Saturday, December 28, 2024
President-elect Donald Trump has frequently complained about unfair treatment of the U.S. by various countries in trade and other relationships. Arguably, his biggest grievance has been the longstanding failure of most NATO members to spend at least 2 percent of national GDP on defense as collectively agreed upon. On that subject, most people have agreed with him, and many of the previous laggards have already taken steps to raise their defense spending.
Given the multiple threats that America and its allies face today from adversaries like China, Russia, Iran, and North Korea, Mr. Trump’s highlighting of the importance of bolstering NATO defenses has been quite useful. He deserves a lot of credit for it. But unfortunately, he is now browbeating some of America’s friends needlessly on matters that don’t deserve such attention.
Last week, Mr. Trump threatened to impose tariffs on the European Union unless the bloc’s countries purchase more oil and gas from the U.S. A report by The Office of the U.S. Trade Representative showed that in 2022, U.S. goods and services trade deficit with the European Union amounted to $131.3 billion. The president-elect is aiming to narrow that gap by increasing sales of U.S. energy products to Europe. He may need to look elsewhere because the Europeans already rely quite heavily on America for their energy supplies.
According to S&P Global Commodity Insights, an energy and commodities data provider, European imports of U.S. liquefied natural gas (LNG) rose from 22 million metric tons (MMT) in 2021 to 58 MMT in 2023. The 2023 volume imported by the EU represented 68 percent of U.S. LNG delivered globally that year. For 2024, 53 percent of U.S. LNG exports have gone to the EU. S&P Global Commodity Insights analysts attribute this year’s lower volume to some U.S. cargoes having been diverted from Europe to Asia and elsewhere because customers there offered higher prices.
With its latest round of sanctions on Russia in response to its unprovoked invasion of Ukraine, the EU has reaffirmed its commitment to completely end all fossil fuel imports from Russia by 2027. To meet that goal, Germany and several other EU countries have hurriedly built terminals in the last couple of years for additional LNG imports. The bulk of that incremental supply is expected to come from the U.S.
Unlike natural gas, the U.S. is not a net exporter of oil. America currently produces around 14 million barrels of oil per day, while it consumes about 21 million barrels each day. Even then, S&P Global Commodity Insights reports that so far this month, daily purchases of U.S. light sweet crude by the EU have averaged 1.8 million barrels. The U.S. uses the proceeds from those sales to buy from elsewhere the heavier types of oil that are required by some industrial sectors in this country.
Quite clearly, the EU already imports substantial amounts of American energy products, and plans to significantly increase those purchases in the coming years. By his pressure tactic, the president-elect is making America look like a greedy bully and an ingrate. He shouldn’t be wasting this much precious political and moral capital so needlessly.