Energy can't plug the US tariff gap

Amid the market carnage and turmoil created by US President Donald Trump's chaotic global tariff rollout and retreat, there are likely some clear trends that will emerge.

- Clyde Russell

One of these is that countries seeking to cut a deal with Mr Trump will try to purchase more US goods in order to lower their trade surpluses with the United States.

The problem is that for many countries, there is little that they want from the United States in terms of manufactured goods, and even relative success stories like Boeing aircraft serve to highlight the paucity of competitive US goods.

But there is one area where countries can try and up their imports from the United States, and that's energy commodities such as crude oil, liquefied natural gas (LNG) and coal.

The obvious problem is that if every country wanting to cut a deal with Mr Trump commits to buying more US energy, the United States will very soon run out of capacity to supply the demand.

This means that early movers may actually be the ones who secure energy supplies from the United States and may gain some leverage in talks with the Trump administration.

Japan and South Korea are two such countries that may well try to buy more US energy.

Both are major importers of crude, LNG and coal, both have wide trade surpluses with the United States, and both are traditional US allies, although whether this counts for anything with Mr Trump remains uncertain.