(BOE Report) – Spiralling trade tensions between the U.S. and Europe over President Donald Trump’s bid to buy Greenland have once again left the bloc highly vulnerable in a geopolitical tussle because of its heavy dependence on a single supplier for its critical energy needs.
Less than four years ago, Europe’s economy was dealt a harsh blow in the wake of Russia’s full-scale invasion of Ukraine, as nations had to rapidly find alternatives to the abundant Russian natural gas they had relied on for decades. That scramble triggered a severe supply shock and a four-fold increase in European gas prices in the first six months of the conflict. Europe resolved this problem by trading one dependency for another. As Russia’s share of European Union gas imports fell to 12% last year, from 45% before the invasion, Europe rapidly turned to U.S. liquefied natural gas (LNG). Imports of U.S. LNG skyrocketed from 18 million metric tons in 2021 to 65 million tons last year, making up 57% of all LNG imported by the EU and Britain in 2025, according to analytics firm Kpler. Today, the U.S. supplies nearly a quarter of the EU’s total gas imports. On top of that, in the U.S.-EU trade deal struck last August, Brussels agreed to buy $250 billion of energy from the U.S. between 2026 and 2028, a figure that dwarfs its total purchases of around $75 billion last year. Fast forward to this week, and European leaders now confront the uncomfortable reality that their lopsided energy relationship has left the region vulnerable once again, as Trump could seek to use Europe’s energy dependency as a bargaining chip in the escalating economic battle over Greenland.
STRATEGIC LIABILITY
Trump on Saturday threatened to impose a 10% levy on imports from multiple European countries that have opposed his plan to seize Greenland. A day later, EU ambassadors hastily met to discuss their potential response. This could include a package of tariffs impacting some 93 billion euros ($107.7 billion) of U.S. imports, or the as-yet-unused “Anti-Coercion Instrument” (ACI), which could restrict trade in services and reduce access to public tenders, investments and financial systems. France said it would support suspending the trade deal if the spat intensified.
These tit-for-tat threats risk reigniting an economic war between the two global powers.
While it is far too early to know how this clash will play out, two things are clear. First, the showdown marks a low point in the transatlantic relationship between NATO allies that have shared common economic and security interests for decades. And second, Europe’s energy strategy remains a national security liability.
LESSON NOT LEARNED
European leaders do recognise this vulnerability and are attempting to address it with longer-term solutions. Many are pushing to expand renewable and nuclear power, while some governments are reconsidering the exploitation of remaining domestic oil and gas reserves, reversing years of climate-driven opposition. And there are also plenty of reasons not to panic in the short term. To begin, despite the significant scale of the bloc’s U.S. LNG imports, they are currently far more secure, even with the escalating tensions between Washington and Brussels. For one thing, U.S. LNG supplies are underpinned by long-term commercial contracts between a multitude of companies that are governed by international trade rules. Russian gas was delivered predominantly through the Kremlin-controlled Gazprom.
Furthermore, Europe’s heavy dependency cuts both ways. Europe accounted for around half of last year’s U.S. LNG exports, which have experienced meteoric growth in recent years to make the U.S. the world’s top producer of the super-chilled fuel. Any disruption in exports to Europe would therefore have a demonstrable impact on LNG producers and gas drillers, an industry that the Trump administration has heavily supported over the past year. Using energy as a political weapon has always been a high-risk strategy that tends to push buyers toward alternative suppliers. Gazprom is a cautionary tale: its profits have shrivelled since 2022 as European customers shifted away. That does not mean Europe can relax, however. The U.S. president does have the authority to restrict exports of energy and other goods for national security reasons under the Energy Policy and Conservation Act. Trump also declared a “national energy emergency” upon his return to the White House last January, which appears to give him further powers.
Icy relations between Europe and Washington over the Arctic island may eventually ease, given the long-standing alliance between the two sides. But Europe’s heavy reliance on U.S. gas will remain a major strategic vulnerability if – or perhaps when – the next dispute with the White House arises.
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(Ron Bousso Editing by Marguerita Choy)
