Trump’s EU Tariff Threats & the Oil and Gas Industry
In May 2025, U.S. President Donald Trump escalated trade tensions with the European Union (EU) by threatening a 50% tariff on EU imports starting June 1, citing stalled trade negotiations and a persistent trade deficit. This follows earlier threats in December 2024, where Trump demanded the EU increase imports of U.S. oil and gas to offset the $209 billion goods trade deficit or face tariffs. These developments have reignited fears of a transatlantic trade war, with significant implications for the oil and gas industry and related jobs in the U.S., EU, and globally. This article explores the multifaceted impacts of these tariff threats, drawing on economic analyses, trade data, and industry dynamics to assess potential outcomes.
Trump’s Tariff Strategy and the Oil and Gas Context
Donald Trump’s trade policy in his second term has centered on protectionism, aiming to reduce U.S. trade deficits, boost domestic manufacturing, and protect American jobs. His tariff threats against the EU are part of a broader strategy that includes 25% tariffs on Canada and Mexico (later paused), a 145% tariff on Chinese imports, and a universal 10% baseline tariff on all imports, with “reciprocal” tariffs targeting countries with significant trade surpluses. The EU, the U.S.’s third-largest trading partner, faces particular scrutiny due to its $209 billion goods trade surplus with the U.S. in 2023.
Trump’s specific demand for increased EU purchases of U.S. oil and gas reflects the U.S.’s position as the world’s largest oil producer and top liquefied natural gas (LNG) exporter. In 2023, the EU accounted for 66% of U.S. LNG exports and 47% of its LNG imports in Q1 2024, alongside 17% of its oil imports. However, the U.S. is already exporting at near capacity, limiting the scope for significant increases in volume. The EU, meanwhile, is seeking to diversify energy sources away from Russian fossil fuels, with U.S. LNG seen as a viable alternative. Against this backdrop, Trump’s tariffs aim to leverage energy exports to reduce trade imbalances, but they risk disrupting global energy markets and supply chains.
Impact on the U.S. Oil and Gas Industry and Jobs
Potential for Increased Production and Jobs
Trump’s tariff threats are framed as a mechanism to boost U.S. energy exports, which could stimulate domestic oil and gas production. The U.S. produced over 103 billion cubic feet per day of natural gas in 2023, with LNG exports averaging 12 billion cubic feet per day (bcfd). The administration’s push for deregulation and expanded drilling could increase output, potentially creating jobs in exploration, production, and transportation. The U.S. Energy Information Administration projects slow oil production growth until 2030, but new LNG terminals could boost gas exports if approved.
The American Petroleum Institute estimates that the oil and gas industry supports over 10 million U.S. jobs, directly and indirectly, including roles in drilling, refining, and logistics. Increased EU demand could lead to job growth in states like Texas, Louisiana, and Pennsylvania, where LNG export terminals and shale gas production are concentrated. For example, the construction and operation of new LNG facilities could create thousands of high-paying jobs, with each terminal supporting 1,000–2,000 direct jobs during construction and hundreds during operation.
Risks of Higher Domestic Prices and Retaliation
However, the tariff strategy carries risks. A U.S. government study from the Biden administration warned that unfettered LNG exports could raise domestic gas prices by up to 30%, impacting consumers and industries reliant on affordable energy. Higher domestic prices could erode the competitive advantage of U.S. manufacturers, potentially offsetting job gains in the energy sector. Additionally, EU retaliatory tariffs, such as the proposed €100 billion in duties on U.S. goods (including aircraft, cars, and chemicals), could target U.S. energy exports, reducing demand and threatening jobs.
Retaliation could also disrupt integrated supply chains. For instance, EU-based companies like BMW, which operate U.S. factories, rely on imported components that could face higher costs due to tariffs, indirectly affecting energy-intensive manufacturing jobs. The Tax Foundation estimates that Trump’s tariffs will increase U.S. household costs by $1,155–$1,397 annually, potentially reducing consumer spending and economic growth, which could dampen demand for energy-related jobs.
Impact on the EU Oil and Gas Industry and Jobs
Challenges to Energy Diversification
The EU’s energy sector is at a critical juncture, aiming to phase out Russian LNG imports (2 bcfd in 2024) and achieve net-zero emissions by 2050. U.S. LNG has been a cornerstone of this strategy, with the EU importing 48% of its LNG from the U.S. in the first half of 2024. Trump’s tariff threats complicate this transition. While the EU could increase U.S. LNG purchases to avoid tariffs, analysts note that U.S. export capacity constraints limit additional supply. Refinery closures in Europe in 2025 further reduce the ability to process additional U.S. crude oil, potentially increasing reliance on alternative suppliers like Qatar or Norway.
Job Impacts in Energy and Related Sectors
The EU’s oil and gas industry employs approximately 1.2 million workers, including those in refining, distribution, and renewable energy transitions. Increased U.S. LNG imports could support jobs in LNG terminal operations and energy infrastructure, particularly in countries like Germany, France, and Spain, which are major U.S. LNG destinations. However, tariffs on EU exports (e.g., a 20% tariff effective April 9, 2025, or the threatened 50% tariff) could harm energy-intensive industries like chemicals and manufacturing, which rely on affordable energy and global trade.
Ireland and Italy face particular risks due to their export-oriented economies. Ireland’s chemical and pharmaceutical sectors, which employ over 50,000 workers, are highly exposed to U.S. markets and could face significant job losses if tariffs reduce competitiveness. Italy’s transport equipment and manufacturing sectors, employing hundreds of thousands, are similarly vulnerable. Retaliatory tariffs could also disrupt jobs in U.S.-linked supply chains, such as German automakers producing in the U.S., which employ 200,000 workers across both regions.
Trade Diversion and Market Dynamics
A major concern for the EU is the potential diversion of Chinese goods, blocked by U.S. tariffs (145% on Chinese imports), into European markets. This could depress prices in energy-intensive sectors like chemicals, threatening jobs. The EU has proposed safeguard measures to limit such imports, but implementation could strain resources and increase costs for consumers. Additionally, a potential EU ban on Russian LNG could increase energy costs, further pressuring industries and jobs.
Global Implications for the Oil and Gas Industry and Jobs
Disruption of Global Energy Markets
Trump’s tariffs threaten to destabilize global energy markets. Oil prices rose over 2% in February 2025 due to fears of supply disruptions from tariffs on Canadian energy exports and potential future tariffs on Venezuelan oil buyers. A 25% tariff on countries purchasing Venezuelan oil, effective April 2, 2025, could affect global supply chains, as China, a major buyer, may seek alternative suppliers, increasing competition for non-U.S. oil. This could drive up global oil prices, impacting energy-intensive industries and jobs worldwide.
The International Monetary Fund (IMF) downgraded its 2025 global growth forecast, citing Trump’s tariffs as a risk for a global recession. Higher energy prices and trade disruptions could exacerbate economic slowdowns, particularly in energy-importing economies like Japan and South Korea, which rely on stable U.S. and EU energy supplies.
Impact on Emerging Markets and Energy Exporters
Emerging markets like Brazil and South Africa, which face U.S. tariffs, may diversify export markets to Asia and the EU, potentially increasing competition in global energy trade. Zimbabwe’s decision to scrap tariffs on U.S. goods to foster relations with Trump’s administration illustrates how smaller economies may realign trade policies, affecting global energy flows. Meanwhile, energy exporters like Qatar and Australia could benefit from increased EU demand if U.S. LNG becomes less viable due to trade tensions, supporting jobs in their energy sectors.
Risks of a Global Trade War
The threat of a transatlantic trade war, with the EU’s proposed €100 billion retaliatory tariffs, could disrupt global supply chains, including energy. The EU’s focus on diversifying trade partners (e.g., with Africa and the Indo-Pacific) could shift energy trade dynamics, potentially reducing U.S. market share in Europe. This could lead to job losses in U.S. energy exports while creating opportunities in other regions. However, a global trade war risks higher energy costs and reduced economic growth, threatening jobs across energy and manufacturing sectors worldwide.
Economic and Policy Considerations
Economic Impacts
Economic analyses suggest that Trump’s tariffs could reduce U.S. GDP by 0.7% and EU GDP by 0.3% in a no-deal scenario, with Germany facing a 0.4% contraction due to its export-heavy economy. The IMF predicts that a 10% U.S. tariff could slow EU growth by 1% over two years, with the automotive sector particularly vulnerable due to a proposed 25% tariff on car imports. These economic contractions could reduce demand for oil and gas, impacting jobs in both regions.
Policy Responses
The EU has proposed lowering car import tariffs from 10% to 2.5% and increasing U.S. LNG and military equipment purchases to avert tariffs. However, Trump’s rejection of these offers and his insistence on a 50% tariff suggest limited room for negotiation. The EU’s strategy includes retaliatory tariffs, WTO reform advocacy, and new trade agreements to offset losses. These measures could stabilize EU energy markets but risk escalating tensions.
In the U.S., Trump’s tariffs are supported by claims that they will create manufacturing jobs and reduce trade deficits. However, economists warn of higher consumer prices and potential recession risks, which could undermine job growth. The administration’s focus on energy exports as a bargaining chip may also face challenges due to domestic opposition to higher LNG prices and environmental concerns.
Trump’s tariff threats against the EU pose significant risks and opportunities for the oil and gas industry and related jobs. In the U.S., increased LNG exports could create jobs, but higher domestic prices and EU retaliation threaten economic stability. In the EU, energy diversification efforts may support LNG infrastructure jobs, but tariffs could harm energy-intensive industries, particularly in Ireland and Germany. Globally, the tariffs risk higher energy prices, supply chain disruptions, and a potential recession, affecting jobs in both energy-producing and energy-importing nations.
The outcome hinges on whether negotiations can avert a full-scale trade war. The EU’s willingness to increase U.S. LNG imports and lower tariffs on certain goods suggests room for compromise, but Trump’s unpredictable approach and focus on “reciprocal” trade make resolution uncertain. Policymakers must balance short-term economic gains with long-term stability to protect jobs and ensure energy security in an increasingly volatile global market.