What is the US-EU Framework on Reciprocal, Fair and Balanced Trade?

On 27 July 2025, US President, Donald J Trump, and EU Commission President, Ursula von der Leyen, confirmed the US-EU Framework Agreement on Reciprocal, Fair and Balanced Trade (“US-EU Framework Agreement”). Article 5 of the US-EU Framework Agreement commits the EU to procure US oil, LNG, and nuclear energy products worth $750bn through 2028. Similar commitments have been made in the US trade deals with Japan (LNG and energy is assumed to be part of the overall $550bn investment commitment made by Japan), the Republic of Korea ($100bn in LNG over an unspecified period), Indonesia and the Philippines, although not in specific terms.

On the campaign trail in 2024, President Trump made energy dominance a key part of his campaign message. Other objectives include boosting US exports, altering trade flows (including away from geopolitical rivals such as the Russian Federation), reducing US energy costs through more competition in energy markets, and reviving US manufacturing in areas such as shipping.

What commitments are in the Agreement?

The energy purchase commitment made by the EU in the US-EU Framework Agreement, assuming a $250bn a year commitment, would represent a large increase in total US energy exports to the bloc and would effectively mean that the US would become the dominant supplier of the EU’s energy needs. To put this in context, the US sold LNG worth $13bn to the EU in 2024, while total EU energy imports were over $437bn, although not limited to the energy products mentioned in the US-EU Framework Agreement. Although the commitment in the US-EU Framework Agreement also extends to oil and nuclear energy products, there is a vast difference between the historic figures and the new purchase commitment. To achieve this commitment, both the US portion of LNG imports and the overall size of LNG in the energy mix in the EU will have to alter dramatically.

The energy purchase commitments in the US-EU Framework Agreement reflect and solidify what is already a trend. Since the Russian invasion of Ukraine in 2022 and the construction of five new LNG import terminals in Germany alone, the share of the US in supplying the EU’s LNG needs has increased from 16% in 2021 to the current 50% (albeit with a decline of 16% in 2024 from 2023 numbers), while the percentage supplied by the Russian Federation has decreased to 16% (with a slight revival in 2024). Having said this, the US is projected to potentially double LNG export capacity by 2030 and is looking for markets.

The EU energy purchase commitments are made in a trade agreement between the bloc and the US. They do not bind the private companies that control the US and EU LNG and wider energy markets and whose investment strategies and commercial decision-making are guided by market forces. For example, European buyers (particularly European utilities) have often been reluctant to sign long-term LNG sale and purchase agreements due to expected long-term LNG demand decline. Also, European LNG buyers of US LNG can redirect US cargoes out of Europe to more profitable destinations.

The economic scenarios in the US and EU are vastly different from an energy point of view. The EU must replace relatively low-cost Russian pipeline gas and more recently LNG (largely through the Yamal LNG project) in order to maintain industrial competitiveness. The transit of gas through Ukraine stopped on 1 January 2025. The EU is currently considering a proposal from the EU Commission to phase out imports of all Russian oil and gas by 1 January 2028, so this is an issue of high importance within the EU irrespective of the commitments made under the US-EU Framework Agreement.

This is a difficult enough exercise while balancing its legislatively mandated de-carbonisation agenda, including the “Fit for 55 Package” introduced in 2021 (also known as the EU’s Climate Law). This requires EU Member States to reduce carbon emissions by 55% compared to 1990 levels by 2030, with the goal of climate neutrality by 2050. LNG and nuclear energy reactor fuel and products can help with decarbonisation in the short to medium term as it may be seen as a potential replacement for oil or coal in national energy mixes, but this will be politically difficult in certain EU Member States.

If you have questions about the Framework, or any other LNG matter, please contact James Douglass.