EU signals desperation to avoid trade war with Trump, desire to buy American gas

President-elect Donald Trump is still months away from taking office, yet the European Union already appears desperate to cut a deal with him.

Ursula von der Leyen, president of the European Commission, addressed members of the European Council in Budapest, Hungary, Friday, signaling a desire to avoid a trade war with the United States and to switch from Russian to American gas.

When asked how she intends to negotiate with Trump on trade, Leyen answered, "I think first of all: Engage. Very important what we have started yesterday."

Leyen was referencing her phone call with Trump Thursday, where she apparently congratulated him on his landslide electoral victory. The German politician noted on X that they discussed defense, Ukraine, trade, and energy.

"Secondly, discuss about common interests. And there are common interests that we have," continued Leyen. "Then go into negotiations."

'They are going to have to pay a big price.'

Leyen said that liquid natural gas was among the common interests she briefly discussed with Trump this week, noting that Europe still gets "a lot of LNG via Russia, from Russia."

According to the Institute for Energy Economics and Financial Analysis, in the first half of 2024, Europe sourced 48% of its LNG imports from U.S., 16% from Russia, 11% from Algeria, 10% from Qatar, and 4% from Nigeria and Norway.

"Why not replace it by American LNG, which is cheaper for us and brings down our energy prices?" said Leyen. "It's something where we can get into a discussion, also [where] our trade deficit is concerned."

The U.S. Census Bureau indicated Tuesday that the trade deficit with the EU in September was $23.8 billion, contributing to the year-to-date trade deficit of $173 billion.

Trump indicated in October that the EU would have to "pay a big price" for not buying enough American exports, reported Reuters.

"I'll tell you what, the European Union sounds so nice, so lovely, right? All the nice European little countries that get together," said Trump. "They don't take our cars. They don't take our farm products. They sell millions and millions of cars in the United States. No, no, no, they are going to have to pay a big price."

Politico noted that Leyen's maneuver to dodge the steep tariffs of 10% or more that Trump has threatened by promising to buy LNG is largely political theater granted the European Commission is virtually powerless when it comes to dictating European companies' purchases of gas.

"The EU doesn't buy LNG — there's a global LNG market and LNG buyers have their own contract," Laurent Ruseckas, executive director for gas markets at commodities giant S&P Global, told Politico. "It's certainly possible to do a memorandum of understanding to talk about increasing purchases but ultimately in the past that's been a way to put a political wrapper around something that was delivered by the market. And the EU is buying as much LNG currently as the market needs."

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