Trump's EU trade deal is based on massive energy purchases that are unlikely to materialize, analysts say

CNBC

29-07-2025

President Donald Trump's massive energy deal with the European Union will be difficult to implement, setting Washington and Brussels up for a potential future confrontation over tariffs and trade.
The EU has agreed to purchase $750 billion of U.S. energy and invest $600 billion in the U.S. by 2028, according to the White House. In exchange, Trump has agreed to a tariff of 15% on EU goods excluding steel and aluminum, which is half the 30% rate that he had threatened.
But the $600 billion investment in the U.S. is not binding on EU member states or companies. The European Commission, the bloc's executive body, simply said that companies "have expressed interest in investing at least" that amount in the U.S by 2029.
The massive energy purchases in the deal are unrealistic due to market and political constraints, analysts said. The EU cannot force member states and companies to buy U.S. energy just as the Trump administration cannot force producers to sell to Europe, said Mathieu Utting, an analyst at Rystad Energy.
"This is non-binding. It's a pledge," said Erik Brattberg, an expert on Europe at the Atlantic Council, a think-tank with a focus on international affairs. "The EU itself doesn't buy energy. It would be member states or companies from member states."
A White House official told CNBC on Tuesday that Trump expects the EU to abide by its commitments under the deal.
"That is what the EU agreed to purchase," the official said. "The President reserves the right to adjust tariff rates if any party reneges."
The energy purchases are divided into $250 billion annual installments over the rest of Trump's term, European Commission President Ursula von der Leyen told reporters Sunday. The EU is pledging significant purchases U.S. oil, liquified natural gas (LNG) and nuclear fuel to replace Russian fossil fuels, von der Leyen said.
But it is unclear how much EU member states and companies intend to buy of each fuel type. "Details have to be sorted out and that will happen over the next weeks," von der Leyen told reporters.
EU member states bought about $80 billion U.S. oil, liquified natural gas, liquified petroleum gas and coal from the U.S. in 2024, according to data from Kpler. The bloc would have to triple its purchases of U.S. energy to meet the $250 billion annual purchase target laid out in the agreement.
"If this deal were to be realized, we'd be talking about the United States providing the lion's share of European energy imports," Helima Croft, head of global commodity strategy at RBC Capital Markets, told CNBC on Monday. EU energy imports totaled $433 billion in 2024, according to Eurostat.
Increasing U.S. oil exports to the EU is difficult because production is flat and will likely decline in the coming months, said Svetlana Tretyakova, an oil analyst at Rystad.
U.S. companies would have to reroute exports from customers in Asia and Latin America to the EU, Tretyakova said. Importing more oil also does not align with the EU's climate goals and the continent's refining capacity is declining, she said.
Surging LNG exports is also tough, Utting said. U.S. terminals always run at full capacity so there isn't slack capacity to increase shipments to the EU right now, he said. As in the case with oil, LNG would have to be diverted from other customers to Europe, he said.
More LNG capacity is coming online over the next two years that could be exported to Europe, he said. But the EU already receives more than half its imports from the U.S., Utting said.
"It's very unrealistic that Europe would import exclusively from the U.S.," he said. "They will want to diversify to some extent."
While the headline $750 billion figure is unrealistic, the EU is showing that it is serious about expanding its energy trade with the U.S., said Alex Munton, director of global gas and LNG research at Rapidan Energy.
The EU was already planning to eliminate what remains of Russian LNG and pipeline gas imports to the bloc by 2028. This will create a supply gap of 25 million metric tons per year that the U.S. is perfectly positioned to fill, Munton said.
"The interests line up, they go hand in hand," he said. "That's why it's essentially a convenient deal."