Want to reduce your trade surplus with Trump Russell

There are certain trends that will likely emerge amid the chaos and confusion created by U.S. president Donald Trump's global tariff rollout and retreat.

One is that countries looking to make a deal will purchase more U.S. products in order to reduce their trade surpluses.

Even relative successes like Boeing aircraft highlight the lack of U.S. products that are competitive.

Energy commodities like crude oil, LNG and coal are one area that countries could increase their imports of the United States.

If every country that wants to do a deal will commit to buy more U.S. Energy, the United States may very soon be unable to meet the demand.

Early movers could be the ones to secure energy supplies in the United States and gain leverage with the Trump administration.

Japan and South Korea may be two of the countries who try to buy additional U.S. Energy.

Both countries are major importers, especially of coal, LNG, and crude oil. They also have large trade surpluses, but it is unclear whether Trump will take this into account.

Will it really make a difference to the trade balance between Japan and South Korea if they switch to U.S. Energy?

According to Kpler, data from commodity analysts, Japan imported 12,44 million barrels (or 1.6%) of U.S. Crude in 2024.

If we assume an average price per barrel of $70, then Japan will spend $870.8 in 2024 on U.S. crude.

What is the maximum amount of U.S. crude oil that Japan can buy if it has signed long-term agreements with its main suppliers, Saudi Arabia and United Arab Emirates?

Japan must also ensure that the crude oil it buys is suitable for its refineries. This will also limit U.S. imports.

If Japan were to increase its imports of U.S. crude oil to 10%, that would be about 80 million barrels per year. At the current price for U.S. West Texas Intermediate of $60, that would cost around $4.8 billion.

Japan's surplus in trade with the United States reached $68 billion by 2024. Therefore, even a massive increase in imports of U.S. oil would have only a minor impact.

COAL and LNG

What about LNG? According to Kpler, Japan will import 6.5 million tonnes of U.S. Liquefied Natural Gas (LNG) in 2024. This is about 9.6% its total 67.43 millions tons.

It would be difficult to increase the share of U.S. Liquefied Natural Gas (LNG) in Japan's current imports.

As an example, let's assume that Japan could increase its share of U.S. LNG imports by 30% or 13.5 million tonnes.

If Asian LNG were to be sold at the current spot rate of $13 per Million British Thermal Units, it would have a value of $9.13 Billion, compared with an assumed value of $4.39 Billion in 2024.

This would also help reduce the surplus of trade with the United States but not significantly.

In 2024, Japan will import 4.37 million tons of coal from the United States, which is about 2.8% of their total of 153.73 millions.

The longer distances to the U.S. East Coast mean that importing coal from Japan is more expensive than the top two suppliers, Australia and Indonesia.

It is questionable how much more coal could be produced, as there are also capacity limitations on U.S. exports.

Japan buys mostly metallurgical coke from the United States. It would be difficult to increase imports from this source, so any increase in thermal coal would be a major factor.

Based on the $100 per ton price of thermal coal, if Japan increased its share of U.S. imports to 10%, it would amount to about $1.5 billion. This is a small part of Japan's overall trade surplus.

Even if countries such as Japan increased their imports of U.S. commodities for energy, this would only make a small dent on their trade surpluses with the United States.

The U.S. exporters of energy would also quickly run out if multiple major importers tried the same tactic at once.

These are the views of the columnist, an author for.

(source: Reuters)