LAUNCESTON, Australia, July 28 (Reuters) - The recent framework agreement between the United States and the European Union bears strong similarities to former President Donald Trump's contentious trade deal with China during his first term. This new agreement, which features a 15% tariff on U.S. imports of EU goods, was announced at Trump's golf course in Scotland by both him and EU Commission President Ursula von der Leyen.
However, the most significant aspect of this agreement is not merely the tariff rate, but rather the EU's commitment to significantly increase its energy imports from the U.S. The deal stipulates that the EU is expected to import $250 billion worth of U.S. energy annually over the next three years. This ambitious target appears unrealistic, as the EU is unlikely to meet such high import levels, and U.S. producers may also struggle to supply such quantities.
To put this into perspective, in 2024, the 28 EU member states imported 3.38 billion barrels of seaborne crude oil, according to energy analysts at Kpler. Assuming similar import volumes in 2025 and an average price of $70 per barrel, the EU would spend approximately $236.6 billion on crude oil alone. In contrast, U.S. imports amounted to 573 million barrels in 2024, valued at around $40.1 billion.
In terms of liquefied natural gas (LNG), the EU imported 82.68 million metric tons in 2024, costing about $51.26 billion based on an average price of $12 per million British thermal units (mmBtu). From the U.S., the EU's imports were 35.13 million tons, worth around $21.78 billion. Additionally, the EU purchases metallurgical coal from the U.S., primarily used in steel production, totaling about $2.67 billion in 2024.
When combining the values of U.S. crude oil, LNG, and metallurgical coal imports, the total for 2024 stands at approximately $64.55 billion. This figure represents only 26% of the anticipated $250 billion the EU is expected to spend on U.S. energy under the new framework agreement. Should the EU somehow increase its imports to meet the $250 billion target, it would constitute a staggering 85% of its overall expenditure on these energy commodities.
On the U.S. side, exports totaled 1.45 billion barrels of crude oil in 2024, valued at $101.5 billion if priced at $70 per barrel. Additionally, the U.S. exported 87.05 million tons of LNG, worth around $54 billion. The export of metallurgical coal reached 51.53 million tons, totaling about $10.3 billion. Altogether, these energy exports summed up to $165.8 billion, indicating that even a full purchase by the EU would still fall short of the $250 billion benchmark.
The disparity between the proposed figures in this agreement and the reality of energy trade levels draws parallels to Trump's Phase 1 trade deal with China, where China was expected to purchase an additional $200 billion in U.S. energy by the end of 2021—a target they ultimately failed to meet.
There are, however, some nuances to consider regarding the agreement between Trump and von der Leyen. While not all details are public, the $250 billion energy figure is believed to encompass nuclear fuel, though this would contribute a minor portion to the overall value. Additionally, the agreement may include refined fuels, such as diesel, with U.S. exports of these products nearing 110 million barrels in 2024, amounting to around $10.9 billion.
Despite these details, the projected commitment to purchase $250 billion worth of U.S. energy remains impractical and unrealistic. This raises critical questions about the motivations behind agreeing to such inflated figures. Is the EU aiming for a similar strategy as China did during its trade negotiations with Trump in 2019—hoping to run down the clock, maintain a friendly dialogue, and anticipate a more amenable U.S. administration in the future?
The views expressed in this analysis are those of the author, a columnist for Reuters. Editing by Jacqueline Wong. Our Standards: The Thomson Reuters Trust Principles.
