BRUSSELS — The Trump administration has reassured the EU’s top trade lawmaker that it plans to shorten a list of items containing steel that are subject to high U.S. tariffs, in a concession that could finally persuade the European Parliament to back last year’s transatlantic trade deal.  The offer came in a call between U.S. Trade Representative Jamieson Greer with Bernd Lange, the chair of the European Parliament’s Trade Committee. It has helped win the support of Lange’s fellow socialists, enabling a key committee vote to go ahead on Thursday. But the fix is not yet fully in, with caucus leaders still to debate exactly when to schedule a final plenary vote on the accord reached at President Donald Trump’s Turnberry golf club in Scotland last July. One sticking point has been the subsequent addition by Washington of hundreds of items that contain steel — from cranes to furniture — to a list of products subject to a 50 percent U.S. tariff. That, in the view of the Europeans, violates the spirit of the Turnberry accord.  In their call last Saturday, Greer assured Lange that many of these items would go, said the German MEP, who is also steering the enabling legislation on the deal.  “Not everything, but a lot of them,” Lange told POLITICO’s Morning Trade newsletter, saying that there was “some movement” on that front. The enabling legislation, which would remove tariffs on U.S. industrial goods, has been stalled for weeks in the EU chamber, as lawmakers balked at approving a deal following the U.S. Supreme Court’s decision last month to strike down President Donald Trump’s original tariffs. The Turnberry deal had set an “all-inclusive” tariff of 15 percent on most goods. Trump quickly replaced that with a temporary 10 percent global duty. With Trump’s threats to annex Greenland, cut off all trade with Spain, and his military campaign against Iran further undermining any vestigial confidence on the part of EU lawmakers that he will abide by his commitments, the path to final approval of the Turnberry accord is both rocky and narrow. NOT THE END OF THE ROAD  The next hurdle is holding a final plenary vote on the Turnberry deal, with political groups in the European Parliament still divided.  Lange’s Socialists & Democrats, the Left, Greens and Renew are in favor of scheduling it in April, arguing they still require clarity from Washington. The center-right, pro-business European People’s Party (EPP) is pushing to hold it next week, as currently scheduled.  A decision is expected this week. Political group chairs representing a majority of MEPs would be needed to change the plenary agenda. “We need to finish this in March because then we would have much more certainty for everything. We have promises from the White House on steel and aluminum derivatives,” said Željana Zovko, the EPP top negotiator on the file. Lange is meanwhile due to fly — after the Trade Committee vote on Thursday — to Washington and is expected to meet with Greer.  Only after the text is approved by the plenary can the European Parliament enter negotiations with EU capitals and the European Commission on a compromise to finally implement the deal. BEYOND EU  People close to the White House say officials have spent weeks exploring ways to streamline how the U.S. steel tariffs apply to downstream products that hit the EU and other trading partners, following industry pushback after the list of steel and aluminum derivatives expanded to cover hundreds of items last year.  The exchange between Greer and Lange marks the clearest signal yet that the administration may adjust its approach to derivatives tariffs — changes that could extend well beyond the EU.  But the Trump administration has not publicly confirmed any changes, or clarified what that plan would entail.  “We are always examining ways to ensure our sectoral tariffs are most effectively safeguarding our country’s national and economic security, but unless announced by the Administration, discussion about tariff or derivative adjustments is baseless speculation,” said a White House official.  Camille Gijs reported from Brussels and Ari Hawkins reported from Washington. Max Griera contributed to this report. 

STRASBOURG — European and American officials are scrambling to avoid a return to their transatlantic trade war, amid increasing frustration in Washington over the EU’s failure to implement the transatlantic trade deal they agreed last summer. A trio of senior European lawmakers will travel to Washington next week, hoping to meet U.S. Trade Representative Jamieson Greer, who accuses the EU of implementing “zero percent” of the trade accord reached at President Donald Trump’s Turnberry golf resort in Scotland last July 27. The mission to the U.S. comes amid of flurry of diplomatic contacts between EU and U.S. officials ahead of a high-stakes vote by European lawmakers expected on March 26 that will determine whether Brussels can implement last year’s accord. That vote is at risk of being delayed, yet again, after a series of previous hold ups. U.S. patience is wearing thin, raising the prospect that the tariff conflict could flare up again. “The EU has done approximately zero percent of what they were supposed to do for their trade deal with us. We quickly after the Turnberry deal came into compliance with that deal,” Greer said during a press call on Wednesday.  “The European Union has had their legislation for their tariffs pending for many, many, many, many months,” he added.  Top EU parliamentary negotiators will meet on March 17 to decide whether to push back their vote again. The Turnberry agreement is widely seen in Europe as a one-sided pact. In it, the EU accepted a 15 percent U.S. tariff on most exports, while itself pledging to scrap all tariffs on U.S. industrial goods. Many EU lawmakers fear that Trump could yet renege on the deal to make more tariff threats, as he has done over Greenland and Spain.  In the Parliament, the center-right European People’s Party — the political family of European Commission President Ursula von der Leyen and German Chancellor Friedrich Merz — wants to see the deal approved to avoid retaliation by Trump and bring stability to businesses.  The Socialists & Democrats, liberals and Greens have voted against moving forward, however, after balking at the U.S. president’s latest tariff menaces against Spain, his strikes on Iran and his threats to stage a “friendly takeover” of Cuba. CRACKS IN TRUST Treasury Secretary Scott Bessent has sought to reassure the Europeans that the U.S. will stick by the deal. Yet skepticism persists. “How can we get clarity with Trump [who] doesn’t respect the deals? I think that, for now, what we would need is some public statement on the willingness to respect the deal,” Brando Benifei, an Italian Socialist who is the Parliament’s point person for relations with the U.S., said on Tuesday.  Treasury Secretary Scott Bessent has sought to reassure the Europeans that the U.S. will stick by the deal. | Brendan Smialowski/AFP via Getty Images Benifei will be one of the three MEPs traveling to meet Greer. The others are Bernd Lange, the German Social Democrat who chairs the European Parliament’s trade committee, and Polish center-right lawmaker Michał Szczerba, who sits on the foreign and security committees. They hope to meet Greer on March 20, but the EU lawmakers could already have delayed the vote by then. “I hope that we can find some common ground,” Lange said. Karin Karlsbro, a Swedish liberal who is skeptical on the trade pact, is also expected to meet with representatives of the U.S. mission to the EU, her office said. And Željana Zovko, the top negotiator on the file from the EPP, the biggest grouping in Parliament, will meet with U.S. Ambassador Andrew Puzder on Monday, she told POLITICO. Despite the worries from the U.S. side, Anna Cavazzini, the lead lawmaker on the file in the Greens group who is spearheading opposition to the deal, said she had not been contacted by the Americans. UNRELIABLE PARTNER Despite Bessent’s pledge on the Turnberry pact, the EU remains wary over what Trump will do next. The U.S. has, only this week, launched new investigations into unfair trade practices that could trigger more tariffs against the EU. That has redoubled concerns in Brussels that Trump plans to plow on with his aggressive trade agenda against Europe, undeterred by a Supreme Court ruling last month that substantially overturned his original tariff agenda. On top of the latest investigations, people close to the file say the White House will not shy away from imposing tariffs on national security grounds, such as Section 232 of the Trade Expansion Act of 1962. Washington’s double-sided approach is not lost on European lawmakers.  “‘We’ll stick to the deal.’ And less than 24 hours later, they are already threatening us with new tariffs. It is impossible to work with the Trump administration like this,” the Socialist group’s vice president for trade policy, Kathleen Van Brempt, said in a post on X Thursday.  The EPP’s top trade lawmaker, Jörgen Warborn, last week pitched a “sunrise clause,” meaning the deal would only finally kick in if Washington upheld its side of the bargain. “That would give clarity because what the sunrise clause is doing, it’s making sure that the deal doesn’t kick in before it is confirmed that all the elements of the deal are upheld,” Warborn told POLITICO on Tuesday. Željana Zovko, the top negotiator on the file from the EPP, the biggest grouping in Parliament, will meet with U.S. Ambassador Andrew Puzder on Monday, she told POLITICO. | Martin Bertrand/Hans Lucas/AFP via Getty Images Benifei said the sunrise clause could enable his group to support the pact. Still, he explained, this would require provisions allowing the Commission not to implement the EU-U.S. agreement until Washington stops threatening the EU’s digital rules, and until the U.S. lowers tariffs on EU steel derivatives. “We are not there,” he said, expressing skepticism that the EPP would be willing to place such tough demands on the Commission. “They [EPP lawmakers] are a bit worried about the situation that is not moving,” he said. “I need to see what they are actually ready to do, because to be frank, my impression is that they are a bit in the mood [of saying] …‘Just let’s not make Trump angry.’” Carlo Martuscelli contributed to this report.

BRUSSELS — The European Parliament froze ratification of the EU’s trade deal with the United States on Monday amid concerns that President Donald Trump’s latest tariff broadside breaches the terms of the transatlantic accord struck last summer. Senior trade lawmakers pulled the emergency brake after the U.S. Supreme Court on Friday struck down the main tariffs on which the deal, reached at Trump’s Turnberry Scottish golf resort last July, had been based. Trump said on Saturday he would impose a global tariff of 15 percent under a new legal authority — triggering alarm across the bloc.  “The decision to postpone the vote on the implementation of the U.S. deal is the right one. Given the current enormous uncertainty, a vote would be unjustifiable,” said Anna Cavazzini, who represents the Greens. A second lawmaker, Željana Zovko of the center-right European People’s Party, confirmed the delay but nonetheless called for the European Parliament to hold a final vote on the Turnberry accord next month. “We have to act as Team Europe and have one voice,” Zovko told POLITICO. “I agreed to postpone, but not unconditionally and not forever. We have to have a vote in March and we have to respect our side to the deal.” Trump’s latest tariffs, invoked under Section 122 of the U.S. Trade Act of 1974 and due to take effect on Tuesday, would appear to “stack” on top of any existing most-favored-nation rate.  This, in the view of Brussels, would be a direct breach of the Turnberry accord and of a subsequent joint statement locking down the deal that, the EU argues, set an “all-inclusive” tariff of no more than 15 percent on most goods. NOT BUSINESS AS USUAL The European Parliament’s International Trade Committee had been due on Tuesday to vote through legislation to enable the deal that included specific safeguards, after reaching a hard-fought compromise earlier this month. One of the safeguards foresaw a six-month review of the deal to ensure that tariffs on products containing steel were lowered to the baseline level. The second would have revoked the deal if Trump again threatened the EU’s territorial integrity, as he did when he proposed to annex Greenland in January. Cavazzini, a German MEP, said: “The top priority must be to find a solution for the remaining 50 percent tariffs on steel, aluminum, and derivatives. The ball is now in the U.S.’s court. Tariffs are extremely unpopular and have not led to the industrial jobs promised by Trump.” Croatian MEP Zovko, whose party favors the Turnberry deal, said MEPs should still hold a plenary vote to implement it next month. “If we stick to the deal, we can at least demand something from the Americans,” she said. Confirming the delay, Bernd Lange, the chair of the trade committee, said: “Business as usual is not an option.” Senior trade lawmakers, known as shadow rapporteurs, will meet again next week to reassess the situation, the German Social Democrat added in a statement. Only once the Parliament adopts a position would it be possible to hold talks with the other branches of the EU — the Commission and the Council representing its 27 member states — to finally implement the EU’s side of the bargain. This would mainly entail scrapping duties on U.S. industrial goods. EU Trade Commissioner Maroš Šefčovič was due to brief ambassadors from EU member countries later on Monday and EU lawmakers on Tuesday, Olof Gill, the Commission’s deputy chief spokesperson, said earlier. Šefčovič spoke with Jamieson Greer, the U.S. trade representative, and Commerce Secretary Howard Lutnick on Saturday. The EU executive, which negotiates trade deals on behalf of the bloc’s 27 member countries, has expressed dismay at Trump’s latest tariff move.  “The current situation is not conducive to delivering ‘fair, balanced, and mutually beneficial’ transatlantic trade and investment,” it said on Sunday, requesting full clarity from the Trump administration on the steps it intends to take after the Supreme Court ruling.

BRUSSELS — The European Parliament’s top trade lawmakers failed on Wednesday to reach a common position on the EU-U.S. trade deal, in a move that risks fueling Washington’s impatience against the EU’s slow pace in finally implementing its side of a bargain struck last summer. Negotiations will continue until next week, two people who attended a meeting of the lawmakers told POLITICO. One said that committee vote was penciled in for Feb. 24 and a final plenary vote for March. Both were granted anonymity to discuss the closed-door talks. The meeting failed to clear remaining hurdles regarding the Parliament’s position on the removal of tariffs on U.S. industrial goods and lobsters — a precondition for Washington to reduce its own tariffs on European cars.  Lawmakers from the international trade committee disagreed on the length of a sunset clause which would limit the proposals’ application to 18 to 36 months, as well as whether the EU should withdraw any tariff concessions until a solution is found between Brussels and Washington on the 50 percent tariff the Trump administration has put on steel derivatives. With the EU still processing the shock of Trump’s threats against the territorial sovereignty of Greenland and the Kingdom of Denmark, the liberal Renew group and the Socialists & Democrats are pushing to Trump-proof the deal by inserting suspension clauses into enabling legislation in case the U.S. president turns hostile again.  The center-right European People’s Party has pushed to sign off the deal following calls from EU leaders to unfreeze the implementation of the deal.  Failure to reach an agreement on Wednesday throws into disarray the timeline for parliamentary approval, and further delays the start of negotiations with EU capitals and the European Commission.

Businesses from Wall Street to main street are struggling to comply with President Donald Trump’s byzantine tariff regime, driving up costs and counteracting, for some, the benefits of the corporate tax cuts Republicans passed earlier this year. Trump has ripped up the U.S. tariff code over the past year, replacing a decades-old system that imposed the same tariffs on imports from all but a few countries with a vastly more complicated system of many different tariff rates depending on the origin of imported goods. To give an example, an industrial product that faced a mostly uniform 5 percent tariff rate in the past could now be taxed at 15 percent if it comes from the EU or Japan, 20 percent from Norway and many African countries, 24 to 25 percent from countries in Southeast Asia and upwards of 50 percent from India, Brazil or China. “This has been an exhausting year, I’d say, for most CEOs in the country,” said Gary Shapiro, CEO and vice chair of the Consumer Technology Association, an industry group whose 1,300 member companies include major brands like Amazon, Walmart and AMD, as well as many small businesses and startups. “The level of executive time that’s been put in this has been enormous. So instead of focusing on innovation, they’re focusing on how they deal with the tariffs.” Upping the pressure, the Justice Department has announced that it intends to make the prosecution of customs fraud one of its top priorities. The proliferation of trade regulations and threat of intensified enforcement has driven many companies to beef up their staff and spend what could add up to tens of millions of dollars to ensure they are not running afoul of Trump’s requirements. The time and expense involved, combined with the tens of billions of dollars in higher tariffs that companies are paying each month to import goods, amount to a massive burden that is weighing down industries traditionally reliant on imported products. And it’s denting, for some, the impact of the hundreds of billions of dollars of tax cuts that companies will receive over the next decade via the One Big Beautiful Bill Act championed by the White House. “Every CEO survey says this is their biggest issue,” said Shapiro. A recent survey by KPMG, a professional services firm, found 89 percent of CEOs said they expect tariffs to significantly impact their business’ performance and operations over the next three years, with 86 percent saying they expect to respond by increasing prices for their goods and services as needed. Maytee Pereira, managing director for customs and international trade at PriceWaterhouseCoopers, another professional services firm, has seen a similar trend. “Many of our clients have been spending easily 30 to 60 percent of their time having tariff conversations across the organization,” Pereira said. That’s forced CEOs to get involved in import-sourcing decisions to an unprecedented degree and intensified competition for personnel trained in customs matters. “There’s a real dearth of trade professionals,” Pereira said. “There isn’t a day that I don’t speak to a client who has lost people from their trade teams, because there is this renewed need for individuals with those resources, with those skill sets.” But the impact goes far beyond a strain on personnel into reducing the amount of money that companies are willing to spend on purchasing new capital equipment or making other investments to boost their long-term growth. “People are saying they can’t put money into R&D,” said one industry official, who was granted anonymity because of the risk of antagonizing the Trump administration. “They can’t put money into siting new factories in the United States. They don’t have the certainty they need to make decisions.” A White House spokesperson did not respond to a request for comment. However, the administration has previously defended tariffs as key to boosting domestic manufacturing, along with their overall economic agenda of tax cuts and reduced regulation. They’ve also touted commitments from companies and other countries for massive new investments in the U.S. in order to avoid tariffs, although they’ve acknowledged it will take time for the benefits to reach workers and consumers. “Look, I would have loved to be able to snap my fingers, have these facilities going. It takes time,” Treasury Secretary Scott Bessent said in an interview this week on Fox News. “I think 2026 is going to be a blockbuster year.” For some companies, however, any benefit they’ve received from Trump’s push to lower taxes and reduce regulations has been substantially eroded by the new burden of complying with his complicated tariff system, said a second industry official, who was also granted anonymity for the same reason. “It is incredibly complex,” that second industry official said. “And it keeps changing, too.” Matthew Aleshire, director of the Milken Institute’s Geo-Economics Initiative, said he did not know of any studies yet that estimate the overall cost, both in time and money, for American businesses to comply with Trump’s new trade regulations. But it appears substantial. “I think for some firms and investors, it may be on par with the challenges experienced in the early days of Covid. For others, maybe a little less so. And for others, it may be even more complex. But it’s absolutely eating up or taking a lot of time and bandwidth,” Aleshire said. The nonpartisan think tank’s new report, “Unintended Consequences: Trade and Supply Chain Leaders Respond to Recent Turmoil,” is the first in a new series exploring how companies are navigating the evolving trade landscape, he said. One of the main findings is that it has become very difficult for companies to make decisions, “given the high degree of uncertainty” around tariff policy, Aleshire said. Trump’s “reciprocal” tariffs — imposed on most countries under a 1977 emergency powers act that is now being challenged in court — start at a baseline level of 10 percent that applies to roughly 100 trading partners. He’s set higher rates, ranging from 15 to 41 percent, on nearly 100 others, including the 27-member European Union. Those duties stack on top of the longstanding U.S. “most-favored nation” tariffs. Two notable exceptions are the EU and Japan, which received special treatment in their deals with Trump. Companies also could get hit with a 40 percent penalty tariff if the Trump administration determines an item from a high-tariffed country has been illegally shipped through a third country — or assembled there — to obtain a lower tariff rate. However, businesses are still waiting for more details on how that so-called transshipment provision, which the Trump administration outlined in a summer executive order, will work. The president also has hit China, Canada and Mexico with a separate set of tariffs under the 1977 emergency law to pressure those countries to do more to stop shipments of fentanyl and precursor chemicals from entering the United States. Imports from Canada and Mexico are exempt from the fentanyl duties, however, if they comply with the terms of the U.S.-Mexico-Canada Agreement, a trade pact Trump brokered in his first term. That has spared most goods the U.S. imports from its North American neighbors, but also has forced many more companies to spend time filling out paperwork to document their compliance. Trump’s increasingly baroque tariff regime also includes the “national security” duties he has imposed on steel, aluminum, autos, auto parts, copper, lumber, furniture and heavy trucks under a separate trade law. But the administration has provided a partial exemption for the 25 percent tariffs he has imposed on autos and auto parts, and has struck deals with the EU, Japan and South Korea reducing the tariff on their autos to 15 percent. In contrast, Trump has taken a hard line against exemptions from his 50 percent tariffs on steel and aluminum, and recently expanded the duties to cover more than 400 “derivative” products, such as chemicals, plastics and furniture, that contain some amount of steel and aluminum or are shipped in steel and aluminum containers. And the administration is not stopping there, putting out a request in September for further items it can add to the steel and aluminum tariffs. “This is requiring companies that do not even produce steel and aluminum products to keep track of and report what might be in the products that they’re importing, and it’s just gotten incredibly complicated,” one of the industry officials granted anonymity said. That’s because companies need to precisely document the amount of steel or aluminum used in a product to qualify for a tariff rate below 50 percent. “Any wrong step, like any incorrect information, or even delay in providing the information, risks the 50 percent tariff value on the entire product, not just on the metal. So the consequence is really high if you don’t get it right,” the industry official said. The administration has also signaled plans to similarly expand tariffs for other products, such as copper. And the still unknown outcomes of ongoing trade investigations that could lead to additional tariffs on pharmaceuticals, semiconductors, critical minerals, commercial aircraft, polysilicon, unmanned aircraft systems, wind turbines, medical products and robotics and industrial machinery continue to make it difficult for many companies to plan for the future. Small business owners say they feel particularly overwhelmed trying to keep up with all the various tariff rules and rates. “We are no longer investing into product innovation, we’re not investing into new hires, we’re not investing into growth. We’re just spending our money trying to stay afloat through this,” said Cassie Abel, founder and CEO of Wild Rye, an Idaho company which sells outdoor clothing for women, during a virtual press conference with a coalition of other small business owners critical of the tariffs. Company employees have also “spent hundreds and hundreds and hundreds of hours counter-sourcing product, pausing production, restarting production, rushing production, running price analysis, cost analysis, shipping analysis,” Abel said. “I spent zero minutes on tariffs before this administration.” In one sign of the duress small businesses are facing, they have led the charge in the Supreme Court case challenging Trump’s use of the 1977 International Emergency Economic Powers Act to impose both the reciprocal and the fentanyl-related tariffs. Crutchfield Corp., a family-owned electronics retailer based in Charlottesville, Virginia, filed a “friend of the court” brief supporting the litigants in the case, in which the owners detailed its difficulties in coping with Trump’s erratic tariff actions. “If tariffs can be imposed, increased, decreased, suspended or altered … through the changing whim of a single person, then Crutchfield cannot plan for the short term, let alone the long run,” the company wrote in its brief, asking “the Court to quell the chaos.”

BRUSSELS — The European Union has invited U.S. Commerce Secretary Howard Lutnick to Brussels on Nov. 24 for talks with the bloc’s trade ministers, a Danish official familiar with the situation told POLITICO. The Danish presidency of the Council of the EU, as well as the European Commission, have invited the commerce secretary to attend a lunch with ministers dedicated to trade relations between the United States and the EU. The invitation comes as rifts with China over its latest export controls on rare earths redefine relations between Washington, Beijing and Brussels. Lutnick hasn’t yet formally confirmed his attendance at the ministerial meeting, the official added. The invitation, which has been in the works for months, comes as Brussels and Washington are still going through the implementation of commitments struck in Scotland in July between U.S. President Donald Trump and the European Commission President Ursula von der Leyen. European Commission spokesperson Olof Gill confirmed the invitation had been extended to Lutnick. Brussels is still pressing Washington for tariff exemptions on sensitive sectors such as spirits and chemicals, and has raised concerns about the U.S. expanding its list of derivative steel products subject to a 50 percent tariff. EU countries will be informed of the invitation on Friday, with ambassadors set to discuss it on Nov. 5. It builds upon recent contact between EU trade chief Maroš Šefčovič and Danish Foreign Minister Lars Løkke Rasmussen, whose country is currently chairing legislative work for the Council, the bloc’s intergovernmental arm. G7 allies are meanwhile seeking to coordinate their responses to China’s grip on the supply of the minerals that are crucial for tech such as wind turbines, electric vehicles and drones. The European Commission on Friday is hosting a delegation of Chinese officials to discuss the latest export controls. The U.S. Department of Commerce was contacted for comment. Daniel Desrochers contributed to this report.

Germany’s two banking supervisory agencies have drafted a plan to ease the burden of regulation on Europe’s smaller banks and are now seeing if it will fly. An informal discussion paper drafted by the Deutsche Bundesbank and Bafin — which share responsibility for supervising German banks — proposes freeing banks across the EU of the need to report capital ratios based on complex calculations of the riskiness of their assets, as well as liberating them from various other obligations. The proposals are the first concrete result of a drive to simplify regulation that began earlier this year and are the clearest sign yet that the EU is — belatedly — ready to undo some of the stifling financial regulation it introduced over a decade ago. Regulation is currently based on the global Basel III accords that were agreed by regulators in 2010, two years after reckless lending by U.S. and European banks caused the biggest financial crisis in nearly 80 years and a wrenching recession across most of the world. Basel III drastically increased the amount of capital and liquidity that banks have to hold to protect themselves against a possible repeat. But the accords were aimed primarily at big international institutions whose operations were capable of destabilizing the global financial system; as the impact of the 2008-2009 disaster has faded, regulators have grudgingly come to accept that their response went too far. The U.S., Switzerland and the U.K. have already implemented less intrusive regimes for smaller banks with simpler business models. “With the proposal for an EU small banks regime, we have provided important impetus to the discussions on simplifying the regulatory framework,” Michael Theurer, the Bundesbank’s head of banking supervision, said in emailed comments, stressing that the proposal “does not represent a departure from the Basel framework.” The framework would be open to banks with less than €10 billion in assets and with a mainly domestic focus (at least 75 per cent of their business should be in the European Economic Area). Banks using it would not be allowed to hold any cryptocurrency assets such as Bitcoin, and would be allowed to hold only minimal amounts of derivatives or assets for trading purposes. They would also have to prove that their vulnerability to changes in interest rates is acceptably low. ‘PARADIGM SHIFT’ Under the Capital Requirements Regulation, which applies Basel III in the EU, banks are generally required to report two capital ratios — one adjusted for risk, and one unadjusted. The latter, known as the leverage ratio, was originally intended as a backstop to prevent larger banks from gaming the system by understating the risks on their books under internal models allowed by the accords The German proposals suggest that smaller banks would merely have to report a leverage ratio, albeit a “significantly higher” one than the present 3 percent. By comparison, U.S. community banks must keep their leverage ratios above 9 percent, which means they must hold at least $9 of capital for every $100 in assets. Theurer said the Bundesbank had deliberately refrained from suggesting a specific ratio at this time. This idea “is more than a technical detail,” Daniel Quinten, a member of the board at Germany’s Federal Association of Cooperative Banks, said in a post on social media. “It would be a paradigm shift — and a chance for more proportionality, more efficiency and less bureaucracy in regulation.” The proposals — and the feedback they get — are to be incorporated in a report that a high-level European Central Bank task force will recommend to the European Commission at the end of the year. | Florian Wiegand/EPA The proposals also simplify demands on liquidity coverage. They would exempt banks from the Basel III Net Stable Funding Ratio — a complex formula for guaranteeing liquidity over a one-year timeframe — and would replace it with a new requirement that would limit their lending to only 90 percent of their deposit base. Banks would also have to keep at least 10 percent of their assets in highly liquid form, such as cash, central bank reserves or short-term government debt. This, the discussion paper said, “would achieve similar potential outcomes with dramatically reduced complexity.” The proposals — and the feedback they get — are to be incorporated in a report that a high-level European Central Bank task force will recommend to the European Commission at the end of the year. Additional reporting by Carlo Boffa.

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.”