The US and EU will look to forge a closer alliance on energy trade, but growing hostility and mistrust could scupper any deal and end up disrupting LPG flows
US president Donald Trump has finally come good on his threat to tax the EU, bringing the bloc into his 25pc tariff on imports of steel and aluminium from all countries from 12 March. The EU's quick counterattack led Trump to warn of even greater tariffs to come for the bloc. Energy is likely to remain off the table in a trade war between the two, but LPG could yet be affected.
The EU's retaliatory tariffs on a $28bn mix of US industrial and agricultural goods, due to come into effect on 1 April, included a 50pc rate on whiskey. This angered Trump, who turned to Truth Social to claim the EU was "one of the most hostile and abusive taxing and tariffing authorities in the world, formed for the sole purpose of taking advantage of the US". If the EU did not remove the tariff "immediately", the US would place a 200pc rate on "all WINES, CHAMPAGNES, & ALCOHOL PRODUCTS OUT OF FRANCE AND OTHER EU COUNTRIES" — something the president said would be great for the US' champagne businesses.
The EU insists it was forced into the tit-for-tat measures as it considers ways to tackle Trump's transactional approach to diplomacy. One strategy for achieving this is through greater co-operation on energy trade, with the EU having already forged closer ties with the US as it looks to wean itself of Russian gas. "Even in a transactional world, and maybe even more in a transactional world… you need partnerships and alliances and co-operation," European Commission director general for energy Ditte-Juul Jorgensen said at the CERAWeek by S&P Global conference in Houston, which took place over 10-14 March.
Importing more low-cost US fossil fuels while the EU invests in its energy transition in order to build its energy security would make sense. The US supplied the bloc with about 74mn t of crude, 37mnt of LNG and 8.3mn t of LPG in 2024, Kpler data show. While in volumetric terms US LPG is of smaller consequence, for the European LPG industry it is vital, in particular following the decision to ban LPG imports from Russia from 20 December.
But the EU's willingness to play by Trump's rules is being undermined by increasingly febrile relations. A transactional approach must rely on some form of predictability to the US president's deal-making and to keeping his end of any bargain, all while he apparently holds the view that the EU was "formed to screw the US".
Another albeit improbable scenario is that the US-EU trade war spirals and energy is embroiled, which would have significant implications for the European LPG sector even if propane and butane were excluded. It is unlikely that the EU would put itself in such a precarious position given its reliance on US energy but it cannot be ruled out. Were LPG to be bundled into any measures, it could hit demand hard depending on magnitude, with little in the way of alternative supply to fill the gap.
Steely Don
Canada is meanwhile imposing nearly C$30bn ($20.9bn) in counter-tariffs on US imports from 13 March in response to Washington's 25pc tariff on steel and aluminium. These include US steel, aluminium and products such as computers and sports equipment. Canada provides the US with as much as 70pc of its aluminium and 23pc of its steel. Trump had said he would double the rate to 50pc on Canada but backed down after the Canadian province of Ontario suspended a 25pc tariff on electricity delivered to northern US states. "Cooler heads prevailed," Trump trade adviser Peter Navarro says.
The US' 10pc tariff on Canadian energy remains, prompting Canada's largest seaborne LPG exporter, AltaGas, to again point out that it has ready and willing trading partners across the Pacific capable of absorbing growing domestic natural gas liquids production.
