aggressive tariffs on trading partners could lead to a larger retaliation.

'There’s a myth that imposing tariffs is going to eliminate the trade deficit in the U.S.,' Sweet said to Yahoo's Capitol Gains team. 'That’s just not gonna happen.'

How it Affects You

Although tariffs are a tax on imported goods, experts still worry that these actions could heavily impact consumer prices on imported goods nationwide.

Some data supports that this potential move by businesses amid tariff hikes could lower household incomes by nearly $3,000.

Consumers, investors, and economists await Trump's return to office to see what policy trade measures unfold.