Trump is overselling US fossil fuels

Starting in his first term, Trump keyed in on liquefied natural gas as a central pillar of his trade strategy: The world wants more of it, the US has a lot of it, and the quickest route to winning Trump’s heart on trade is to promise to buy plenty of it.

China did this in 2019, followed in Trump’s second term by Japan, South Africa, and others. But the US gas supply — while indeed vast — isn’t infinite, and following the new EU deal there are officially far too many people in the queue for it.

The problem with Trump’s strategy, apart from its physical impossibility, is that it weakens his hand in future trade negotiations. It’s now less clear what Trump expects other countries to offer him in exchange for favorable tariff terms. To the extent the White House is able to push gas to one place or another, any further deals predicated on promises to buy US energy will unavoidably mean shortchanging those allies who already signed up, and potentially leave investors holding the bag on multi-billion-dollar import facilities that go underused. And the more US gas Trump gives up for sale abroad, the less will be left behind for sale at home, undermining his promise to keep consumer energy prices low as the data center boom drives US utilities on a mad rush for more gas (especially as the administration is simultaneously pushing to cut support for renewables).

“World leaders have clearly learned that they can kind of cajole [Trump] into positive press by offering these big numbers [on energy sales],” said Alex Jacquez, a former senior Biden administration official on the White House National Economic Council. “Whether any of that is enforceable, whether it’s going to happen, whether it’s actually good for the broader US energy dominance strategy, is all really doubtful.”

Trump is also establishing a pattern whereby countries can make what is essentially an empty promise on energy, extract better trade terms for the time being, and then hope that Trump leaves office before he catches on. That, again, is what China did back in 2019; its energy imports from the US never came close to what was promised at the time, and in the meantime it bought itself a few more years of relative detente in its trade tensions with the US.

It’s not clear where all this additional gas could come from, or where it will go: US LNG export facilities are already at capacity. More are in the works and could be operational in the next few years, but during that time, Europe’s gas demand is expected to level off. This is to say nothing of the fact that the European Commission — the bloc’s executive arm, which negotiated the deal — does not have the power to direct individual member states to purchase more LNG, or any other commodity. Officials in Brussels have privately suggested that even if LNG imports don’t pick up, per se, Trump may want to see concrete interim steps like new investments in import terminals. But Europe’s existing regasification capacity already exceeds its total gas demand, Corbeau said. Even as the EU pushes to completely sever its energy ties with Russia, there is practically no headroom for new gas import infrastructure.

And even if there was, it’s not clear that a drastic boost in Europe’s energy reliance on the US is in the bloc’s long-term strategic interest. Russia’s invasion of Ukraine revealed the risks of an overreliance on a single, politically unstable supplier, said Laurie van der Burg, global public finance manager at the advocacy group Oil Change International: “The EU has just fallen into another dangerous fossil fuel dependency trap.”

Wall Street was more bullish about the possibilities for greater US-Europe energy trade: Share prices of top LNG companies jumped following the deal. And Venture Global, a leading builder of US LNG export terminals, closed a $15 billion financing round that it said involved 30 international banks.