- President Trump is using the threat of tariffs to pressure countries to increase their imports of U.S. LNG.
- Several countries, particularly in Asia, are responding by pursuing new LNG deals with the U.S. to avoid trade penalties.
- While some nations are complying, others, like the EU, are exploring diversifying their LNG sources to enhance energy security.
During his first two months in office. U.S. President Trump has made several threats to impose tariffs on trade partners who do not purchase more U.S.-made products. One of Trump’s main focuses is energy. As the U.S. produces record levels of liquified natural gas (LNG), Trump is hoping to boost exports of the energy source. While some countries are searching for alternative trade partners to improve their energy security, some governments are responding to Trump’s calls by increasing their U.S. LNG imports.
President Trump has been bold in his calls for countries worldwide to purchase more U.S.-produced energy or face his wrath. In January, he said that the European Union should purchase more LNG from the U.S. to avoid the imposition of tariffs. “The one thing they can do quickly is buy our oil and gas,” Trump told media sources. “We will straighten that out with tariffs, or they have to buy our oil and gas,” he added. This is a sentiment he has reiterated to several countries.
On his first day in office, Trump removed a pause on new LNG export terminal construction, which was implemented by the Biden administration, to increase gas production and export. The U.S. has become the biggest global exporter of LNG, driven largely by a rise in demand in Europe following the 2022 Russian invasion of Ukraine and subsequent sanctions on Russian energy products. U.S. LNG exports to Europe averaged 25 million tonnes a year before 2022, while they totaled 55 million tonnes in both 2022 and 2023. Trump’s moves support a production growth of nearly 100 million metric tonnes a year of additional LNG by 2031.
This month, Trump signed an executive order stating that from 2nd April, the White House will impose 25 percent tariffs on all goods imported into the U.S. from any country that imports Venezuelan oil, either directly or indirectly through third parties. Restrictions on the import of energy from other countries could also put pressure on governments to increase the share of energy imports coming from the U.S.
Governments worldwide are already responding to Trump’s calls. At an annual energy industry conference in Houston in early March, energy executives said that companies from around the globe are looking to buy more U.S.-produced LNG in response to trade pressure from President Trump.
The CEO of Australia’s Woodside Energy, Meg O’Neill said that countries with a trade imbalance with the U.S. are “all asking themselves, ‘What can we do to try to level the playing field?’” O’Neill added they are making deals now mainly “so their government can say, ‘We’re taking action. We hear you, Mr. President.’” This view was echoed by other industry leaders.
This month, companies in Japan, Taiwan, and South Korea revived a $44 billion gas project in Alaska that was long thought impossible. The project would include the development of a massive gas terminal in Alaska to export LNG to Asia. Earlier this month, Alaska Governor Mike Dunleavy said that Alaska LNG could begin exports by 2030.
At least six Asian countries have shown interest in buying more LNG from the U.S. to boost their trade ties and avoid tariffs, including India, Bangladesh, and Vietnam.
South Africa has also stated its intention to expand the drilling rights of U.S. companies in its waters in response to Trump’s decision to freeze aid to the country. Ukraine also signaled plans to purchase more American gas.
Europe has already increased its import of U.S.-produced LNG since 2022, as it moved away from a dependence on Russian gas to alternative supplies. Russia contributed around 40 percent of the EU’s gas imports in 2021, a figure that fell to less than 10 percent in 2023. Meanwhile, in December, half of the 10.89 million tonnes imported by the EU came from the U.S., and, in January, almost nine out of every 10 cargoes from the U.S. were destined for Europe.
Higher demand for gas during the cold winter months has resulted in lower European inventories, suggesting that the region will need to import higher levels of LNG to prepare for future demand. It seems somewhat ironic, therefore, that Trump is calling on Europe to buy more U.S.-produced energy products to avoid tariffs, given the sharp incline in LNG purchases in recent years. While this kind of antagonization may work with some governments, the EU has responded to Trump’s threats by exploring a range of LNG import options.
A draft document from the European Commission (EC) aimed at reducing European energy prices stated that the EC would “immediately engage with reliable LNG suppliers to identify additional cost-competitive imports from existing and future LNG export projects.” The document did not specify which countries, but this suggests that the EU may be looking to diversify its energy imports to boost security.
President Trump has repeatedly used the threat of tariffs to pressure countries around the globe into deepening their trade ties with the U.S. Some countries, including several Asian powers, South Africa, and Ukraine, have responded by proposing new deals to purchase more U.S.-produced gas. However, other regions, such as the EU, may be looking to diversify their energy imports to ensure their energy security and avoid future trade threats.
By Felicity Bradstock for Oilprice.com
Energy News Beat