Donald Trump threatened to impose tariffs on U.S. allies in an overnight post demanding that the European Union close its trade gap.
The president-elect told the EU to reduce its trade gap with the U.S. by purchasing oil and gas or face tariffs, which he's also threatened to levy on Canada, China and Mexico.
“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," Trump posted on Truth Social shortly after 1 a.m. "Otherwise, it is TARIFFS all the way."
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A senior EU diplomat told CNBC they were not surprised by Trump's comment and agreed energy was a "good option" to buy more goods from the U.S., while another EU official said that German chancellor Olaf Scholz had spoken with Trump on Thursday night after the final meeting of the year between EU heads of state.
“The message is clear: the European Union is committed to continue working with the United States, pragmatically, to strengthen transatlantic ties,” said European Council president António Costa after the meeting.
The U.S. accounts for nearly a fifth of the EU's exports, and the the biggest U.S. trade deficit with the block is in machinery and vehicles, while the EU is reportedly already buying the bulk of U.S. oil and gas exports, and no additional volumes are available unless the U.S. increases output or oil is rerouted from Asia.
“I think it is a transactional approach, we have to respond to this transactional approach. [Trump] mixes together energy and tariffs on goods, manufacturing and so on. I think it’s incorrect because the two topics are completely different,” said Enrico Letta, former prime minister of Italy and dean of the IE School of Politics, Economics and Global Affairs.
“If the deal is proposed by Trump — such an asymmetric deal on topics that are not linked one to the other — I think we have to do the same," Letta added.
