LONDON — The British government is working to give its trade chief new powers to move faster in imposing higher tariffs on imports, as it faces pressure from Brussels and Washington to combat Chinese industrial overcapacity. Under new rules drawn up by British officials, Trade Secretary Peter Kyle will have the power to direct the Trade Remedies Authority (TRA) to launch investigations and give ministers options to set higher duty levels to protect domestic businesses. The trade watchdog will be required to set out the results of anti-dumping and anti-subsidy investigations within a year, better monitor trade distortions and streamline processes for businesses to prompt trade probes. The U.K. is in negotiations with the U.S. and the EU to forge a steel alliance to counter Chinese overcapacity as the bloc works to introduce its own updated safeguards regime. The EU is the U.K.’s largest market and Brussels is creating a new steel protection regime that is set to slash Britain’s tariff-free export quotas and place 50 percent duties on any in excess. The government said its directive to the TRA will align the U.K. with similar powers in the EU and Australia, and follow World Trade Organization rules. It is set out in a Strategic Steer to the watchdog and will be introduced as part of the finance bill due to be wrapped up in the spring. “We are strengthening the U.K.’s system for tackling unfair trade to give our producers and manufacturers — especially SMEs who have less capacity and capability — the backing they need to grow and compete,” Business and Trade Secretary Peter Kyle said in a statement. “By streamlining processes and aligning our framework with international peers, we are ensuring U.K. industry has the tools to protect jobs, attract investment and thrive in a changing global economy,” Kyle added. These moves come after the government said on Wednesday that its Steel Strategy, which plots the future of the industry in Britain and new trade protections for the sector, will be delayed until next year. The Trump administration has been concerned about the U.K.’s steps to counter China’s steel overcapacity and refused to lower further a 25 percent tariff carve-out for Britain’s steel and aluminum exports from the White House’s 50 percent global duties on the metals. Trade Secretary Kyle discussed lowering the Trump administration’s tariffs on U.K. steel with senior U.S. Cabinet members in Washington on Wednesday.  “We are very much on the case of trying to sort out precisely where we land with the EU safeguard,” Trade Minister Chris Bryant told parliament Thursday, after meeting with EU Trade Commissioner Maroš Šefčovič on Wednesday for negotiations. “We will do everything we can to make sure that we have a strong and prosperous steel sector across the whole of the U.K.,” Bryant said. The TRA has also launched a new public-facing Import Trends Monitor tool to help firms detect surges in imports that could harm their business and provide evidence that could prompt an investigation by the watchdog. “We welcome the government’s strategic steer, which marks a significant milestone in our shared goal to make the U.K.’s trade remedies regime more agile, accessible and assertive, as well as providing greater accountability,” said the TRA’s Co-Chief Executives Jessica Blakely and Carmen Suarez. Sophie Inge and Jon Stone contributed reporting.

BRUSSELS — The EU’s push for the U.S. to scrap its tariffs on steel and aluminum has opened the door to an old demand from Washington: Loosen your digital rulebook, and we’ll meet you halfway. Brussels raised its concerns over Washington’s expanded list of goods covered by high steel and aluminum tariffs at meetings on Monday between Trade Commissioner Maroš Šefčovič and EU trade ministers and, from the U.S. side, Secretary of Commerce Howard Lutnick and Trade Representative Jamieson Greer. The Commerce Department in August subjected over 400 products containing steel and aluminum to a 50 percent tariff — a list the EU feels is so broad it goes against the spirit of a framework trade deal struck in July. That trade deal, which President Donald Trump and European Commission President Ursula von der Leyen clinched at Trump’s Turnberry golf resort in Scotland, sets a baseline tariff of 15 percent on most EU imports to the U.S., while the EU committed to cutting most of its own tariffs to zero. At the time, the EU and the U.S. pledged to work together to reduce tariffs on steel and aluminum — but remained vague on the details. After the Europeans raised the steel tariffs on Monday, Lutnick responded by calling on the EU to “analyze their digital rules, trying to come away with a balance … not put them away, but find a balanced approach that works with us.” “And if they can come up with that balanced approach, which I think they can, then we will, together with them, handle the steel and aluminum issues and bring that on together,” he added. Lutnick’s remarks signal a departure from the previous U.S. position, which threatened to retaliate against the bloc’s digital laws, while advocating for light-touch artificial intelligence regulation.  Lutnick sold the loosening of the bloc’s digital rules as an “opportunity” for the EU, offering U.S. investment in return, mainly through data centers that could power artificial intelligence.   “If the European Union can find a way to have a balanced digital set of rules, I think the European Union can see $1 trillion of investment,” he said. PUSHING BACK — SORT OF In response, Šefčovič reiterated the bloc’s commitment to its regulatory autonomy and its belief that its rules are not — contrary to what Washington asserts — discriminatory.  The EU side, he added, “explained how our legislation is working, we explained that this is not discriminatory. It’s not aimed at American companies. And I think that we just simply need to do more of the explanation in that regard.”  A Commission official, speaking on condition of anonymity, was more direct: “Steel and digital are completely unrelated. Steel has always been part of the discussions with the U.S. and has been formalized in the joint statement. Our sovereign digital legislation is not up for negotiations.” The EU’s digital rules are a major concern for the Donald Trump administration, and U.S. Commerce Secretary Howard Lutnick raised the matter on a visit to Brussels. | Pool photo by Aaron Schwartz/EPA The EU executive has already moved to simplify its tech rules through a digital omnibus presented last week, an effort that the EU’s tech chief, Henna Virkkunen, raised with Lutnick and Greer at an earlier meeting that day. That omnibus brought major changes to the EU’s GDPR data protection regulation, and also proposed to pause the rollout of a key part of the EU’s Artificial Intelligence Act — a controversial move championed by U.S. Big Tech companies and lobby groups.  European lawmakers and civil society groups have expressed concerns in recent weeks that the Commission’s digital simplification push is meant to placate Washington, a claim the Commission has vehemently denied.   Lawmakers are due to discuss the digital simplification package with the Commission on Tuesday. Last week, the Commission also kicked off a process to review all of its tech rulebooks, which could lead to further simplification efforts.  STEEL TALKS  Washington’s earlier decision to widen the list of steel products facing the 50 percent tariff caused uproar in Brussels, with some European lawmakers arguing that the EU should refrain from lowering its own tariffs on steel until the issue is resolved. In a bid to cozy up to the White House, the EU side on Monday pushed the idea that Brussels and Washington should jointly face up to a common enemy — China — rather than dwelling on their differences.  Danish Foreign Minister Lars Løkke Rasmussen said the two sides had addressed “some of the challenges we are facing together,” such as “overcapacity” and “China’s role in the global economy.” Asked about joint work on overcapacity, Lutnick said such issues are “easy for us to work together, and those don’t take up a lot of time when we’re talking, because when everybody just agrees right away, it’s not very difficult.” Behind closed doors, however, the U.S. stressed to its European counterparts that cooperation on China didn’t mean they would simply give the EU a pass on steel and aluminum tariffs. Šefčovič said a team from Brussels would travel to Washington in the coming weeks to address these issues.

An emerging U.S.-China detente gives European leaders breathing room to find a strategy on trade, raw materials and the war in Ukraine — but the thaw between the two great powers risks pushing European interests to the side.   President Donald Trump and his counterpart Xi Jinping agreed to a significant de-escalation in their trade spat during a head-to-head Thursday in South Korea, pausing export controls on rare earth magnets and other critical raw materials for 12 months.   While the move is good news for European companies that have been caught in the crossfire, other sticking points in the Europe-China relationship will be harder to resolve, even with the gift of time.  Brussels, under pressure from Trump and in pursuit of its own strategic interests, is trying — without notable success — to sway Beijing from supporting Russia in its war on Ukraine.   At the same time the EU is doing its best to keep the temperature down in its longstanding trade standoff with China, whose intensity has ratcheted up recently with the imposition of limits on exports of critical raw materials and microchips. Both measures have had an immediate negative impact on European industry, particularly automakers which were already struggling prior to the restrictions.  Fears of lasting, irreversible damage to Europe’s industries have led the EU to take a more conciliatory stance in its trade standoff, emphasizing engagement and dialogue rather than punitive measures.  Yet Chinese officials have balked at the slow and uncoordinated pace of discussions with the EU, leading Beijing to drop Europe down its list of priorities, according to Jeremy Chan, a senior analyst at Eurasia Group.  “The EU is a secondary at best, maybe a tertiary or a non-consideration for both Washington and Beijing in these negotiations,” Chan told POLITICO.  ‘LET THEM FIGHT’ The top political priority for the EU is ending the war in Ukraine — something that Trump while on the campaign trail promised to do within his first 24 hours in office. Almost a year into his term, the fighting continues, aided by China propping up Russia’s economy through investments and oil purchases.  At the urging of the White House, the EU included Chinese banks and refineries in its two latest rounds of sanctions targeting Russia, arguing the entities were helping Moscow evade sanctions. This prompted an angry response from top Chinese officials including Prime Minister Li Qiang, who branded the sanctions “unacceptable” during a meeting with European Council President Antonio Costa in Asia this week, per an EU official.  European Commission President Ursula von der Leyen and the bloc’s top diplomat, Kaja Kallas, have both called out Beijing’s support for Moscow in explicit terms, with the former saying in July that it has a “direct and dangerous impact on European security.”  The EU’s latest sanctions prompted an angry response from top Chinese officials including Prime Minister Li Qiang, who branded them “unacceptable” at a meeting with European Council President Antonio Costa, per an EU official. | Pool photo by Vincent Thian via AFP/Getty Images Ukraine had hoped Trump would pressure Beijing to stop buying Russian oil, but the American president told media on Air Force One that the issue was not on the table — although he did say the war in Ukraine “came up very strongly,” with both sides hoping to find an end to the fighting.   “He’s going to help us and we’re going to work together on Ukraine,” Trump said, referring to the Chinese president. INDUSTRIES HELD HOSTAGE While China’s export controls were not directed at the EU, the bloc’s companies faced long delays and sharp price hikes in contending with the subsequent shortage of raw materials and magnets. China accounts for 98 percent of the EU’s rare earth permanent magnets.  The geopolitical firestorm sent the European Commission into overdrive to secure its own supplies of the magnets and launch a plan to diversify Europe’s supply chain by the end of the year.   But the EU has been here before. Just two years ago it passed the Critical Raw Materials Act to solve this exact problem, and yet all the deals that have been signed have failed to deliver actual products. Its latest scheme is big on ideas and short on specifics.   The one-year pause on export controls agreed between Trump and Xi affords the EU some time to put that plan into action and leverage its other alliances — including efforts unfolding at the G7 this week with Canada, along with the U.K., Italy, France and Germany seeking to diversify away from China’s grip.  But for companies looking for clarity, the catch is that none of the agreements made between Trump and Xi are binding.  “As long as we don’t see any details hammered out and put on paper it leaves a lot of room for both sides backtracking and applying various other conditions, so I don’t think that this is really settled,” said Alexander Gabuev, director of the Carnegie Russia Eurasia Center.  SECURITY CONCERNS  In the U.K., pressure is expected to build for policymakers to use the temporary U.S. truce to minimize the risks from China.  British PM Keir Starmer has thus far failed to resolve longstanding tensions between “securocrats” in parliament and Whitehall, who want to see a tougher stance toward Beijing, and those who argue for a closer embrace in order to boost inward investment. Prominent members of the government have traveled to Beijing in pursuit of strengthened ties since Starmer took office, despite his overriding foreign policy aim of cleaving close to Trump.  China has become a particular sore point for Starmer in recent weeks due to the collapse of the prosecution of two men accused of spying for Beijing, while ministers have yet to decide the fate of a planned Chinese “super-embassy” in London.  Back in the EU, divisions among member countries over how to counter China’s power — and any subsequent retribution — make a unified stance toward Beijing on trade or dumping measures unlikely.   Brussels got a glimpse of its internal factions when it slapped duties on made-in-China electric vehicles following an anti-subsidy investigation. Automakers and their political benefactors fear Chinese brands will dump their overcapacity in the European market, bringing a severe price war to Europe’s shores.   Yet for all the handwringing over how to protect domestic automakers, the votes of EU capitals on the duties revealed how economically exposed each is to China, with Germany launching a last-minute appeal to stop the duties.  The Netherlands is the latest EU member on the outs with China after Dutch authorities seized control of chipmaker Nexperia, prompting Beijing to hit back with export controls on Nexperia’s Chinese-produced chips. The shortage could halt production lines across Europe in less than a week, showcasing just how economically dependent Europe has become on China.  LET’S BE FRIENDS From the jump, Trump framed his sojourn to Asia as a “G2” summit, stoking fears that any deal would sideline other countries or that “British and European trade priorities could be overlooked or traded away without consultation,” said David Taylor, director of policy and programs at Asia House.  Sensing its declining influence in the Trump-Xi bromance, the EU is looking to bolster its trade ties elsewhere.  Trade chief Maroš Šefčovič is traveling to Australia in late November to chair an inaugural dialogue between the EU and the 12 members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership bloc, two diplomats told POLITICO. The dialogue is meant to deepen economic and political ties between the EU and countries keen to maintain established global trade rules.  Brussels, under pressure from Donald Trump and in pursuit of its own strategic interests, is trying to sway Beijing from supporting Russia in its war on Ukraine. | Jim Watson/Getty Images Brussels will have a chance to do just that when it hosts a delegation of high-level Chinese officials on Friday. They’re expected to meet with the Commission’s trade deputy-director general, Denis Redonnet, and other senior officials.  Experts caution that Europe will need to maintain pressure on Beijing to get any movement on its priorities.   “Europe cannot just simply be waiting to see what happens on talks between [the] United States and China,” said Ignacio Garcia Bercero, a former director at the Commission’s trade department. “It needs to develop its own channel of dialogue with China.” 

LONDON — Britain is pushing to form a Western alliance with the European Union to curb China’s dominance in the global steel market, multiple figures familiar with the talks told POLITICO.  The hope in London is that a coordinated approach could help the U.K. dodge the new tariffs Brussels plans to impose — a 50 percent duty aimed at shielding EU producers from China’s industrial overproduction. Britain, which finds itself at the mercy of EU trade action post-Brexit, is currently seeking carve-outs from those measures. The idea under consideration is for the U.K. and EU to form a Western steel alliance — potentially including Washington — that would align tariff policies and grant members preferential tariffs on steel trade. A senior EU official said earlier this month that the bloc had “no other choice” but to defend its industry, warning Europe was “in deep trouble because of this problem of overcapacities.” Still, the official left the door open to talks with London, urging both sides to sit down to negotiate. One other EU official, granted anonymity to speak freely about ongoing talks, said the concept of a steel “club” has been circulating for “quite some time” but is now looking “more appealing.” They added that the EU and U.K. already cooperate in multilateral forums such as the Global Forum on Steel Excess Capacity. The two sides have already agreed to align their upcoming carbon taxes on imports of steel and other products produced through highly polluting manufacturing processes. U.S. Trade Representative Jamieson Greer called for stronger coordination against Chinese steel earlier this month, warning that the “current international trade rules are inadequate” and questioning “the political will of foreign members to take action.” U.S. Trade Representative Jamieson Greer called for stronger coordination against Chinese steel earlier this month. | Andrew Harnik/Getty Images Britain currently sends half of its steel exports to the EU, making the bloc’s upcoming tariffs a serious threat to U.K. producers. UK Steel Director Gareth Stace said the government’s “focus must be on securing essential U.K. carve outs in the EU’s quotas, and tightening its own trade defenses.” But the lobby group boss added that a broader alliance could help to resolve global overcapacity issues and keep heavily subsidized imports out of Britain. A U.K. government spokesperson said: “We are continuing our engagement with the EU following their recent announcement. We are also working with international partners on solutions which can address wider overcapacity.”

European lawmakers accused Commission President Ursula von der Leyen of striking a bad, one-sided trade deal with U.S. President Donald Trump after she defended the accord in her annual State of the Union address Wednesday.  “Where was Europe when you signed an unfair deal with Trump?” asked Socialists & Democrats leader Iratxe García Pérez. Responding to von der Leyen’s speech, she called the EU’s decision to accept a 15 percent tariff on most EU exports while scrapping its own tariffs on U.S. industrial goods “unacceptable.”  The EU’s strategic autonomy, said García Pérez, has been buried “under a golf course.”  She was referring to the trade deal that von der Leyen struck with Trump at his Turnberry resort in Scotland in July. Von der Leyen and her aides have defended the deal as the best that could be done in difficult circumstances. Many critics fear, however, that it will condemn the bloc to an era of economic subjugation. Ahead of Wednesday’s speech, the European Socialists had already come out against the deal — and others leaped at the chance to criticize the agreement or voice specific concerns.  Both on the left and radical-right side of the Parliament, the truce with Trump was criticized widely. Martin Schirdewan, the German leader for The Left, said that “fighting overcapacity with more trade is like throwing lighters on the fire of the European economic crisis.” LEFT-RIGHT PILE ON Bas Eickhout of the Greens and Jordan Bardella of the right-wing Patriots for Europe both slammed von der Leyen’s promise that the EU would buy €750 billion in U.S. energy — mostly fossil-based — albeit for very different reasons.  Eickhout argued that, amid climate change, this money should be invested into European renewable energy. Bardella claimed, falsely, that EU countries would be coughing up that amount. In reality, this number is based on projections of investments and market developments, not hard agreements. While less harsh in her assessment, Valérie Hayer, chief of the liberal Renew Europe group, urged von der Leyen to “continue standing firm” on the bloc’s regulatory power and autonomy in trade talks. Trump has repeatedly attacked the EU’s digital rulebook, arguing that it puts U.S. companies at a disadvantage. European People’s Party leader Manfred Weber — von der Leyen’s political ally and fellow German conservative — seemed relatively isolated in his defense of the trade deal, asking: “What is the alternative to Scotland?” In her speech, von der Leyen called on lawmakers to support the agreement. Their votes will be needed to pass legislation to scrap the EU tariffs on U.S. industrial goods, which in turn would unlock a reduction in the levies on European cars being exported to the U.S. “I have heard many things about the deal we agreed on over the summer,” she said in her hour-long address. “I understand the initial reactions … But when you account for the exceptions that we secured and the additional rates which others have on top — we have the best agreement. Without any doubt.” “The deal provides crucial stability in our relations with the U.S. at a time of grave global insecurity,” she told MEPs. “Think of the repercussions of a full-fledged trade war with the U.S.” Trump, however, is ready to demand more and on Tuesday told the EU it should put 100 percent tariffs on both China and India to pressure them into abandoning support for Russian leader Vladimir Putin and his war against Ukraine, the Financial Times and other news outlets reported. Von der Leyen, in her speech, did not respond to the U.S. demands, but did stress the need to keep up the pressure on Russia. “We need more sanctions,” she said, referring to a 19th round of measures that will prioritize phasing out imports of fossil fuels more quickly. This proposal is expected to land this week, with negotiations between EU governments to follow. 

BRUSSELS — Ursula von der Leyen played hardball on trade with China in Beijing last week. Within days, she was rewarded with a trade deal with U.S. President Donald Trump. After reaching a handshake deal at the U.S. president’s Turnberry gold resort in Scotland on Sunday, the European Commission President made clear — without name-checking China — that Washington and Brussels needed to team up to confront the competitive threat from the east. “On steel and aluminum, the European Union and the U.S. face the common external challenge of global overcapacity,” she said — referring to China’s excess production of subsidized products such as steel, as well as solar panels or batteries. When Washington and Brussels “work together as partners, the benefits are tangible on both sides,” she added.  The EU’s deal with the U.S., which fends off Trump’s threat to raise tariffs on most EU goods to 30 percent on Aug. 1, came days after von der Leyen met Chinese President Xi Jinping and Premier Li Qiang in Beijing for what should have been a celebration, yet ended up being anything but.  Speaking after a one-day EU-China summit — marking the 50th anniversary of diplomatic relations — von der Leyen said relations between the bloc and China had reached an “inflection point.”  “Trade must become more balanced,” she said, arguing that the EU will not be able to keep its markets open to Chinese exports unless Beijing takes decisive action on the trading relationship.  In her strategy to win over the White House, von der Leyen, a transatlanticist at heart, has over recent months gradually toughened her stance toward Beijing — which in return has warned it will retaliate against any country that seals a trade deal with the U.S. Ahead of the EU-China summit, expectations for any concrete deliverables on trade were low, with some EU officials pointing out it was an achievement the EU and China were meeting at all in the current climate. Right on cue before the summit, the EU listed two Chinese banks in its latest sanctions against Russia, leading Beijing to vent its “strong dissatisfaction and resolute opposition” at a step that it called “egregious.” In the end, the two sides agreed a mechanism to facilitate the fast-tracking of licenses for raw materials, something many European companies had complained about as China tightened its leash on export controls over its rare earth minerals. Big spats — such as over the EU’s anti-subsidy duties on Chinese electric vehicles and access to tenders for medical devices — were left unresolved, however.  EU officials have started referring to China’s negotiation tactics as “the stinking fish strategy” — in which Beijing manufactures new frictions (aka stinking fish) that the EU then has to remove through negotiation.  THE ENEMY OF MY ENEMY IS MY FRIEND The optics could hardly have been more different at the Scottish coast on Sunday.  Following a meeting that lasted about an hour, von der Leyen, a grin on her face, said she wanted to “thank President Trump personally for his personal commitment and leadership to achieve this breakthrough. He’s a tough negotiator, but he is also a deal maker.” The “breakthrough” amounted to Donald Trump lowering his originally threatened 30 percent to 15 percent tariffs on imports of EU goods, as well as agreeing to certain sectoral exemptions. | Andrew Harnik/Getty Images The “breakthrough” amounted to Trump lowering his originally threatened 30 percent to 15 percent tariffs on imports of EU goods, as well as agreeing to certain sectoral exemptions.  As part of their preliminary deal, von der Leyen and Trump also agreed to form an alliance on industrial metals — steel, aluminum, copper and their derivatives — to mitigate the impact of subsidized Chinese overproduction on global markets. This alliance would “effectively [create] a joint ring fence around our respective economies through tariff rate quotas at historic levels with preferential treatment,” Maroš Šefčovič, the EU’s trade chief, said on Monday.  While terms still need to be ironed out — along with most details of the transatlantic trade deal — the alliance is part of broader plans to “join forces in addressing sources of non-market overcapacity so that we work together to address global overcapacity,” according to one senior EU official, who was granted anonymity to discuss the closed-door talks.  LOOKING EAST? LOOKING WEST Initially, after Trump’s return to the White House, hopes were high for a diplomatic reset of the bloc’s relations with China, or at least a gradual détente. In a speech to EU ambassadors in February, von der Leyen said the EU needed to “engage constructively with China,” adding that “we can find agreements that could even expand our trade and investment ties.” The unusual openness was welcomed by Beijing, which seemed keen to build ties with the EU when Washington later hiked tariffs to 145 percent. But when China hit back by imposing strict controls on exports of rare earths, Europe was caught in the crossfire — and von der Leyen’s conciliatory tone didn’t last.  At a summit of G7 leaders in June, von der Leyen accused China of “weaponizing” its leading position in producing and refining critical raw materials. And, speaking to European lawmakers shortly before the EU-China summit, she took aim at China’s industrial overproduction, export restrictions and its support for Russia’s war against Ukraine. In the end, von der Leyen’s hawkish stance on Beijing may have helped her seal a deal with Trump. But it’s a strategy that risks backfiring and being less effective than the Commission hopes.  “The current U.S. leadership seems more interested in striking a bilateral deal with China than in collaborating with allies and partners to deal with the challenges posed to the U.S. and the world,” said Francesca Ghiretti, director of the China Europe Initiative at the RAND think tank. Ghiretti added that the EU’s alignment with the U.S. on China “does not give any immediate advantage or relief in the tensions between the U.S. and the EU.”  The EU, she said, should “carry on with an approach to China that is about the EU and China, rather than the role China may play in the EU’s relation with the U.S.”

Brussels says it struck the best trade deal it could with Washington — even if Paris and other European capitals aren’t buying it.  In a last-ditch effort to fend off Donald Trump’s threat to raise tariffs on most EU goods to 30 percent on Aug. 1, European Commission President Ursula von der Leyen on Sunday flew with her negotiating team to the U.S. president’s Turnberry golf resort in Scotland and, in about an hour, locked down a preliminary deal.  “This is clearly the best deal we could get under very difficult circumstances,” EU trade chief Maroš Šefčovič said Monday.  The deal, which imposes a 15 percent tariff on most imports from the EU, “saves trade flows, saves the jobs in Europe” and “opens a new chapter in EU-U.S. relations,” he told reporters.  “It’s not only about … trade: It’s about security, it is about Ukraine, it is about current geopolitical volatility,” said Šefčovič, indicating that guaranteeing Washington’s continued military support for Ukraine and NATO played a central part in the negotiations — and in pushing Brussels to clinch a deal. But while the EU executive hails the mere fact of sealing a deal a success, that didn’t satisfy some EU heavyweights like France and industry lobbies, which accused Brussels of giving in too easily to Trump’s demands. Unlike German Chancellor Friedrich Merz and Italian Prime Minister Giorgia Meloni, who were quick to welcome the deal, French President Emmanuel Macron has remained silent. His Prime Minister François Bayrou, meanwhile, slammed the accord as an act of “submission” to Washington. Germany’s main industry lobby BDI said it sent “a fatal sign” regarding the future of transatlantic trade. In France, big-business group Medef said the outcome demonstrates that the EU still struggles to win respect, while the country’s confederation of small- and medium-sized enterprises said the deal will have a “disastrous impact.”  “The lesson of this agreement: We are an economic giant but a political dwarf,” said Valerie Heyer, leader of the liberal Renew group in the European Parliament, joining the chorus of disapproval from French politicians. AS GOOD AS IT GETS?  “It was heavy lifting we had to do,” von der Leyen said after her meeting with Trump on Sunday evening. “But now we made it.” Yes, the EU made it — but at a significant political and economic price that some regard as too high. German Chancellor Friedrich Merz and Italian Prime Minister Giorgia Meloni were quick to welcome the deal. | Angelo Carconi/EPA “Trump has won, there’s no question about that,” Bernd Lange, a German Social Democrat who chairs the trade committee in the European Parliament, told POLITICO.  As part of the deal, Brussels not only agreed to lower its tariffs to zero on some U.S. imports such as cars, but also committed to purchase $750 billion worth of energy and to invest $600 billion more than planned in the U.S.  What’s more, the provisional agreement — which isn’t legally binding and still has to be locked in through a joint statement, to be published ahead of Aug. 1 — leaves a host of points open, giving Trump wiggle room to change his mind further down the line.  The Commission has, for instance, been reassured that sectors that are currently undergoing separate investigations in the U.S. and might soon face sectoral tariffs, such as pharmaceuticals and semiconductors, won’t face a tariff higher than 15 percent. But there’s no legal guarantee of that.  Steel and aluminum will remain subject to 50 percent tariffs after both sides committed to work together to create a ring fence to address global overcapacity.  David Kleimann, a senior trade expert at the ODI think tank in Brussels, called the deal a “clear-cut political defeat for the EU.”  “The optics of an EU Commission president surrendering to a U.S. President Trump may have lasting effects on the identification of the Union’s citizens with the supranational project,” he added.  NO GUN ON THE TABLE Throughout the lengthy negotiation process France has played the role of the bad cop, accusing the Commission of being too weak and calling on Brussels to resort to heavier trade weapons including its trade “bazooka,” the Anti-Coercion Instrument. The European Commission won approval from national capitals to prepare and eventually strike back with retaliatory tariffs hitting nearly €100 billion in U.S. goods, and to look into readying the instrument — which could be used to target services or restrict access to public procurement tenders.   But it never resorted to using those tools, even after Trump escalated the standoff earlier this month by threatening to jack up tariffs if no deal were done by Aug. 1. EU countries repeatedly shied away from giving the Commission a mandate to get tougher. Prime Minister François Bayrou slammed the accord as an act of “submission” to Washington. | Mohammed Badra/EPA “There has not been a united front of member countries calling for confrontation over the past days,” said Elvire Fabry, a trade expert at the Jacques Delors Institute in Paris. That’s why Brussels was never able to go beyond threatening to deploy the Anti-Coercion Instrument.  And, as Šefčovič acknowledged, Brussels has to think very hard before launching a full-scale trade war with an ally it relies on for its security and energy. “There is a dependence on U.S. security guarantees on Ukraine and energy dependency which limits the EU’s ability to confront the U.S.,” Fabry said.  Antonia Zimmermann reported from Brussels and Giorgio Leali reported from Paris. Oliver Noyan and Romanus Otte contributed reporting from Berlin.

The little Basque village of Zubieta has an unlikely talent for a place its size: This community of 300 souls can make the trash of half a million people vanish into thin air. Each year, as much as 200,000 metric tons of waste from across northwestern Spain is trucked to the Gipuzkoa treatment plant on the edge of the village. There it is sorted and fed into a giant incinerator, generating enough electricity to power 45,000 homes. The Gipuzkoa plant was meant to be an eco-friendly alternative to landfill, but it’s backfiring. Locals have accused the plant’s owners and the regional government of violating European Union environmental laws and releasing hazardous levels of pollution into the surrounding water, air and soil. It’s even spurred a criminal court case. “The court has to decide if the environmental permit [granted by the local government] is in accordance with [the] EU directive on pollution,” says Joseba Belaustegi Cuesta, a member of the grassroots GuraSOS movement that is campaigning against the incinerator. Gipuzkoa is not a one-off. Across Europe, hundreds of waste-to-energy facilities have mushroomed over the years, built on the promise that burning trash to generate electricity is better for the environment than burying it in a landfill. But studies increasingly find that the pollution generated by these facilities also harms the environment and people’s health. The EU, meanwhile, has massively reduced funding for such projects, while municipalities are still repaying the debt they accrued to fund them. At best, critics say, waste-to-energy plants risk becoming unpopular relics of a misguided waste policy. At worst the existing debt-funded plants could become “stranded assets” that struggle to find enough trash to burn to ensure they remain commercially viable. Gipuzkoa itself was financed with €80 million worth of bonds whose repayment date is 2047. The plant, in other words, needs to keep running for another two decades — regardless of the environmental cost. Belaustegi Cuesta complains that the incinerator now imports “residues that [are] not even household residues” to feed itself. French asset manager Meridiam, the biggest shareholder in the Gipuzkoa plant, did not respond to POLITICO’s request for comment. EUROPE’S WASTE PROBLEM Some 500 waste-to-energy plants operate on EU soil today and burn around a quarter of Europe’s everyday trash, according to waste-to-energy lobby CEWEP.   Plant operators and their investors say these furnaces are essential if Europe wants to meet its goal of sending less than 10 percent of household waste to landfills by 2035. In 2022 Europeans generated roughly 190 million metric tons of household waste, according to data from Brussels statistical office Eurostat. | Thomas Samson/AFP via Getty Images In 2022 Europeans generated roughly 190 million metric tons of household waste, according to data from Eurostat, Brussels’ statistical office. Despite recycling roughly 40 percent — more than any other region — the EU still buries a big chunk of its trash. More than 50 million metric tons of municipal waste were sent to landfills in the EU in 2023, enough to cover central Paris with a 20-meter pile of garbage.  Waste-to-energy is considered a slightly cleaner alternative: About 58 million metric tons were incinerated in 2023, nearly all of which was used to make energy, EU data shows. EU laws on waste require companies to prioritize reuse and recycling over waste incineration and landfilling. “The main objective of a waste-to-energy plant is not to produce energy; its primary purpose is to manage waste that cannot be recycled,” explained Patrick Dorvil, senior economist in the circular economy division of the European Investment Bank. The power generation benefits are often what the waste-to-energy lobby advertises when promoting the technology, however.  “With one week of your household’s residual waste, you have enough heat to warm your home for at least 8 hours,” CEWEP writes in its 2025 brochure. The lobby also claims that about 10 percent of district heating in Europe comes from energy made by burning waste, and that the technology contributes to renewable energy generation and landfill diversion.  POLLUTION CONCERNS But green groups say it’s a mistake to think waste-to-energy is a cleaner source of energy than fossil fuels. Poorly sorted municipal waste often means that a lot of fossil fuel-based plastic gets burnt, releasing planet-warming CO₂ in the process.  “The argument that burning waste is better than landfilling oversimplifies a complex issue. Both practices have serious environmental impacts and neither should be seen as a viable long-term solution,” said Janek Vahk, senior policy officer at Zero Waste Europe. The NGO estimates that each metric ton of municipal waste that is burned releases between 0.7 and 1.7 metric tons of CO₂. Scientists, meanwhile, warn that insufficient research has been conducted on the dangers faced by people living near incinerators. Plant operators insist that technological solutions and proper sorting can keep that pollution under control. But these concerns have not gone unnoticed, and popular backlash against waste incinerators is growing. In Rome, for example, tens of thousands of people signed a petition to stop the mayor from greenlighting a waste incineration project in Santa Palomba. And last March, French senators proposed to ban the construction of new waste incinerators in the country. The pollution concerns have led the EU to reduce its financial support for waste-to-energy plants and to introduce policy obligations meant to steer EU countries toward recycling.  Plant operators insist that technological solutions and proper sorting can keep pollution under control. | Christopher Neundorf/EPA Over the years, Brussels has introduced strict environmental conditions that projects must meet to receive EU funding. This has significantly reduced the amount of public funds allocated to waste incineration compared to larger sums earmarked for greener projects such as recycling plants.  Back in 2020, the technology’s carbon footprint was ultimately what prompted Brussels to exclude waste-to-energy plants from its list of eligible green projects. The list, called the EU taxonomy, tells investors what counts as a sustainable investment.  Meanwhile, local governments are stuck, environmental NGOs argue, with many still paying off the debt they accrued when agreeing to build the sites. “Many of these installation plans would turn out to be obsolete,” says Anelia Stefanova, energy transformation area leader for CEE Bankwatch, since EU countries are expected to meet waste reduction and recycling targets enforced by EU laws. STRANDED ASSETS As countries move toward greener waste management systems, the risk is that these large infrastructure projects could become useless. Many waste-to-energy plants already require more trash than tends to be available in the surrounding area. In Copenhagen, for example, the city’s infamous ski slope incinerator — itself financed through a 30-year loan —  imports tens of thousands of tons of waste from abroad annually to feed its furnaces.   Denmark has an “overcapacity in the incineration sector of up to 700,000” metric tons, according to its climate and energy ministry. The country is already budgeting to cover the costs of unnecessary waste incinerators. In 2020, Denmark introduced a plan to green the waste sector, which included allocating 200 million Danish kroner (€26 million) to municipalities to cover “stranded costs.” Lenders, including the EU’s official lending arm the European Investment Bank, are also acutely aware that the policy landscape has moved away from supporting the technology unconditionally. “Everything financed by the EIB must comply with EU directives. We are not policymakers; we are policy takers,” said the EIB’s Dorvil, adding that there have been plenty of cases where the bank has refused funding for financial or environmental reasons. Still, new waste-to-energy plants are in the works.  “When there are no incineration facilities then there [are] bigger landfills,” insists Hanna Zdanowska, mayor of the Polish city of Łódź. The city will soon have a new waste-to-energy plant planned by French energy company Veolia and paid for with a €97 million loan from the European Bank for Reconstruction and Development.  Zdanowska says the plant will increase the city’s “energy independence, which is also very important right now.” The EU’s Modernisation Fund is one of the last funding programs that still pays for waste-to-energy; it aims to help lower-income EU member countries transition their energy sectors away from fossil fuels. The €19 billion cash pot has poured just shy of €2 billion into waste-to-energy projects since its inception in 2021, all of them in Czechia and Poland. Asked if there’s a risk the new incinerator could become a stranded asset, Zdanowska said she “would love to have such a scenario that we really produce less waste in the future.”   “When the amount of waste goes down in the future and recycling goes up, then probably only a couple of plants will be left in the area and they will not limit themselves to collecting waste only from the city but they will expand their area for the whole region.”

The EU will not be able to keep its markets open to Chinese exports unless Beijing takes decisive action to rebalance their trading relationship, European Commission President Ursula von der Leyen said after a summit on Thursday. “Unlike other markets, Europe keeps its markets open to Chinese goods. However, this openness is not matched by China,” von der Leyen told a news conference after meeting Chinese President Xi Jinping and Premier Li Qiang in Beijing. She highlighted that the EU’s trade deficit with China had doubled over the past decade, to more than €300 billion. “We have reached an inflection point,” she said. “Trade must become more balanced.” Expectations on trade progress had been low ahead of the one-day summit, with a fight over the EU’s imposition of anti-subsidy duties on Chinese electric vehicles last year still unresolved. In another tit-for-tat dispute, the two sides have closed their public markets to each other for tenders for medical devices. Von der Leyen said that leaders in their discussions had focused on market access, where she highlighted the principle of reciprocity and said the two sides had agreed to work on “concrete solutions” on public procurement. On overcapacity — China’s excess production of subsidized products such as steel, solar panels or batteries — she said Beijing had shown willingness to reduce its export surpluses by boosting domestic consumption. “Without progress it will be very difficult for the European Union to maintain openness,” she said, highlighting the diversion of trade flows from other markets that have closed the door to Chinese exports. Finally, on export controls, von der Leyen said it was vital to maintain reliable supplies of critical raw materials in which China is the dominant supplier. She acknowledged Beijing’s efforts on fast-tracking deliveries and developing a support mechanism for business that need to access such minerals for their operations.

It was supposed to be a celebration. But ahead of a meeting of European and Chinese leaders in Beijing on Thursday, expectations could hardly be lower.  After Donald Trump’s return to the White House, hopes were high that Beijing and Brussels could reach a gradual détente. And this year’s EU-China summit, marking the 50th anniversary of diplomatic relations, was meant to reflect that. Fast-forward six months and relations have hit a new low.  “The EU-China relationship has been an increasingly tense relationship for the past six to seven years, and it’s not getting any better,” said Noah Barkin, senior fellow at the German Marshall Fund think tank. “The summit is likely to underscore that both as far as the economic relationship goes and as far as China’s support for Russia goes, there has been very little progress between Brussels and Beijing.” As she tries to smooth ties with Washington, European Commission President Ursula von der Leyen’s tone toward Beijing has turned increasingly hawkish. In reply, China has warned against sealing any transatlantic trade deal that would harm its interests.  The elephant in the room, in addition to the long-running trade disputes: Russia’s war on Ukraine. And, right on cue before the summit, the EU listed two Chinese banks in its latest sanctions against Russia, leading Beijing to vent its “strong dissatisfaction and resolute opposition” at a step that it called “egregious.” Despite the harsher tone, Dutch Member of the European Parliament Bart Groothuis still thinks “the EU is handling China too carefully.” China’s crackdown on exports of critical raw materials are a case in point, he told POLITICO, and demand a tough response: “You’ll have to hit back with market access,” said Groothuis, who sits on the Parliament’s trade committee. The irritants are multiplying: Earlier this month, Beijing banned government purchases of EU medical devices, in retaliation against Brussels putting up rules for Chinese medical equipment. That comes on top of a lingering dispute over the EU’s imposition of duties on Chinese-made electric vehicles last year and Beijing’s retaliatory duties on European liquor. The setup of the summit reflects just how tense ties between the two economic superpowers have become. First, Chinese President Xi Jinping snubbed von der Leyen and European Council President António Costa earlier this year by declining an invitation to come to Brussels. Then, the summit — originally planned to run for two days — was shortened to one day only.  Now, von der Leyen and Costa are expected to meet with Xi for a more general discussion on EU-China relations in the morning, according to an EU official. Leaders will discuss geopolitics over lunch, while a meeting with Premier Li Qiang will focus on economy and trade issues.  As at previous summits, there won’t be a joint statement. The Chinese foreign ministry only officially confirmed Xi’s attendance on Monday.  STUCK IN THE MIDDLE Earlier this year, von der Leyen had struck an unusually conciliatory tone toward Beijing, prompting cautious hopes for a diplomatic reset of the bloc’s relations with the Middle Kingdom. In a speech to EU ambassadors in February, she said the EU needed to “engage constructively with China,” adding that “we can find agreements that could even expand our trade and investment ties.” Chinese President Xi Jinping snubbed Ursula von der Leyen and European Council President António Costa earlier this year by declining an invitation to come to Brussels. | Pool photo by Kirill Kudryavtsev/EPA That openness was welcomed by Beijing, which looked to build ties with Europe when Trump later hiked tariffs to 145 percent. When China hit back by imposing strict controls on exports of rare earths, Europe was caught in the crossfire. Although EU trade chief Maroš Šefčovič negotiated faster permitting procedures, Beijing has refused to lift the controls for EU companies — which continue to sound the alarm about disruptions to critical industry supply chains.  “Why aren’t we in Europe getting any gallium, if the goal is to hit the U.S.?” asked Groothuis. Gallium is used in military applications and many other high-tech products. He said the Chinese authorities were subjecting EU companies that request permission to buy gallium and other materials to heavy questioning: “How much gallium goes in which product? Who is your customer? How much stock do you have? They are just mapping out where they can squeeze us in the future.” Groothuis, a member of Renew, has called in the Parliament for the EU to “do squeezing of its own” on market access, visas, migration issues and public procurement. If the bloc isn’t willing to make use of that leverage, he said, “it’s like someone is pissing in your boot and you’re like: ‘Ah, that’s nice and warm’.” LITTLE TO OFFER That’s unlikely to cut much ice with China’s supreme leader. “China has little incentive to offer anything beyond the usual low-effort, easy wins to the EU,” said Francesca Ghiretti, director of the China Europe Initiative at the RAND think tank. “Beijing believes it is in a position of strength, having secured a temporary truce with the U.S. more quickly and easily than anticipated, while the EU remains engaged in challenging negotiations.” Before heading to Beijing, von der Leyen and Costa will land in Tokyo for the official launch of an EU-Japan alliance that links the two economies’ industrial policy more closely in the face of Chinese overcapacity and U.S. tariffs — a signal that Brussels hopes Beijing won’t miss. Among the scant summit deliverables is a rumored order for Airbus passenger jets. With a lack of announcements on trade and security, the two sides had hoped to sign a joint communiqué on climate, but that’s unlikely to happen.  An EU official said they would consider the China summit a success “if our counterparts acknowledge and understand our concerns,” for instance around overproduction and fair competition globally. “Then it would be up to them to react.”