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

July 29, 2025
05:51 PM
5 min read
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investmentfinancialenergytrademarket cyclesseasonal analysisgeopolitical

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The EU has pledged to buy $750 billion of energy from the U.S. in exchange for a lower rate tariff rate in its trade deal, but analysts say this is unrealistic.

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investment

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Published

July 29, 2025

05:51 PM

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CNBC

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investmentfinancialenergytrademarket cyclesseasonal analysisgeopolitical

The analysis indicates that President Donald Trump looks on, during a meeting with European Commission President Ursula von der Leyen (not pictured), after an announcement of a trade deal between the U

In contrast, And EU, in Turnberry, Scotland, Britain, July 27, 2025

However, Evelyn Hockstein | ReutersPresident 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 (something worth watching)

Moreover, The EU has agreed to purchase $750 billion of U (this bears monitoring)

On the other hand, Energy and invest $600 billion in the U

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

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 at least" that amount in the U

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

Energy just as the Trump administration cannot force ducers to sell to Europe, said Mathieu Utting, an analyst at Rystad Energy. "This's 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, given the current landscape. "The EU itself doesn't buy energy (this bears monitoring)

Moreover, It would be member states or companies from member states, in today's market environment

On the other hand, On the other hand, "A White House official told CNBC on Tuesday that Trump expects the EU to abide by its commitments under the deal, given current economic conditions. "That's what the EU agreed to purchase," the official said. "The President reserves the right to adjust tariff rates if any party reneges

On the other hand, "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 (noteworthy indeed), given the current landscape

Oil, liquified natural gas (LNG) and nu fuel to replace Russian fossil fuels, von der Leyen said

But it is un how much EU member states and companies intend to buy of each fuel type. "Details have to be ed out and that will happen over the next weeks," von der Leyen told reporters

Meanwhile, Tripling U

Exports unrealisticEU member states bought $80 billion U

However, Oil, liquified natural gas, liquified petroleum gas and coal from the U (fascinating analysis)

In 2024, according to data from Kpler

The bloc would have to triple its purchases of U

At the same time, 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 the United States viding the lion's of European energy imports," Helima Croft, head of global commodity strategy at RBC Capital, told CNBC on Monday (something worth watching)

Furthermore, EU energy imports totaled $433 billion in 2024, according to Eurostat

Increasing U, considering recent developments

Oil exports to the EU is difficult because duction is flat and will ly decline in the coming months, said Svetlana Tretyakova, an oil analyst at Rystad

Companies would have to reroute exports from customers in Asia and Latin America to the EU, Tretyakova said

Meanwhile, 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

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

Moreover, But the EU already receives more than half its imports from the U (an important development)

Nevertheless, , Utting said. "It's very unrealistic that Europe would import exclusively from the U

At the same time, ," he said, amid market uncertainty. "They will want to diversify to some extent. "While the headline $750 billion figure is unrealistic, the EU is showing that it is serious expanding its energy trade with the U (noteworthy indeed), in today's financial world. , said Alex Munton, director of global gas and LNG re at Rapidan Energy

What the re reveals is EU was already planning to eliminate what remains of Russian LNG and pipeline gas imports to the bloc by 2028

This demonstrates that will create a supply gap of 25 million metric tons per year that the U

Is perfectly positioned to fill, Munton said

Furthermore, "The interests line up, they go hand in hand," he said. "That's why it's essentially a convenient deal.