The European Commission will present a new plan to break the EU’s dependencies on China for critical raw materials, President Ursula von der Leyen announced on Saturday. The EU executive chief warned of “clear acceleration and escalation in the way interdependencies are leveraged and weaponized,” in a speech Saturday at the Berlin Global Dialogue. In recent months, China has tightened export controls over rare earths and other critical materials. The Asian powerhouse controls close to 70 percent of the world’s rare earths production and almost all of the refining. The EU’s response “must match the scale of the risks we face in this area,” von der Leyen said, adding that “we are focusing on finding solutions with our Chinese counterparts.” Brussels and Beijing are set to discuss the export controls issue during meetings next week. “But we are ready to use all of the instruments in our toolbox to respond if needed,” the head of the EU executive warned. This suggests that the Commission could make use of the EU’s most powerful trade weapon — the Anti-Coercion Instrument. This comes after French President Emmanuel Macron called on the EU executive to trigger the trade bazooka at a meeting of EU leaders on Thursday. His push has not met with much support from the other leaders around the table. NEW BREAKAWAY PLAN To break the EU’s over-reliance on China for critical materials imports and refining, the Commission will put forward a “RESourceEU plan,” von der Leyen said. She did not provide much detail about the plan, nor when it would be presented. But she said it would follow a similar model as the REPowerEU plan that the Commission introduced in 2022 to phase out Russian fossil fuels after Moscow’s illegal invasion of Ukraine. Under REPowerEU, the Commission proposed investing €225 billion to diversify energy supply routes, accelerate the deployment of renewables, improve grids interconnections across the bloc and boost the EU hydrogen market, among other measures. The EU executive also put forward a legislative proposal, which is currently under negotiations with the European Parliament and the Council, to ban Russian gas imports by the end of 2027. The aim of RESourceEU “is to secure access to alternative sources of critical raw materials in the short, medium and long term for our European industry,” von der Leyen explained. “It starts with the circular economy. Not for environmental reasons. But to exploit the critical raw materials already contained in products sold in Europe,” she said. She added that the EU “will speed up work on critical raw materials partnerships with countries like Ukraine and Australia, Canada, Kazakhstan, Uzbekistan, Chile and Greenland.” “Europe cannot do things the same way anymore. We learned this lesson painfully with energy; we will not repeat it with critical materials,” von der Leyen said.

BRUSSELS — Brussels and Beijing will discuss China’s recent restrictions on exports of rare earths and magnets next week, the European Commission said on Friday. “We can confirm that both in-person and virtual high-level technical meetings will take place next week,” trade spokesperson Olof Gill told reporters. The talks will not include Commissioner for Trade and Economic Security Maroš Šefčovič or his Chinese counterpart Wang Wentao just yet. “Teams will engage under the Export Control Dialogue which was upgraded after EU-China summit in July,” Gill added. It is unclear if restrictions on chips will also be discussed. Germany Foreign Minister Johann Wadephul on Friday postponed a trip to China due to start next week. Beijing’s export controls came up in the talks during Thursday’s meeting of EU leaders, according to two EU officials, with some leaders expressing their concerns. One said the EU’s most powerful trade weapon, the Anti-Coercion Instrument, was mentioned, but didn’t garner much interest around the table. The EU, which imports many of its critical raw materials, almost all rare earths and permanent magnets from China, is caught in the crossfire between Beijing and the Trump administration in the U.S. “A crisis in the supply of critical raw materials is no longer a distant risk,” European Commission President Ursula von der Leyen said earlier this week in a speech to European lawmakers.

BRUSSELS — Heard the one about the 12-and-half-hour meeting of 27 national leaders that succeeded in agreeing very little apart from coming up with quite a lot of “let’s decide in a couple of months” or “let’s just all agree on language that means absolutely nothing but looks like we’re united” or “let’s at least celebrate that we got through this packed agenda without having to come back on Friday”? No? Well let us enlighten you. And if that makes you question how we’ve managed to squeeze 29 things out of this, well let’s just say one of these is about badly functioning vending machines… 1 . STRAIGHT OUT OF THE BOX WITH A QUICK WIN ON SANCTIONS … The day was off to a flying start when Slovak Prime Minister Robert Fico lifted his veto over the latest raft of Russia sanctions on the eve of the summit — allowing the package to get formally signed off at 8 a.m. before leaders even started talking. Fico rolled over after claiming to achieve what he set out to do: clinch support for Slovakia’s car industry. He found an unusual ally in German Chancellor Friedrich Merz who he met separately to discuss the impact of climate targets on their countries’ automotive sectors. 2. … BUT AGREEMENT ON FROZEN RUSSIAN ASSETS WAS LESS FORTHCOMING There was a moment earlier in the week where the EU looked to be on the cusp of a breakthrough on using Russian frozen assets to fund a €140 billion loan for Ukraine. Belgium, the main holdout, appeared to be warming to the European Commission’s daring idea to crack open the piggy bank. But Belgian Prime Minister Bart De Wever stuck by his guns , saying he feared taking the assets, which are held in a Brussels-based financial depository, could trigger Moscow to take legal action. 3. BELGIUM DIDN’T MOVE ON ITS BIG THREE BIG DEMANDS The Flemish right-winger’s prerequisites were threefold: the “full mutualization of the risk,” guarantees that if the money has to paid back, “every member state will chip in,” and for every other EU country that holds immobilized assets to also seize them. Leaders eventually agreed on that classic EU summit outcome: a fudge. They tasked the European Commission to “present options” at the next European Council — effectively deciding not to decide. “Political will is clear, and the process will move forward,” said one EU official. But it’s uncertain whether a deal can be brokered by the next summit, currently set for December. 4. DE WEVER REJECTS THE ‘BAD BOY’ LABEL After POLITICO ranked the Belgian leader among its list of “bad boys” likely to disrupt Thursday’s summit (rightfully, might we add), he protested the branding. “A bad boy! Me? … If you talk about the immobilized assets, we’re the very, very best,” he said. The day was off to a flying start when Slovak Prime Minister Robert Fico lifted his veto over the latest raft of Russia sanctions on the eve of the summit. | Olivier Hoslet/EPA 5. URSULA VON DER LEYEN ALSO CONCEDED THEY’RE NOT QUITE THERE YET The high-level talks “allowed us to identify points we need to clarify,” the Commission president said tactfully. “Nobody vetoed nothing today,” European Council President António Costa chimed in. “The technical and legal aspects of Europe’s support need to be worked upon.” Translation in case you didn’t understand the double negative: The EU needs to come up with a better plan to reassure Belgium — and fast. 6. UKRAINE: EVER THE OPTIMIST Ukrainian President Volodymyr Zelenskyy ― a guest of the summit ― told reporters Russia must pay the price for its invasion, calling on the EU to follow through with its frozen assets proposal, adding he thought the leaders were “close” to an agreement. “If Russia brought war to our land, they have to pay for this war,” he said. 7. AND ZELENSKYY IS STILL HOLDING OUT FOR TOMAHAWKS “We will see,” was Zelenskyy’s message on the topic of acquiring the long-range missiles from the U.S., which Donald Trump has so far ruled out selling to Kyiv. “Each day brings something … maybe tomorrow we will have Tomahawks,” Zelenskyy said. “I don’t know.” 8. UKRAINE WANTS GERMANY TO SEND MORE WEAPONS TOO Merz held a meeting with Zelenskyy about “the situation in Washington and the American plans that are now on the table,” a German official said, adding Zelenskyy made “specific requests” to the chancellor about helping Ukraine with its “defense capabilities.” After the summit, the German leader said Berlin would review a proposal on how German technologies could help to protect Ukrainian’s energy and water infrastructure. 9. THUMBS UP TO DEFENSE ROADMAP! EU leaders endorsed the Defense Readiness Roadmap 2030 presented last week by the Commission, which aims to prepare member countries for war by 2030. One of its main objectives is to fill EU capability gaps in nine areas: air and missile defense, enablers, military mobility, artillery systems, AI and cyber, missile and ammunition, drones and anti-drones, ground combat, and maritime. The plan also mentions areas like defense readiness and the role of Ukraine, which would be heavily armed and supported to become a “steel porcupine” able to deter Russian aggression. As leaders deliberated, a Russian fighter jet and a refueling aircraft briefly crossed into Lithuanian airspace from the Kaliningrad region, underscoring the need for the EU to protect its skies. 10. KYIV IS PROMISING TO BUY EUROPEAN — MOSTLY Ukraine will prioritize domestic and European industry when spending cash from the proposed reparation loan funded by Russia’s frozen assets, Zelenskyy told leaders at the summit — but wants to be able to go across the pond when necessary. 11. MUCH THE SAME FOR SPAIN Spanish leader Pedro Sánchez said the country had committed to contributing cash to a fund organized by NATO to buy weapons for Ukraine from the U.S. | Nicolas Tucat/Getty Images Spanish leader Pedro Sánchez said the country had committed to contributing cash to a fund organized by NATO to buy weapons for Ukraine from the U.S. “Today, most of the air defense components, such as Patriots or Tomahawks … which Ukraine clearly needs, are only manufactured in the United States,” he said. Madrid has been a thorn in Washington’s side over its lax defense spending. 12. THERE WAS A MERCOSUR SURPRISE Merz stunned trade watchers when he announced the leaders had backed a controversial trade agreement with Latin American countries. “We voted on it today: The Mercosur agreement can be ratified,” the German chancellor told reporters, adding that he was “very happy” about that. “All 27 countries voted unanimously in favor,” Merz added on Mercosur. “It’s done.” The remark sparked confusion amongst delegations, as the European Council doesn’t usually vote on trade agreements — let alone one as controversial as the mammoth agreement with the countries of the Latin American bloc of Mercosur, which has been in negotiations for over 25 years. One EU diplomat clarified that it’s because European Council President António Costa sought confirmation from EU leaders that they would agree to take a stance on the deal by the end of this year — and no formal vote was taken yet. 13. CLIMATE TALKS PASSED WITHOUT A HITCH One of the hotter potatoes ahead of the summit passed surprisingly smoothly. Leaders ultimately refrained from bulldozing the EU’s climate targets, agreeing to a vaguely worded commitment to a green transition, though without committing to a 2040 goal, which proposes cutting emissions by 90 percent compared to 1990 levels. In the words of one diplomat: “Classic balance, everyone equally unhappy.” 14. AT LEAST ONE LEADER SEEMED PLEASED, THOUGH Polish Prime Minister Donald Tusk called the summit a “turning point” in Europe’s approach to green policy, adding he succeeded in inserting a “revision clause” into the EU’s plan to extend its carbon-trading system to heating and transport emissions that will give member countries the option to delay or adjust the rollout. “We’ve defused a threat to Polish families and drivers,” he declared, calling the change a signal that “Europe is finally speaking our language.” 15. BUT THE ISSUE WON’T STAY BURIED FOR LONG Ministers are set to reconvene and cast a vote on the 2040 goal on Nov. 4, described by one diplomat as “groundhog day.” 16. MEANWHILE, THERE WAS NOTHING ON MIGRATION … Polish Prime Minister Donald Tusk called the summit a “turning point” in Europe’s approach to green policy. | Thierry Monasse/Getty Images Aside from promising to make migration a “priority,” the EU’s leaders failed to make any kind of breakthrough on a stalled proposal for burden-sharing. Reminder: The EU missed a deadline last week to agree on a new way of deciding which member countries are under stress from receiving migrants and ways of sharing the responsibility more equally across the bloc. 17. … BUT THE ANTI-MIGRANT BREAKFAST CLUB LIVES ON Italy’s Giorgia Meloni, Denmark’s Mette Frederiksen and the Netherlands’ Dick Schoof have kept up their informal pre-summit “migration breakfasts” since last June, swapping innovative ideas on tougher border and asylum policies. They met again on Thursday with von der Leyen, who updated them on the EU’s latest plans for accelerating migrant returns, and the trio agreed an informal summit will take place next month in Rome. 18. NOR DID THE EU’S SOCIAL MEDIA BAN GET MUCH OF A LOOK IN As expected, the leaders endorsed a “possible” minimum age for kids to use social media, but failed to commit to a bloc-wide ban, with capitals divided on whether to make the age 15 or 16, as well as on the issue of parental consent. 19. THERE WAS A WHOLE LOT OF WAITING FOR NEWS… Journalists were frantically pressing their sources in the Council and national delegations to find out what was happening at the leaders’ table as the meeting dragged into the late hours. It eventually finished at 10.30 p.m. ― 12 and a half hours after it began. 20. … AND THE GREENS SEIZED THEIR MOMENT The EU Parliament’s Greens group co-chair Bas Eickhout wandered the hallways of the Justus Lipsius building ready to brief bored journalists about the wonders of the Green Deal — while leaders debated how to unravel it in the other room. 21. THE COMBUSTION ENGINE BAN FELL FLAT One of the pillars of the EU’s green transition, its 2035 de facto combustion engine ban, was set to play a major role in the competitiveness and climate discussions, with Merz and Fico spoiling for a fight over the proposal — yet it barely registered as a footnote. Slovakia used the climate talks to oppose the ban, and the Czech Republic chimed in to agree, but in the end the summit’s official conclusions welcomed the Commission’s proposed ban without mentioning how it should be watered down. 22. THE EUROPEAN COUNCIL’S VENDING MACHINES AREN’T VERY, ER, COMPETITIVE Officials and journalists alike found that the vending machines in the EU’s Justus Lipsius building, which incidentally is due for a €1 billion renovation, about as efficient as a roundtable of 27 national leaders lasting 12 and a half hours. 23. THE BLOC IS WORRIED ABOUT CHINA… Beijing’s export controls on rare earths came up in the talks on competitiveness, according to two EU officials, with some leaders expressing their concerns. 24. … BUT THEY’RE NOT READY TO GO NUCLEAR — YET One of the officials said the EU’s most powerful trade weapon, the Anti-Coercion Instrument, was mentioned, but didn’t garner much interest around the table. 25. HOUSING GETS 40 MINUTES — NOT BAD FOR A FIRST RUN Leaders spent a chunk of time discussing the continent’s housing crisis. A solid start for the topic, which made it onto the agenda for the first time at Costa’s behest. The EU executive “is ready to help,” von der Leyen said after the summit, announcing a European Affordable Housing Plan is in the pipeline and the first EU Housing Summit in 2026. | Dursun Aydemir/Getty Images During talks, Greek Prime Minister Kyriakos Mitsotakis called on the Commission to create a database tracking which housing policies work — and which don’t — across Europe. Most leaders agreed that, while housing remains a national competence, the EU still has a role to play. 26. AND THE COMMISSION WANTS TO ROLL UP ITS SLEEVES The EU executive “is ready to help,” von der Leyen said after the summit, announcing a European Affordable Housing Plan is in the pipeline and the first EU Housing Summit in 2026. 27. LEADERS ENJOYED A FEAST OR TWO For lunch, langoustine with yuzu, celeriac and apple, fillet of veal with artichokes and crispy polenta, and a selection of fresh fruit. For dinner, cannelloni with herbs, courgette velouté, fillet of brill with chorizo and pepper, and fig meringue cake. Yum. 28. THOUGH A FEW COULDN’T MAKE IT Hungarian Prime Minister Viktor Orbán was the most notable absence, rocking up several hours late due to a national holiday in Budapest. Portugal and Slovenia’s leaders were also absent at one point. 29. AND COSTA KEPT HIS PROMISE … JUST The European Council president pledged to streamline summits under his watch, making them one-day affairs instead of two. And with just a couple hours to spare, he was successful. Okay, breathe. Did we miss anything? (Don’t answer that.) Gerardo Fortuna, Max Griera Andrieu, Jordyn Dahl, Gabriel Gavin, Hanne Cokelaere, Clea Caulcutt, Hans von der Burchard, Kathryn Carlson, Tim Ross, Jacopo Barigazzi, Gregorio Sorgi, Eliza Gkritsi, Carlo Martuscelli, Nicholas Vinocur, Saga Ringmar, Sarah Wheaton, Louise Guillot, Zia Weise, Camille Gijs, Bartosz Brzezinski and Giedre Peseckyte contributed to this report.

BRUSSELS — As Beijing further weaponizes its control over the flow of minerals that Western countries need for their green, defense and digital ambitions, Europe has to face an uncomfortable truth: It won’t escape China’s dominance anytime soon. The Chinese government’s shock imposition earlier in October of sweeping export controls on rare-earth magnets and the raw materials needed to make them has escalated a running trade feud with the United States. The embargo threatens vast — and rapid — collateral damage on the European Union and has forced its way onto the agenda of a high-level summit on Thursday. “A crisis in the supply of critical raw materials is no longer a distant risk. It is on our doorstep,” European Commission President Ursula von der Leyen said in a pre-summit speech to European lawmakers. “Now, we must accelerate decisively and urgently. We need faster, more reliable supply of critical raw materials, both here in Europe and with trusted partners. I will be ready to propose further measures to ensure Europe’s economic security and I will accelerate what we have already put in motion.” Beijing’s announcement this month drew a fierce rebuke from U.S. President Donald Trump, who threatened to hike tariffs on Chinese goods to 100 percent. Trump is due to hold a high-stakes meeting with Chinese President Xi Jinping on the sidelines of an Asia-Pacific summit at the end of October. The EU, which imports nearly all of its rare earths and permanent magnets from the Middle Kingdom, is caught in the crossfire. “We have no interest in escalation,” Maroš Šefčovič, the EU’s trade chief, told reporters Tuesday. “However, this situation casts a shadow over our relationship. Therefore, a prompt resolution is essential.” China and the EU will “intensify contacts at all levels” on the issue, Šefčovič added. Wang Wentao, the Chinese trade minister, has accepted an invitation to come to Brussels in the coming days to discuss the restrictions, Šefčovič said after a two-hour call between the two. The EU is also consulting with the G7 group of industrialized nations on a coordinated response on critical minerals ahead of an Oct. 30-31 ministerial meeting in Canada. Yet, behind the talk of adequate diplomatic responses and potential retaliation there is no escaping the dominance in rare earths that China has built up over decades. For now at least. “In the short term there’s nothing you can do, except try and negotiate with the Chinese,” said Philip Andrews-Speed, senior research fellow at the Oxford Institute for Energy Studies.  HIT WHERE IT HURTS Beijing dominates the entire supply chain of rare earths — a group of 17 minerals used in permanent magnets found in everything from electric vehicles and wind turbines, to F-35 fighter jets and naval vessels. Under its new export controls, importers will need a government license to access not only those permanent magnets, but also the refined metals and alloys that go into them. China already weaponized its leading position in producing and refining critical raw materials — and specifically rare-earth elements like scandium, yttrium and dysprosium — in response to Trump’s first wave of punitive tariffs back in April. Eventually, the White House caved in. This time, again, the Chinese export controls are “a tit-for-tat for U.S. policy,” said a person from the Chinese business sector, granted anonymity to speak candidly. The EU is being hit, too: “The effects are direct and enormous, particularly for the defence sector,” Tobias Gehrke and Janka Oertel of the European Council on Foreign Relations wrote in a commentary. “The EU defence industry risks grinding to a halt as inventory shortfalls could leave it struggling to produce and deliver enough weapons for the war in Ukraine.” China accounts for 61 percent of rare earths extraction and 92 percent of refining, according to the International Energy Agency. It provides nearly 99 percent of the EU’s supply of the 17 rare earths, as well as about 98 percent of its rare earth permanent magnets. UNDERDOG DIPLOMACY  In addition to its minerals monopoly, Beijing has built a legal foundation to capitalize on it — through an export control toolbox that mirrors the one Washington has used to cap exports of leading-edge technology to China. The EU lacks a comparable armory that would allow it to respond in kind. Whereas export controls are now a go-to option in Washington’s and Beijing’s trade negotiation strategies, to Brussels, protecting national security remains the sole legitimate justification to deploy such measures.  “The EU will need to find a way to live in this new reality,” said Antonia Hmaidi, senior analyst at think tank Merics, adding that the bloc may have to give up its belief in the rules-based trading system that characterized the post-World War Two era. “It could also mean that the EU chooses not to play that game, but then the EU needs a different game to play,” she said, adding that weaponizing EU market access could be a powerful alternative. Ahead of Thursday’s summit, calls are growing to ready the EU’s Anti-Coercion Instrument (ACI), the only trade policy tool the EU can wield against economic coercion. Working mostly through deterrence, the bloc’s so-called trade bazooka seeks to prevent foreign powers from pressuring European countries — but only foresees action as a last resort. “It’s the usual sabre rattling from the usual subjects, but activating the ACI is not seriously under consideration at this stage,” said one EU diplomat, who was also granted anonymity. Asked whether the EU executive is looking at the ACI, the Commission’s deputy chief spokesperson Olof Gill said: “Right now we’re focused on engagement, and we’re not going to go down the road of speculating about any other possibility.” That engagement is delivering scant results. In June, Beijing agreed to set up a “green channel” for European companies to speed the approval of export licenses. And yet, Šefčovič said, only half of the 2,000 priority applications submitted by European companies to the Chinese authorities had been “properly addressed.” CATCHING UP  Moving forward, the EU needs to dramatically ramp up its diversification efforts. At a meeting with industry leaders on Monday, Industry Commissioner Stéphane Séjourné said the EU’s response must build on two pillars, according to his cabinet: a diplomatic solution and a more resilient supply chain. China accounts for 61 percent of rare earths extraction and 92 percent of refining, according to the International Energy Agency. | VCG/Gett Images That, however, won’t happen overnight. Especially since the EU executive unveiled its grand plan to diversify its supply of raw materials away from China two years ago, officials have been stressing the need to stockpile more of the metals and minerals, ramp up domestic mining and production and seal new partnerships. But concrete action is still lagging, with experts and industry alike lamenting the lack of funding being put on the table. James Watson, director general at metals lobby Eurometaux, welcomed the EU executive’s decision to award “strategic project” status to some 60 mines and refineries inside and outside the bloc, but added: “We still need dedicated funding for the sector, as well as addressing structural issues, such as higher energy costs and heavier administrative burdens, that put as at a competitive disadvantage compared with our global competitors.” Camille Gijs and Koen Verhelst contributed reporting.

Robert Benson is the associate director for National Security and International Policy at the Center for American Progress. History will likely remember the U.S.–EU Turnberry trade deal less for its technicalities than for what it symbolizes: the moment Washington openly rewrote the transatlantic bargain. Far from a victory for Brussels, this terse 19-point deal merely codified the structural disadvantages the bloc faced in earlier trade talks. Building on the understanding reached at U.S. President Trump’s Turnberry golf resort in July — which European leaders had called “a dark day” — the agreement imposed a 15 percent tariff on most European exports to the U.S. and formalizes a commitment to bring auto tariffs to the same level, while leaving the levies on Europe’s car industry punishingly high. Yet, somehow, the release of the deal’s framework text was met with grudging acceptance — and even relief — on the grounds that it was the best bargain Europe could hope for. Essentially, what began as a trade standoff ended in a lopsided pact formalizing America’s leverage over Europe. Then, before the ink had even dried, Washington drew a new battle line, threatening fresh tariffs that would strike at the core of the bloc’s digital sovereignty. This broadside exposes a deeper truth: Europe is adrift in a world where it no longer shapes the norm and stands increasingly vulnerable to American revisionism. This realization may be frightening, but it shouldn’t come as a surprise. U.S. Treasury Secretary Scott Bessent had already laid out this vision last fall — that the U.S. must leverage Europe’s security dependence to rewrite the global economic order in its favor. Turnberry is simply the first full implementation of this strategy, and pressure will only mount from here. The deal itself is structurally skewed, front-loading a 15-percent asymmetric tariff in favor of U.S. industries and shielding American sectors from reciprocal obligations. Its bold promises — including $750 billion in U.S. energy exports and $600 billion in EU investment — are also unrealistic and deliberately designed to collapse under their own weight. So, when the EU inevitably falls short, the U.S. can then seize the opportunity to press for greater concessions on tech regulation and digital services. The real purpose isn’t compliance, it’s coercion. And while the fact that we’ve so far managed to avoid a full-blown trade war may appear to some as evidence of successful diplomacy, this reading overlooks the real cost of Brussels’s concessions: sharp economic contraction, political backlash and the normalization of bullying in international diplomacy. Europe is navigating a maze of interdependencies, and Washington knows exactly how to exploit that. As evidenced by Congressman Jim Jordan’s August visits to Brussels, London and Dublin, MAGA will now frame the EU’s digital regulation — on content moderation, data privacy and platform accountability — as violations of “free speech” and anti-American bias. This is more than a rhetorical ploy, it’s a calculated effort to destabilize Europe’s liberal democracies by amplifying fringe political actors, sowing division and undermining trust in centrist institutions. Beyond pushing back against tech standards, Washington is positioning itself to challenge Europe on the ideological legitimacy of its entire regulatory model. Thus, the battle over digital sovereignty will be cast in civilizational terms — free markets versus bureaucratic overreach, expression versus censorship, sovereignty versus globalism. And Europe’s far-right narrative of elite censorship will have the imprimatur of U.S. policy. These grievances will then likely merge with U.S. demands for greater burden-sharing on defense or security concessions on Ukraine. It’s also entirely possible the Trump administration will exploit divisions among member countries on digital sovereignty, tying reviews of America’s force posture to regulatory rollbacks, a retreat on digital taxes or alignment with its own tech standards.  Brussels needs to be prepared for the battles ahead. Thankfully, some of the consequences are already coming into focus: First, driven by anemic growth forecasts of 0.5 to 0.9 percent — particularly in export-heavy economies like Germany — the risk of a far-right surge across Europe is growing. This economic pain will translate into political volatility. Populist parties will frame Brussels as complicit in Washington’s coercion and incapable of defending national interests. And despite its ideological affinities with the U.S., Europe’s far right won’t have any qualms with turning on its ideological bedfellows in the White House. Germany’s Alternative for Germany and France’s National Rally are already exploiting anger over the deal and are calling for a loosening of transatlantic ties.   Brussels needs to be prepared for the battles ahead. | Brendan Smialowski/AFP via Getty Images Next, when it comes to security, the U.S.–EU decoupling that’s already in motion will only accelerate. France and Germany are currently reviving proposals for a European Security Council, accelerating cooperation under Permanent Structured Cooperation and weighing investment in a European Defense Fund. Public opinion is shifting too. Majorities in Germany and France now support greater autonomy in defense planning and procurement, with pluralities favoring a European army. Even staunchly Atlanticist Poland is moving away from reflexive alignment with Washington. Finally, there’s the fact that, sooner or later, markets will wake up to the implications of this global reordering. So far, they’ve largely shrugged it off, treating Turnberry as theater, and investors have priced in volatility without grasping the deeper structural shift underway. But if capital flows start reflecting the risk of permanent transatlantic divergence — on currency regimes, regulatory frameworks and trade access — the spiral could be swift. And unlike the 2008 financial crisis, the shock wouldn’t be easily sutured. Europe isn’t powerless here. It retains economic scale, regulatory clout and unused tools — but it must be prepared to use them. This means treating economic security like national security, and embedding defense autonomy, energy resilience and technological sovereignty into a unified strategic doctrine. It also means strengthening Europe’s defenses against asymmetric coercion. Brussels’s Anti-Coercion Instrument, a trade tool meant to counter economic blackmail by imposing targeted measures on U.S. service providers, was a step in the right direction — even if it ultimately wasn’t deployed. Now, the EU must also build legal firewalls against extraterritorial enforcement and deploy its regulatory power to actively shape global norms. Europe’s challenge isn’t to restore the old transatlantic bargain but to build a new one before the next crisis hits and Trump dictates the terms once more. If the bloc hesitates, it won’t get to choose at all.

BRUSSELS — The next obstacle to the trade deal between the European Union and the United States won’t come from the Oval Office — but rather from the second-biggest party in the European Parliament. The European Socialists have come out against the accord that Commission President Ursula von der Leyen struck with U.S. President Donald Trump in July. That will make her job of building the majority she needs to enact the tariff truce a tough one — and failure to do so could plunge the transatlantic trade relationship back into turmoil. “We firmly oppose the agreement,” Iratxe García Pérez, president of the Socialists and Democrats (S&D) parliamentary group, told POLITICO.  The Socialists’ opposition imperils the EU’s efforts to present the pact as guarding transatlantic unity against Moscow. It also deepens a rift with von der Leyen’s center-right allies the European People’s Party (EPP) — who support the deal — which has in the past worked with the S&D to pursue a moderate agenda. The standoff comes just weeks after von der Leyen had to make long-term commitments on social spending to secure the support of the Socialists to win a high-stakes motion of no confidence. The S&D lost leverage in the 2024 European election, when an electoral shift made it possible for the EPP to pass measures with the support of political groups on the right of the political spectrum. As their presence in the Commission and in national governments has dwindled, the Socialists have become increasingly strident in their criticism of the EU executive and the EPP — and are eager to leverage their remaining political weight to extract political concessions. EXPLOITING WEAKNESS Since the transatlantic trade agreement was sealed at Trump’s golf resort in Turnberry, Brussels has faced charges that it surrendered to Washington and did not make use of the EU’s economic heft, as a market of 450 million people, to respond to Trump’s aggressive negotiating tactics. García Pérez comments came after Trump threatened last week to punish countries that impose digital rules and taxes that discriminate against American companies. She insisted the EU should make use of its toughest trade weapon, the Anti-Coercion Instrument, to hit back at Trump’s bullying.  “Trump will exploit any sign of weakness to escalate the trade war,” she added. García Pérez’s defiance followed criticism of the trade deal by Teresa Ribera, the top-ranking Socialist in von der Leyen’s Commission. Ribera, who oversees competition policy, told the Financial Times last Friday that the EU needed to be ready to walk away from the deal if Trump acts on his tech threats. And on Monday, European Council President António Costa — another Socialist — said he acknowledged “the frustration felt by many Europeans, who perceive the Union as having been too passive in shaping this summer’s developments on trade, relations with the U.S. and Ukraine.” European Council President António Costa — another Socialist — said he acknowledged “the frustration felt by many Europeans, who perceive the Union as having been too passive in shaping this summer’s developments on trade, relations with the U.S. and Ukraine.” | Rodrigo Antunes/EPA Costa, a former Portuguese premier who now represents the interests of EU governments, said in a speech in Slovenia that Washington’s attack on the EU over its tech regulations amounted to regulatory overreach and censorship. “Our partners — including the U.S. — must know that the EU will always defend its sovereignty, its citizens, its companies and its values,” Costa said. “Diplomacy should never be mistaken for complacency.” Under the deal, most EU exports are subject to an all-in 15 percent U.S. tariff. To complete its side of the bargain, the EU should pass legislation to abolish all tariffs on U.S. industrial goods, including the 10 percent it charges on U.S. autos, and ease market access for some farm produce and seafood. “In the bigger picture, the Socialists have good reasons to oppose this deal, because it is very unclear what the rationale was for von der Leyen to give away the EU’s WTO orientation and these massive concessions for security guarantees that are nowhere in near sight,” said David Kleimann, a senior trade expert at the ODI Europe think tank in Brussels. Kleimann was referring to concerns that the agreement goes against global trade rules as enshrined at the World Trade Organization. UPHILL BATTLE The most immediate test for the deal will be when the Parliament weighs in on the legislation proposed by the Commission last week to scrap the tariffs on U.S. industrial goods — a prerequisite for Washington in turn to lower its tariffs on European autos to 15 percent from 27.5 percent. With autos the largest transatlantic export of the bloc’s largest economy, Germany, the stakes are high. The most immediate test for the deal will be when the Parliament weighs in on the legislation proposed by the Commission last week to scrap the tariffs on U.S. industrial goods — a prerequisite for Washington in turn to lower its tariffs on European autos to 15 percent from 27.5 percent. | Andrew Harnik/Getty Images Bernd Lange, a German S&D lawmaker who chairs the Parliament’s trade committee, warned that Brussels must be ready to act fast if Washington fails to deliver on its pledge to reduce car tariffs — and especially if Trump moves against the EU’s regulatory sovereignty on digital or green rules. Lawmakers will get their first opportunity to vent their frustration when Sabine Weyand, the top official in the Commission’s trade department, testifies before Lange’s committee on Wednesday. Lange, who will be the lead lawmaker on the proposals, said that if the United States doesn’t reduce tariffs on European cars, “then we will not lower the 10 percent U.S. tariffs. That is clear.” To pass, the legislation would require a simple majority of votes cast. If von der Leyen can’t persuade the S&D group to back the trade deal, her party would, along with the moderate coalition allies that elected her to a second term, need the votes of the right-wing European Conservatives and Reformists group and the far-right party Patriots for Europe to secure its passage. “The S&D has always been more critical of the United States trying to strong-arm the EU into following their position. They are generally more opposed than the transatlanticist EPP on the other side, which would want to keep this truce alive,” Kleimann added. The EPP, von der Leyen’s political family, broadly backs the deal but has also raised concerns. “I support the Commission in its efforts to create predictability in trade with one of our most important partners — but I have concerns about how the agreement is compatible with [World Trade Organization] rules, which I am in the process of analyzing now,” said Jörgen Warborn, the EPP’s trade policy lead. Koen Verhelst and Seb Starcevic contributed reporting. 

BRUSSELS — The ink is still drying on a leaders’ statement formalizing a tariff deal between the EU and the United States, and President Donald Trump is already threatening to tear it up.  In another punch against the EU, Trump threatened Monday to impose further tariffs on countries whose digital rules, in his view, discriminate against American companies.   “I put all Countries with Digital Taxes, Legislation, Rules, or Regulations, on notice that unless these discriminatory actions are removed, I, as President of the United States, will impose substantial additional Tariffs on that Country’s Exports to the U.S.A., and institute Export restrictions on our Highly Protected Technology and Chips,” he wrote on Truth Social. The Trump administration has fired shot after shot against the EU’s digital rule book — claiming that the Digital Services Act and the Digital Markets Act, respectively, censor American citizens and unfairly target U.S. companies.   The European Commission was quick to stress its regulatory autonomy.  “It is the sovereign right of the EU and its member states to regulate economic activities on our territory, which are consistent with our democratic values,” the EU’s chief spokesperson Paula Pinho told reporters Tuesday.   Trump’s new threat, however, challenges the EU’s logic that a joint statement published with the U.S. last week provides industry with crucial predictability.  “This is a further indication that the so-called deal of July 27 does not bring security and stability,” said Bernd Lange, a lawmaker with the Socialists and Democrats who chairs the trade committee in the European Parliament.   As Trump and Commission President Ursula von der Leyen shook hands on the deal in Scotland at the end of July, many saw it as an act of surrender by the EU. Chiefly, the EU agreed to scrap tariffs on all U.S. industrial goods in exchange for a 15 percent baseline tariff, which would also apply to cars that now face a 27.5 percent levy.  This, Brussels argued at the time, was a price worth paying to shield the EU — and its regulatory autonomy — from future escalation from the mercurial Trump administration.  “I can only repeat, and stress how much we’ve worked to ensure that we are not touching in any way our legitimate digital regulation. That includes, of course, the Digital Markets Act, as well as the Digital Services Act, as well the digital services taxes of our member states,” a senior EU official told reporters last week after the EU executive unveiled its joint statement with the U.S.   Less than a week on, the EU is finding out the hard way that Trump’s commitments can quickly be overtaken by his ever-shifting priorities.   “Deals with the Trump administration simply do not create the kind of lasting certainty everyone is desperate for, because certainty, predictability and strict fidelity to treaties are not White House objectives,” said Dmitry Grozoubinski, a former trade diplomat and author of the book “Why Politicians Lie About Trade.” “Given the public interest in digital regulation, the suspicion of U.S. tech giants, and how quickly this extortion is coming after what was supposed to be a glorious trade peace across the Atlantic — this may be a bridge too far for Europe,” he added.   The Commission pushed back against that interpretation.   “We believe that this deal indeed has provided for predictability and stability,” Pinho told a news briefing.  RETALIATION MOJO   In the final stages of its negotiations with the Trump administration, Europe’s appetite to retaliate against Washington faded, with capitals desperate to keep Trump focused on ending the war in Ukraine.   “We prepared [countermeasures],” Sabine Weyand, the EU’s top trade official, told a panel at the European Forum Alpbach on Monday before Trump’s latest announcement. “But, of course, this requires you to be ready to accept the cost that is associated with countermeasures and to accept that is linked to further escalation. There was clearly no appetite for that. And, as I said, the overwhelming point was Ukraine and the U.S. security guarantees.”  Trump’s latest move could, however, put pressure once again on the EU executive and member countries to respond. One option would be to take countermeasures — which would impose tariffs on €93 billion in U.S. goods ranging from aircraft to autos, and from soybeans to Kentucky bourbon — out of the freezer.   Another — which some are already calling for — would be to deploy its Anti-Coercion Instrument. This “trade bazooka” foresees potentially broad action in response to trade blackmail. “In my opinion, this is clearly a case for the AC instrument,” said Lange.  Pinho, asked directly about the Anti-Coercion Instrument, declined to speculate.  UP NEXT   The EU’s weakness in negotiating with Trump contrasts with Beijing’s more aggressive strategy. Capitalizing on its near-monopoly on rare earths, China in April imposed export restrictions on the critical minerals — Trump earlier this month extended a tariff truce with China for another 90 days, setting the stage for broader negotiations between the world’s two biggest economies.  Its strategic weaknesses in sectors ranging from military to technology condemns the EU, however, to reactionary limbo in its dealings with the U.S.   On Wednesday, the Commission is expected to put forward its proposals to lift tariffs on U.S. industrial goods and cars.   According to the joint statement, the U.S. will lower its 27.5 percent tariffs on cars and automotive parts to the baseline 15 percent only after the EU proposes legislation to eliminate tariffs on all U.S. industrial goods. If the Commission goes ahead with the proposal, the tariff relief would apply retroactively from Aug. 1.  “We will proceed with the implementation of the framework agreement,” said Pinho. Sarah Wheaton contributed reporting.

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 president of the European Commission, Ursula von der Leyen, is flying to Scotland to meet directly with President Donald Trump on Sunday, in a sign that a trade deal with America’s largest trading partner is within sight. But European diplomats aren’t counting on a deal until it is officially rolled out, after being burned before by Trump’s penchant for last-minute reversals. That’s because the president’s modus operandi when it comes to trade deals is clear: He wants to deal one-on-one with foreign leaders, applying an arm twist at the highest level to try and eke out final concessions. That doesn’t work as well with the European Union, the 27-nation bloc that makes decisions, literally, by committee. That fundamental issue has turned the talks between the EU and the Trump administration into a series of stops and starts, as negotiators painstakingly piece together compromises, only for them to be slapped down when presented to Trump or European countries. And it’s why, even as the von der Leyen-Trump meeting raises hopes of reaching a deal to avoid a stiff U.S. tariff increase Aug. 1, they are not counting on it. “Nothing is agreed until everything is agreed,” said one EU diplomat. “I guess everyone is quite tense,” said another. Trump himself underscored the uncertainty Friday after touching down in Scotland for what initially was billed as a weekend golf getaway. “I will be meeting with the EU on Sunday and we will be working on a deal. … Ursula will be here. A highly respected woman. So, we look forward to that. That will be good,” he told reporters, adding, “I think we have a good 50-50 chance. That’s a lot.” Asked about what issues are still under discussion, he replied, “I don’t want to tell you what the sticking points are. But the sticking points are having to do with maybe 20 different things. You don’t want to listen to all of them.” Trump has repeatedly expressed frustration about dealing with the EU, a bloc that he claims was created to “screw” the U.S. One senior White House official said Trump still holds out hope, however improbable, of cutting deals with individual EU member countries, particularly Germany, whose influential auto sector has been pummeled by Trump’s 25 percent tariff on cars and car parts. Per EU rules, however, only the European Commission can negotiate trade deals for member countries, with input from the European Parliament and the heads of state for each nation. “Yes, it’s complicated with the EU,” said the official, who was granted anonymity to describe the president’s thinking on the matter. “But if some of these countries had the opportunity to do a deal with us on their own, they would jump at the chance.” It’s true that, as Treasury Secretary Scott Bessent has observed on several occasions, the EU “has a collective action problem,” with leading economies like Germany and France pushing different priorities and negotiating strategies. Germany’s conservative Chancellor Friedrich Merz has lobbied hard for an accord that would offer some relief to the country’s powerful auto industry, while French President Emmanuel Macron has led calls to tough things out with Trump by backing retaliatory tariffs and calling to activate the EU’s so-called trade bazooka — the Anti-Coercion Instrument — an all-purpose weapon that would only need supermajority support to hit back against the U.S. But Merz and Macron met in Berlin on Wednesday and pledged to present a united front on trade issues during a series of meetings seeking to bolster a flailing Franco-German relationship. And EU countries on Thursday approved plans to retaliate with tariffs on approximately $109 billion worth of U.S. goods, if no deal materializes and the U.S. ratchets up its duties. More problematic at this point: Trump’s penchant for adding his own last-minute spin to the trade agreements his negotiators have spent months hashing out, sometimes to the point where he has sent countries back to the negotiating table. With each of the preliminary deals the administration has reached this summer, Trump has held a final call with the country’s leader, using the opportunity to demand additional concessions or alter key terms in his government’s favor. That may not work with von der Leyen, who acts on behalf of the bloc’s members and doesn’t have the discretion to accept last-minute changes. “I might anticipate that there would be some latitude from the Commission,” said Daniel Mullaney, a former assistant U.S. trade representative who negotiated with Europe. “But yeah, if something comes in at the last minute which is outside of the realm of what was consulted on with the member states, it could be challenging.” The EU is currently rallying around a deal that would apply a 15 percent tariff on goods from its member states — higher than the current 10 percent rate that Trump imposed on all countries in early April but half the 30 percent rate the president threatened in a July 12 letter. According to four diplomats, who were granted anonymity to discuss the confidential negotiations, the deal would largely mirror an accord the U.S. clinched with Japan earlier this week. Cars and car parts would also see their tariff reduced from the 25 percent duty Trump set on all auto imports in May to 15 percent. Other sectors that got hit by U.S. tariffs, like steel and aluminum, are still under discussion. WATCH: THE CONVERSATION * https://imasdk.googleapis.com/js/core/bridge3.708.0_en.html?gdpr=1#fid=goog_1162029740Play VideoFDA commissioner has ‘no preconceived plans’ for abortion pill policies | The Conversation According to one EU official, the 50 percent tariff Trump has imposed on steel and aluminum remains a key sticking point, as well as other sector-specific tariffs the White House is threatening on industries like pharmaceuticals, semiconductors and aerospace. “There is total uncertainty on that, what we can get on that,” said the official, who was granted anonymity to discuss the private conversations. Trump on Friday played down the chances of lowering his steel tariffs, telling reporters he did not have much wiggle room to provide more generous terms because “if I do it for one, I have to do it for all.” The EU has already been close to a deal once before but has been confounded by what they see as Trump’s unpredictable behavior. Members said that they had an agreement waiting for Trump’s approval earlier this month but that the president rejected it because it was too bureaucratic, according to two EU officials who were briefed on the discussions, granted anonymity because of the sensitivity of the talks. One official said Trump “smacked it down for the lack of enough ‘wins.’” A White House official, granted anonymity to discuss private conversations, said no agreement was reached earlier this month; instead, the EU had sent an offer, and the administration did not find it suitable. The official agreed that any final deal with the EU will be decided by Trump. “He’s ultimately the one who makes the deal,” the official said. Other world leaders have confronted similar problems — and concluded that the only way to address the issue is to hold one-on-one meetings with Trump, as British Prime Minister Keir Starmer is doing this weekend in Scotland. While Starmer and Trump reached a preliminary trade deal in May to lower some U.S. duties on British goods, they have yet to come to hash out the terms for a promised “alternative arrangement” for steel and aluminum tariffs, a top priority for the British government. The golfing visit is “an opportunity for the PM to build personal rapport with Trump,” said one U.K. government adviser, granted anonymity to speak candidly about the visit. “They have a good relationship, but this is where Starmer will need to shine in an informal setting.” Trump has recently insisted that any trade deal will require other countries to open their markets. The president has claimed that Indonesia, the Philippines and Vietnam will drop all tariffs on U.S. goods as part of their trade agreements. Officials from those countries, however, have either not substantiated or have publicly challenged those claims.  MOST READ 1. Arizona woman sentenced to 8 years in prison for hosting ‘laptop farm’ for North Korean remote workers 2. Trump’s ‘South Park’ Problem 3. Independents are increasingly souring on Trump, new poll finds 4. The state where immigration raids are becoming a problem for Republicans 5. House GOP sends warning shot to Bondi for fumbling Epstein saga ‘so badly’ On Tuesday, he announced a deal with Japan in which the country has pledged to lower tariff barriers on U.S.-made cars and import more agricultural goods, like rice. Trump told reporters Friday morning that while he wasn’t overly confident about reaching a deal with the EU, he was still more optimistic than he had been about coming to terms with Japan in the days before that agreement was finalized. “I would have said we have a 25 percent chance with Japan. And they kept coming back, and we made a deal,” he said. Dan Bloom and Andrew McDonald contributed to this story from London. Koen Verhelst contributed from Brussels.

BRUSSELS — The European Union is eyeing a Japan-style deal with the Donald Trump administration that sets a 15 percent U.S. baseline tariff — but is ready to retaliate if no agreement can be reached by an Aug. 1 deadline, according to EU diplomats briefed on the talks. If Trump blocks a deal now in the works, the EU is ready to launch two separate countermeasures, three diplomats told POLITICO. One would impose tariffs on €93 billion worth of U.S. goods. A vote to finalize this part of the retaliation is due on Thursday, with the Commission expected to garner broad support from the EU’s 27 governments. The second would involve the much broader Anti-Coercion Instrument, one of the diplomats said, adding that there seems to be a broad majority among EU governments — if there is no deal — to “establish coercion,” which is a requirement to trigger the instrument. Another diplomat said the instrument could be used to target U.S. digital and financial services specifically. Currently, the EU and the U.S. are eyeing a deal with a 15 percent baseline tariff, which would largely mirror an accord the U.S. clinched with Japan, according to four diplomats, including the three cited above, who were granted anonymity to discuss the confidential negotiations. Cars and car parts would also see their tariff reduced from 25 to 15 percent. Other sectors that got hit by U.S. tariffs, like steel and aluminum, are still under discussion. Another diplomat said EU ambassadors will likely need to be available during the summer break in August to field any potential deal. In return for a $550 billion investment in the States, Trump early on Wednesday agreed to charge Japan a 15 percent tariff, including on cars. He later dropped a post on Truth Social, saying that countries that don’t open up will face higher tariffs rather than a lower one like Japan. However, it was Japan’s financing arrangement that allowed Tokyo to seal a trade deal with the U.S., Treasury Secretary Scott Bessent said — indicating that the EU cannot simply hope to seal a similar deal with Washington. This story has been updated.