Senior officials inside NATO and the Spanish government are not too concerned with President Donald Trump’s threats to punish the country for its perceived inadequate spending on defense. “The threat is not being taken seriously at the military level,” said a senior NATO officer at the Supreme Headquarters Allied Powers Europe in Brussels. “Spaniards are reacting calmly.” The officer was granted anonymity to discuss internal thinking. The relative shrug comes as Trump’s rhetoric has grown increasingly hostile in recent weeks, criticizing Spain over its low spending amid the administration’s push to make European countries less reliant on the United States’ military umbrella. “You’re going to have to talk to Spain,” Trump told NATO Secretary General Mark Rutte on Wednesday. “Spain is not a team player.” Trump has pushed NATO members to spend at least 5 percent of their GDP on national defense. At a NATO summit in The Hague in June, most members agreed to a spending target of 5 percent of GDP — 3.5 percent on core military expenditure and 1.5 percent in defense-related areas such as military mobility by 2035. But not Spain, which asked for a carveout. Madrid has the lowest military spending of any NATO member country, allocating just 1.3 percent of its GDP to defense in 2024. And its refusal to commit to more has irked Trump, who this month said NATO should consider throwing Spain out of the alliance. The president’s anger further strains an already complex transatlantic relationship in which he has upended trade relationships, imposed new tariffs and lectured leaders on migration and climate change. European leaders, meanwhile, have worked hard to maintain a positive relationship with Trump as they hope to influence him on a range of issues, especially the war in Ukraine. Trump also suggested he’d impose new tariffs Spain, which is a member of the European Union. It’s not clear how Spain could be singled out but, for now, the Spanish don’t seem too concerned. What matters—and we should say it with pride—is that Spain is a reliable and responsible ally, that it has been in the Atlantic Alliance for 40 years, that it has paid a very high price with the lives of Spanish service members, that it is willing to take part in every mission assigned to it, and that it is making a very important effort in the Spanish and European defense industry, creating jobs and honoring commitments,” said Margarita Robles, Spain’s defense minister told reporters last week. “So, even if some do not acknowledge it, Spain is a country that delivers, and an ally respected by the other members of the Alliance.” Robles added that 2035 is a long way off and the alliance’s priority should be what is happening in Ukraine. But Trump remains focused on Spain’s refusal and is still “considering economic consequences,” said Anna Kelly, spokesperson for the White House. “President Trump always means what he says, and his actions speak for themselves,” she said. “While every other NATO ally agreed to increase its defense spending to five percent, Spain was the only country that refused.”

LONDON — Ukraine’s allies are trying everything they can to keep Donald Trump onside. This week, that includes deploying the king of England.  Joined by first lady Melania Trump, he’ll be the first-ever U.S. president to be formally welcomed to Windsor Castle, another unprecedented element of an already paradigm-breaking second state visit for a leader who loves being singular. They will be lauded with the finest pomp and pageantry Britain has to offer, replete with banqueting, honor escorts and a ceremonial flypast of the sort Trump has been impressed by before — and which serves as a reminder of the long history of military cooperation between Britain and the U.S.  The hope is that the royal charm offensive will lay the groundwork for Prime Minister Keir Starmer and his senior aides to make fresh efforts to persuade Trump he should apply more pressure to Russian President Vladimir Putin in the quest for peace in Ukraine. While it may not appear on any program for the visit, political and royal aides expect it will be raised behind the scenes.  A senior defense official, granted anonymity like others in this piece to speak candidly, said the king is “very close” to the detail of ceasefire negotiations and to Ukrainian President Volodymyr Zelenskyy himself.  British Prime Minister Keir Starmer and Ukrainian President Volodymyr Zelensky meet British and Ukrainian troops from Operation Interflex. | Pool photo by Jaimi Joy/WPA via Getty Images That gives the prime minister a weapon many other European leaders don’t have: a sympathetic monarch who has quietly yet consistently demonstrated his support for Kyiv — and is willing to do his part to push back on U.S. skepticism toward the cause.  A ROYAL ALLY  The U.S. president, who so often discards other conventions, has a deep respect and affection for the royal family, which the state visit is intended to capitalize on. As he departed for Britain, he hailed Charles as “such an elegant gentleman” and described his second visit as a “great honor.” He has been far less reverent toward Zelenskyy, to put it mildly, suggesting at various points that he bears responsibility for Russia’s invasion of his country and humiliating him at their infamous meeting in the Oval Office earlier this year.  At a time of highly uncertain American support, the Ukrainian leader has found a champion in the king.  Charles unexpectedly welcomed Zelenskyy for tea at Sandringham in the aftermath of the Oval Office debacle, and then for lunch at Windsor Castle just ahead of June’s NATO summit. King Charles III at an audience with Ukrainian President Volodymyr Zelensky at Windsor Castle. | Pool photo by Jonathan Brady/WPA via Getty Images Orysia Lutsevych, head of the Ukraine program at Chatham House, said the king’s show of support sent a message “of solidarity and a reminder of who is the victim and who is the aggressor” amid “distortion and disinformation” by Putin.  A former senior U.K. diplomat said that while the king does not speak publicly about matters of government, he is “adept at finding other ways of showing his views.” And he will have plenty of time to do so: The president will stay overnight at Windsor Castle, where he will be treated to a carriage procession through the estate and lunch in the state dining room before the main event of the white-tie state banquet. “It wouldn’t be surprising if he took the opportunity privately to encourage the president to support Ukraine more effectively,” the same former diplomat said.  A royal aide acknowledged the king’s interest in Ukraine, noting that he called for a “just and lasting peace” in Ukraine in a message of solidarity to mark the country’s independence day last month. The king may nod to Ukraine during his speech at the state banquet, as he did during French leader Emmanuel Macron’s recent visit, but otherwise his diplomacy is likely to take place behind closed doors, bolstered by symbolism throughout the trip designed to highlight the two countries’ history as wartime allies. THE HARD SELL  The trickier question is whether the king’s overtures will make a difference.  One government adviser pointed to Trump’s royal reception by King Willem-Alexander and Queen Máxima of the Netherlands, arguing it helped pave the way for a successful NATO summit, at which he recommitted to the alliance.  Trump will be joined on the trip by Secretary of State Marco Rubio and envoy Steve Witkoff, meaning there will also be the chance to influence his top diplomats. During Vice President JD Vance’s visit to the U.K. in the summer, insiders reported that both Rubio and Vance had become increasingly engaged with Kyiv’s point of view.  Charles’ biographer Robert Hardman previously told POLITICO: “In soft power terms, other world leaders, other countries are far more interested in the monarchy than they are in Downing Street.” This contrast — together with the continuity represented by the monarch — may be at an even higher premium as Starmer faces questions over his future following weeks of turmoil inside No. 10.  At the same time, spurring Trump toward stronger action in support of Ukraine remains a tough sell. While the president appears to have edged toward a more skeptical view of Putin, that has not yet translated into a decisive move to punish him. U.S. President Donald Trump boards Marine One as he departs the White House en route to London. | Kevin Dietsch/Getty Images The president made clear in a Truth Social post that he expects NATO allies to stop purchasing Russian oil and place significant tariffs on China for its support of Russia’s war before the U.S. enacts any additional costs on Russia.  Torrey Taussig, director of the Transatlantic Security Initiative at the Atlantic Council think tank, said that coupled with Trump’s muted response to the Russian drone incursion into Polish airspace, “this latest positioning does not give Starmer much room to maneuver.” Taussig added that while Trump’s affinity for the royals “may lend weight” to an appeal from the king on Ukraine, she was “unconvinced” the president would change course.  If the U.K.’s main job so far has been attempting to keep Trump in the room for talks about Ukraine, then the king will at least contribute to that effort — with grander gestures than most. Annabelle Dickson contributed to this report.

HOW DONALD TRUMP BECAME PRESIDENT OF EUROPE The U.S. president describes himself as the European Union’s de facto leader. Is he wrong? By NICHOLAS VINOCUR Illustration by Justin Metz for POLITICO European federalists, rejoice! The European Union finally has a bona fide president. The only problem: He lives at 1600 Pennsylvania Avenue in Washington, D.C., aka the White House. U.S. President Donald Trump claimed the title during one of his recent off-the-cuff Oval Office banter sessions, asserting that EU leaders refer to him as “the president of Europe.”  The comment provoked knowing snickers in Brussels, where officials assured POLITICO that nobody they knew ever referred to Trump that way. But it also captured an embarrassing reality: EU leaders have effectively offered POTUS a seat at the head of their table. From the NATO summit in June, when Trump revealed a text message in which NATO Secretary General Mark Rutte called him “daddy,” to the EU-U.S. trade accord signed in Scotland where EU leaders consented to a deal so lopsided in Washington’s favor it resembled a surrender, it looks like Trump has a point. Never since the creation of the EU has a U.S. president wielded such direct influence over European affairs. And never have the leaders of the EU’s 27 countries appeared so willing — desperate even — to hold up a U.S. president as a figure of authority to be praised, cajoled, lobbied, courted, but never openly contradicted. In off-the-record briefings, EU officials frame their deference to Trump as a necessary ploy to keep him engaged in European security and Ukraine’s future. But there’s no indication that, having supposedly done what it takes to keep the U.S. on side, Europe’s leaders are now trying to reassert their authority. On the contrary, EU leaders now appear to be offering Trump a role in their affairs even when he hasn’t asked for it. A case in point: When a group of leaders traveled to Washington this summer to urge Trump to apply pressure to Russian President Vladimir Putin (he ignored them), they also asked him to prevail on his “friend,” Hungarian Prime Minister Viktor Orbán, to lift his block on Ukraine’s eventual membership to the EU, per a Bloomberg report. Trump duly picked up the phone. And while there’s no suggestion Orbán changed his tune on Ukraine, the fact that EU leaders felt compelled to ask the U.S. president to unstick one of their internal conflicts only further secured his status as a de facto European powerbroker. “He may never be Europe’s president, but he can be its godfather,” said one EU diplomat who, like others in this piece, was granted anonymity to speak candidly. “The appropriate analogy is more criminal. We’re dealing with a mafia boss exerting extortionate influence over the businesses he purports to protect.” “BRUSSELS EFFECT” It was not long ago that the EU could describe itself credibly as a trade behemoth and a “regulatory superpower” able to command respect thanks to its vast consumer market and legal reach. EU leaders boasted of a “Brussels effect” that bent the behavior of corporations or foreign governments to European legal standards, even if they weren’t members of the bloc. Anthony Gardner, a former U.S. ambassador to the EU, recalls that when Washington was negotiating a trade deal with the EU known as the Transatlantic Trade and Investment Partnership in the 2010s, the U.S. considered Europe to be an equal peer. “Since the founding of the EEC [European Economic Community], America’s position was that we want a strong Europe,” said Gardner. “And we had lots of disagreements with the EU, particularly on trade. But the way to deal with those is not through bullying.” One sign of the EU’s confidence was its willingness to take on the U.S.’s biggest companies, as it did in 2001 when the European Commission blocked a planned $42 billion acquisition of Honeywell by General Electric. That was the beginning of more than a decade of assertive competition policy, with the bloc’s heavyweight officials like former antitrust czar Margrethe Vestager grandstanding in front of the world’s press and threatening to break up Google on antitrust grounds, or forcing Apple to pay back an eye-watering €13 billion over its tax arrangements in Ireland. Compare that to last week, when the Commission was expected to fine Google for its search advertising practices. The decision was at first delayed at the request of EU Trade Commissioner Maroš Šefčovič, then quietly publicized via a press release and an explanatory video on Friday afternoon that did not feature the commissioner in charge, Teresa Ribera. (Neither move prevented Trump from announcing in a Truth Social post that his “Administration will NOT allow these discriminatory actions to stand.”) “I’ve never seen anything like this in my entire career at the Commission,” said a senior Commission official. “Trump is inside the machine at this point.” Since Trump’s reelection, EU leaders have been exceptionally careful in how they speak about the U.S. president, with two options seemingly available: Silence, or praise. “At this moment, Estonia and many European countries support what Trump is doing,” Estonian President Alar Karis said in a recent POLITICO interview, referring to the U.S. president’s efforts to push Putin toward a peace with Ukraine. Never mind the fact that the Pentagon recently axed security funding for countries like his and is expected to follow up by reducing U.S. troop numbers there too. It became fashionable among the cognoscenti ahead of the NATO summit in June to claim that the U.S. president had done Europe a favor by casting doubt on his commitment to the military alliance. Only by Trump’s cold kiss, the thinking went, would this Sleeping Beauty of a continent ever “wake up.” As for Mark Rutte’s “Daddy” comment — humiliatingly leaked from a private text message exchange by Trump himself — it was a clever ploy to appeal to the U.S. president’s ego. Unfortunately for EU leaders, the pretense that Trump somehow has Europe’s interests in mind and was merely doling out “tough love” was dispelled just a few months later when European Commission President Ursula von der Leyen signed the EU-U.S. trade deal in Turnberry, Scotland. This time, there was no disguising the true nature of what had transpired between Europe and the U.S.  The wolfish grins of Trump White House bigwigs Stephen Miller and Howard Lutnick on the official signing photograph told the whole story: Trump had laid down brutal, humiliating terms. Europe had effectively surrendered. Many in Brussels interpreted the deal in the same way.  “You won’t hear me use that word [negotiation]” to describe what transpired between Europe and the U.S., veteran EU trade negotiator Sabine Weyand told a recent panel. BLAME GAME As EU officials settle in for la rentrée, the shock of these past few months has led to finger-pointing: Does the blame for this double whammy of subjugation lie with the European Commission, or with the EU’s 27 heads of state and government? It’s tempting to point to the Commission, which, after all, has an exclusive mandate to negotiate trade deals on behalf of all EU countries. In the days leading up to Turnberry, von der Leyen and her top trade official, Šefčovič, could theoretically have taken a page from China’s playbook and struck back at the U.S. threat of 15 percent tariffs with tariffs of their own. Indeed, the EU’s trade arsenal is fully stocked with the means to do so, not least via the Anti-Coercion Instrument designed for precisely such situations. But to heap all the blame on the doorstep of the Berlaymont isn’t fair, argues Gardner, the former U.S. ambassador to the EU. The real architects of Europe’s summer of humiliation are the leaders who prevailed on the Commission to go along with Trump’s demands, whatever the cost. “What I am saying is that the member states have shown a lack of solidarity at a crucial moment,” said Gardner. The consequences of this collective failure, he warns, may reverberate for years, if not decades: “The first message here is that the most effective way for big trading blocs to win over Europe is to ruthlessly use leverage to divide the European Union. The second message, which maybe wasn’t fully taken into account: Member states may be asking themselves: What is the EU good for if it can’t provide a shield on trade?” The same goes for regulation: Trump’s repeated threates of tariffs if the bloc dares to test his patience reveal the limits of EU sovereignty when it comes to the so-called “Brussels effect.” And that leaves the bloc in desperate need of a new narrative about its role on the world stage. The reasons why EU leaders decided to fold, rather than fight, are plain to see. They were laid bare in a recent speech by António Costa, who as president of the European Council convenes the EU leaders in their summits. “Escalating tensions with a key ally over tariffs, while our eastern border is under threat, would have been an imprudent risk,” Costa said. But none of this answers the question: What now?  If Europe has already ceded so much to Trump, is the entire bloc condemned to vassalhood or, as some commentators have prophesied, a “century of humiliation” on par with the fate of the Qing dynasty following China’s Opium Wars with Britain? Possibly — though a century seems like a long time.  Among the steaming heaps of garbage, there are a few green shoots. To wit: The fact that polls indicate that the average European wants a tougher, more sovereign Europe and blames leaders rather than “the EU” for failing to deliver faster on benchmarks like a “European Defense Union.” Europe’s current leaders (with a few exceptions, such as Denmark’s Mette Frederiksen) may be united in their embrace of Trump as Europe’s Godfather. But there is one Cassandra-like figure who refuses to let them off the hook for failing to deliver a more sovereign EU — former Italian prime minister and European Central Bank chief Mario Draghi. Author of the “Draghi Report,” a tome of recommendations on how Europe can pull itself back up by the bootstraps, the 78-year-old is refusing to go quietly into retirement. On the contrary, in one speech after another, he’s reminding EU leaders that they were the ones to ask for the report they are now ignoring. Speaking in Rimini, Italy, last month, Europe’s Cassandra summed up the challenge facing the Old World: In the past, he said, “the EU could act primarily as a regulator and arbiter, avoiding the harder question of political integration.” “To face today’s challenges, the European Union must transform itself from a spectator — or at best a supporting actor — into a protagonist.”

BERLIN — German Chancellor Friedrich Merz said he is mentally preparing for a long war in Ukraine — but wouldn’t be drawn on whether Berlin will deploy peacekeeping troops should there be a ceasefire. In a televised interview on Sunday he also said that if he hadn’t decided to alter Germany’s debt rules to allow it to massively invest in defense, the NATO alliance would probably have disintegrated in June. “I’m mentally preparing myself for the fact that this war could drag on for a long time,” he told ZDF when asked if he was hopeful that a ceasefire could be reached next year. “We’re trying to end it as quickly as possible, but certainly not at the price of Ukraine’s capitulation.” Last week Merz had expressed skepticism that U.S. President Donald Trump’s ongoing peace push with Russian President Vladimir Putin would yield results. “I would like the United States of America to work with us to solve this problem for as long as possible,” Merz said. “Diplomacy isn’t about flipping a switch overnight and then everything will be fine again. It’s a lengthy process.” Asked about security guarantees — intended to protect Ukraine from another Russian attack in case of a peace agreement — Merz said: “The number one priority is supporting the Ukrainian army so that they can defend this country in the long term. That is the absolute priority, and we will begin doing that now.” When pressed as to whether Germany would be ready to send troops to Ukraine in the event of a ceasefire, Merz stressed that every foreign troop deployment required Bundestag approval. He did not specify what a German deployment could look like or whether he supported such a step. Despite a huge expansion in military spending, Germany has struggled to recruit and train battle-ready soldiers, with troop levels flatlining at around 182,000 despite significant efforts to grow the force. Germany has struggled to recruit and train battle-ready soldiers. | Pool Photo by Daniel Bockwoldt via EPA During Sunday’s interview Merz defended his coalition’s historic decision to loosen the debt brake on defense spending — made possible by an unexpected U-turn by Merz’s conservatives right after the election — and even went so far as to link it to NATO’s survival. “We were essentially able to preserve NATO with our decision,” he said. “I was at the NATO summit in The Hague [June 24-25]. If we hadn’t changed the constitution and we hadn’t been willing to allow the Federal Republic of Germany to spend 3.5 percent on defense plus 1.5 percent on the necessary infrastructure, then NATO would probably have disintegrated that day. We prevented that.”

Growing international instability is prompting France and Germany to break a decades-old taboo by opening talks on how France’s nuclear deterrent could underpin Europe’s security. “France and Germany underline … that France’s independent strategic nuclear forces contribute significantly to the overall security of the alliance,” reads a five-page document outlining the conclusions of Friday’s Franco-German Defense and Security Council in Toulon. “France and Germany will start a strategic dialogue, led by the French Presidency and the German Chancellery.”  France is the EU’s only country with nuclear weapons. Amid Russia’s war in Ukraine and U.S. President Donald Trump’s unpredictability, President Emmanuel Macron has offered to start talks with European countries to discuss how France’s nuclear deterrent can contribute to the continent’s security.  German Chancellor Friedrich Merz said on the campaign trail he was open to the idea — a major about-face for Germany, as Berlin had repeatedly refused similar offers in past decades.  Under France’s nuclear doctrine, there is a “European dimension” to the country’s so-called vital interests — which the weapons are designed to protect. However, what exactly that European dimension entails, and in which circumstances France might deploy its nuclear capacity beyond its own borders, is left purposefully vague. Unlike the United Kingdom, France is not a member of NATO’s nuclear planning group. In Friday’s conclusions, France and Germany also pledged to implement decisions taken at this year’s NATO summit, meaning boosting defense spending to 5 percent of GDP by 2030 and increasing weapons arsenals.  Paris and Berlin announced a new Franco-German initiative to develop a European early-warning system: “Space-based missile early warning system based on ODIN’s EYE project and a network of ground-based radars.” It’s dubbed JEWEL and open to other European countries. France and Germany also used Friday’s council to push for a stronger EU role in Ukraine — and in Europe’s defense more broadly. On Ukraine, Berlin and Paris pledged fresh air defense support, promised to buy more arms from Ukrainian factories, and backed Kyiv’s integration into EU defense programs.  The two also called for more joint EU financing of military aid, explicitly linking it to building up Europe’s defense industry. They also backed joint projects with Kyiv under new EU investment schemes like EDIP and SAFE. They vowed tougher sanctions enforcement — targeting Russia’s “shadow fleet” used for oil exports and third-country suppliers of key goods used by the Kremlin’s war machine — and stressed the need for credible long-term security guarantees.  Hans von der Burchard contributed to this report from Toulon. 

LONDON — Former NATO boss George Robertson called for a more honest conversation between national governments and voters as they prepare for massive hikes in defense spending.  Robertson, the ex-NATO secretary-general who led a major review of the threats faced by the U.K., backed Britain’s decision to sign up to spending 5 percent of GDP on defense by 2032. But he said it would be especially painful for certain NATO member states, including the U.K.  He told POLITICO: “It will be painful, and it will be difficult, and it will require politicians to outline what the dangers and the risks actually are.” He added that the British public were currently “unaware” that the country lacks comprehensive air and missile defense — and that “if they were aware of it that might change opinions.” Bringing the public onside and persuading them of the imminent threat from Russia is one of the biggest risks to delivering higher spending in many NATO countries, he warned. Keir Starmer joined other countries in signing up to NATO’s flagship pledge following demands from U.S. President Donald Trump for European member countries to shoulder more responsibility. The British PM has faced criticism, however, for a lack of detail on how the higher spending total will actually be reached and for prioritizing defense while cutting other department’s budgets. In July Starmer was forced to reverse plans to slash Britain’s welfare budget by clamping down on disability benefits. The strategic defense review led by Robertson recommended that Britain move to “warfighting readiness” — but many questioned how the government would find the necessary funding, even before the 5 percent target was agreed. Robertson acknowledged “it won’t be easy” for the U.K. to deliver on its commitment, but said it had to ratchet up spending because at present “we’re underinsured, we’re under-prepared, and therefore we are not safe effectively.” He went on to say: “If you’ve been invaded, like in eastern Ukraine, what you spend on welfare and what you spend on justice and what you spend on education is almost irrelevant, because you are under the heel of an authoritarian regime.” A Ministry of Defence spokesperson said Britain was “entering a new era of warfighting readiness” which would be “driven by the biggest sustained boost in defense spending since the end of the Cold War.” They added that the strategic defence review, which the government has accepted in full “will make Britain safer from new threats in a more dangerous world, including by investing up to £1 billion in new funding for UK air and missile defense.” The Labour Party peer, who led the alliance between 1999 and 2003, also backed calls for European countries to redress the imbalance within NATO created by U.S. dominance. He complained that this had been a “convenient” state of affairs for all parties for too long, including the U.S. — since it givens them “a superiority inside the alliance, which magnifies American influence and American spending” The former NATO chief said Trump’s willingness to sign the communiqué at the recent NATO summit “vindicated” the conciliatory approach Starmer has taken. He expressed hope that Trump’s forthcoming trip to the U.K. would “cement” the U.S. president’s commitment to collective defense, which has at times appeared under question. Trump is due to visit `the U.K. in September for a rare second full state visit as Starmer seeks to further strengthen his relationship with the White House.

PRESTWICK, Scotland — The handshake trade deal between the EU and the U.S. has come under a lot of fire, but EU officials insist it’s the best the bloc could do if it wanted to avoid a damaging tariff war with Donald Trump. European countries were also in a weak position thanks to their own past decisions. Slashing defense spending after the end of the Cold War left them dependent on the U.S. military for security, while cutting off Russian energy exports left the bloc reliant on American liquefied natural gas. “It was never going to be between a good and a great deal, but between a bad and less bad one — we certainly believe this is less bad,” said a European Commission official, granted anonymity to speak freely, who called Brussels’ approach “strategic realism.”  Commission President Ursula von der Leyen’s negotiation space with Trump was always much smaller than many in Europe would have liked. The still-vague EU-U.S. deal took a lot of flak for political reasons, with complaints rife about how the bloc — despite its economic clout — submitted to a Trumpian worldview on trade. The power differential was even on display in how the leaders got to Scotland. Von der Leyen and her team flew in on two small chartered business jets; Trump arrived on Air Force One with an escort of U.S. fighters, while his sons and their families were in a black-and-gold Boeing 757 belonging to the Trump family empire. Politicians have been scathing about the deal — although national capitals weakened the EU’s position by lobbying fiercely against any Brussels retaliation to Trump’s tariffs in order to protect their domestic industries. French Prime Minister François Bayrou called the agreement “submission,” while German Finance Minister Lars Klingbeil denounced it as “weak.” Former Trade Commissioner Cecilia Malmström said the EU effectively condoned Trump’s bullying, cementing “a new trading order where tariffs are accepted as a geopolitical cudgel.” “Just the way [Trump] made von der Leyen come to his golf course in Scotland and then put up his thumb almost like a Roman emperor — that says it all,” Karel De Gucht, Malmström’s predecessor as the bloc’s trade chief, told Belgian daily De Standaard. But if politicians gnashed their teeth at the perceived unfairness of the one-sided tariffs, analysts breathed a sigh of relief.  “We believe that the EU-US trade deal was the best available for Europe,” read one note from investment bank Goldman Sachs. “The agreement puts the EU at the more favourable end of the international spectrum despite the EU’s comparatively large goods trade surplus and the US’s geopolitical leverage over Europe.” A comment from Deutsche Bank struck a similar tone, noting that with the deal, “the worse outcomes are avoided.” PAIN THRESHOLD Brussels is also cheering itself up by pointing out that London’s deal with Trump is even worse. Despite the U.K. getting a 10 percent tariff rate — better than the EU’s 15 percent — the U.K. rate is not a ceiling, said the EU official. Cheese is an example where the EU gets a 15 percent tariff but the U.K. faces 10 percent plus another 14.9 percent that the U.S. charges on cheese imports.  Commission President Ursula von der Leyen’s negotiation space with Trump was always much smaller than many in Europe would have liked. | Olivier Matthys/EPA “The 15 percent rate has caught the EU precisely at its pain threshold,” said senior researcher David Kleimann at ODI Global. It keeps the EU relatively competitive compared to the rates facing other economies. Kleimann also pointed out that the American economy has a very “limited ability” to replace highly innovative European products as the existing capacity is low and investments in new factories would be hard with a tight labor force. The Commission official also stressed that the EU avoided an escalating tariff war like that between China and the U.S. “We’re playing the long game,” they said, adding that such a retaliation ladder is “hard to retreat from.” According to Dan Mullaney, a former U.S. assistant trade representative for Europe, the EU couldn’t have hoped for a better outcome. “It’s not clear that following the tougher China course of immediate retaliation would have been successful.” China faced steep consequences for its retaliatory approach. While tariffs of over 100 percent may have dropped to 30 percent, ongoing negotiations risk triggering a return to those higher rates. Canada is also being penalized for retaliating against Trump’s tariffs. “It’s hard to see how that’s a better outcome than 15 percent all-in tariffs,” Mullaney said, calling the Commission’s approach the right one. He also added that Trump voiced “unprecedented public recognition … of the value and importance of the U.S.-EU relationship. That may prove transitory, but it’s significant.” IT’S THE ALLIANCE, STUPID The reasoning in Brussels is that avoiding a trade war is about more than just trade or even the economy; it’s also about preventing Trump from withdrawing from the transatlantic alliance and ending support for Ukraine. Von der Leyen pointed at NATO’s new and higher defense spending targets minutes after announcing the deal in Scotland. “Just a few weeks after the NATO summit, this is the second building block for reaffirming the transatlantic partnership,” she told a handful of Brussels-based reporters before heading back to the EU capital. EU trade chief Maroš Šefčovič, after his plane had landed back in Brussels, told POLITICO that the handshake at Trump’s golf course was about keeping the alliance alive.  At a press conference a day later, he again stressed: “It’s not only about … trade: It’s about security, it is about Ukraine, it is about current geopolitical volatility.” Brussels is keenly aware it can’t risk the trade dispute spiralling into the military sphere, where European countries are not currently prepared to mount a credible defense against Russia and to continue arming Ukraine without U.S. help. In Malmström’s words: “Maybe this was the only deal possible.” De Gucht also admitted that more is at stake than trade. “Imagine if there would be no deal and a trade war — do you really believe Trump would still keep supporting Ukraine, then?” he said. “Or rather: that he’d still sell weapons to Ukraine?” Koen Verhelst reported from Prestwick and Brussels. Antonia Zimmermann, Carlo Martuscelli and Jakob Weizman reported from Brussels. Hanne Cokelaere contributed to this report.

The trade deal struck by U.S. President Donald Trump and European Commission President Ursula von der Leyen on Sunday at his Scottish golf resort was hugely one-sided. The European Union faces the pain of 15 percent U.S. tariffs on most of its exports — and the bloc has had to make telephone-number-sized financial commitments both to import energy from the United States and to invest there. However, from the powerful German auto industry to the European aviation and semiconductor sectors, there are some winners from the outline accord — which has yet to be finalized in writing.  POLITICO’s reporting team breaks down what we know so far: Energy Autos Aviation Pharmaceuticals Technology Digital regulation Defense Steel Food and drink Investment ENERGY  What’s in the deal? As part of the agreement, Trump and von der Leyen agreed that the EU would purchase $750 billion of oil and liquefied natural gas from the U.S. — a figure that would also include other energy products such as nuclear fuel. That means $250 billion in new energy purchases each year, which the Commission chief said would also help end the EU’s remaining reliance on Russian imports. Who wins, who loses? In theory, the deal is a huge win for U.S. oil and gas firms. In practice, experts say it’s unworkable. For starters, hitting that target would require the EU to triple its U.S. energy imports, based on last year’s figures, while asking American firms to divert all their energy flows worldwide toward the bloc — and then some. In comparison, Russia’s total energy sales to the EU totaled just €23 billion last year. Brussels also has limited tools to make that all happen: Imports are firmly in the hands of private firms. By Victor Jack back to the top AUTOS  What’s in the deal? U.S. tariffs on cars and auto parts are being reduced to the baseline 15 percent — a level that matches the deal notched earlier this month by Japanese automakers. In exchange, the EU has agreed to lower its car tariffs from 10 percent to zero, trade spokesperson Olof Gill said. The devil is in the details, however, which remain sparse. Under the U.S.-Japan deal, the Asian country will take vehicles approved to U.S. automotive standards. A senior Commission official said the EU deal includes “a commitment to work together … to see where standards are already aligned or where we need to work more closely to align them in the future.” As POLITICO scooped, the executive previously floated the idea of matching U.S. autonomous driving standards, which was mentioned in Monday’s technical briefing as a possibility. Who wins, who loses? According to the German car lobby, this is a bad deal that will continue to burden the sector. It joined the American auto sector in decrying tariffs on cars and parts produced in Mexico, which remain at the higher 25 percent. The real loser is not the automakers, though, but their workers, according to Ferdinand Dudenhöffer, the director of Germany’s Center Automotive Research. He estimates that up to 70,000 jobs across European car companies and their suppliers could be lost as automakers move production to the U.S. to skirt the 15 percent tariff. By Jordyn Dahl back to the top AVIATION What’s in the deal? The EU-U.S. zero-for-zero tariffs deal on “all aircraft and component parts,” announced by von der Leyen, allows both plane makers and airlines to breathe a sigh of relief. The global supply chain that lies behind every aircraft makes this sector more vulnerable to trade barriers than others. Following the 17-year dispute between Airbus and Boeing that concluded in 2021, neither the European nor the American industries were interested in entering a new trade war involving aviation. Who wins, who loses? Although Boeing may have benefited from tariffs on its competitor Airbus in the short term, analysts note that the U.S. aircraft manufacturer would suffer more under EU retaliation. Instead, some U.S. airlines operating an Airbus fleet, such as Delta Air Lines and Spirit Airlines, would have immediately felt the impact of tariffs on their European suppliers. Among the losers of the zero-for-zero tariff are leasing companies on both sides of the Atlantic, which — if tit-for-tat tariffs had been introduced — would have been the tool used by airlines to avoid the extra charges. By Tommaso Lecca back to the top PHARMACEUTICALS What’s in the deal? Trump and von der Leyen flatly contradicted each other on Sunday, with the U.S. president saying the trade deal didn’t include pharmaceuticals — and the Commission chief saying it did. Commission officials clarified on Monday that the rate remains at zero for now. But Brussels is expecting a top tariff rate of 15 percent to take effect once the U.S. administration’s Section 232 investigation into the sector — under which tariffs can be imposed for reasons of national security — is complete. There are some exemptions for “certain generics,” von der Leyen said, although it’s not clear yet which. Who wins, who loses? Generics companies — those that make the cheapest drugs of all — say they have the most to lose because of their small margins, even if the eventual tariff rate is significantly lower than the 200 percent Trump had threatened a few weeks ago. Industry association Medicines for Europe wants more clarity on which drugs would see zero tariffs applied, and is pushing the EU and the U.S. to “expand the tariff-free list of medicines as widely as possible.” Pharma company Merck said it welcomed the fact that a deal has at least been made, while in Ireland — which is particularly exposed because of its huge pharma sector — business association Ibec said Europe had “capitulated.” By Mari Eccles back to the top TECHNOLOGY What’s in the deal? Sunday’s deal included chip equipment as one of the sectors that received a zero-for-zero tariff, meaning it’s exempt from the baseline 15 percent tariff. Von der Leyen underlined that the EU is and would remain a prominent buyer of American artificial intelligence chips. “U.S. AI chips will help power our AI gigafactories and help the U.S. to maintain their technological edge,” she said. Who wins, who loses? The zero-for-zero tariff was widely seen as a win for Dutch chip printing machine maker ASML, one of Europe’s largest firms by market capitalization. The machines that ASML ships are worth hundreds of millions of euros apiece. ASML didn’t commit to growth this year in mid-July amid the tariff uncertainty, but its stock gained 4 percent on Monday. Von der Leyen’s commitment to buy U.S. AI chips is a setback, though, for proponents of a more technologically sovereign Europe — since continuing to buy them prolongs the bloc’s reliance on U.S. tech.  By Pieter Haeck back to the top DIGITAL REGULATION What’s in the deal? Nothing. The Commission called the Trump administration’s bluff on its attempt to bend the EU’s rules — and for the time being it has paid off. “There is absolutely no commitment on digital regulation, nor on digital taxes,” said a senior EU official, adding that the Commission’s defense of the bloc’s regulator autonomy hadn’t received enough attention. Who wins, who loses? The EU’s digital rulebook — and in particular the Digital Markets Act and the Digital Services Act — has emerged unscathed. That wasn’t for a lack of pressure on the U.S. side, with Big Tech players like Meta and Apple becoming increasingly outspoken over the DMA. They are keeping up the pressure — the Computer & Communications Industry Association tech lobby group has just published a study that pegged the cost and lost revenues of the EU’s digital rules at $97.6 billion annually, including roughly $1 billion in DMA compliance costs alone. By Jacob Parry back to the top DEFENSE  What’s in the deal? Trump touted the purchase of “vast amounts” of U.S. military equipment — but senior EU officials pushed back, stressing that arms procurement was not negotiated as part of the agreement. “Arms procurement is not a matter for the Commission,” one official said, adding it “was not calculated in any way into the figures we talked about.” In short: There is no formal commitment to buy U.S. weapons. Who wins, who loses? The U.S. defense industry didn’t score a guaranteed win — but it may still benefit. EU officials acknowledged that Europe’s rising military budgets could favor American firms. “On the back of the NATO summit in The Hague, there is, of course, an understanding that our member states, with the Commission’s very active support, are increasing defense spending, and therefore that will directly or indirectly benefit the United States,” one official said. That dynamic could leave European defense firms uneasy as procurement decisions ramp up. By Chris Lunday back to the top STEEL What’s in the deal? Apparently, a return to quotas that sound pretty similar to the ones under the Biden administration. Above that, the 50 percent tariff would (most likely) remain in place. An EU official said on Monday that the level of the quotas themselves has not yet been negotiated. This will need more time than is available before Aug. 1. On top of that, the U.S. somewhat acknowledges that the EU is not the problem when it comes to global excess production of steel and aluminum. Brussels and Washington will discuss a “ring fence” to isolate themselves from that unfairly made steel from China, Indonesia, Egypt, Turkey and a host of others. Who wins, who loses? If the European steel industry can — at least to some degree — keep sending specialized products to the U.S., it will prefer that over a blanket 50 percent tariff. The real loser here might be China, however. If the U.S and EU indeed manage to build a steel wall around their markets — which would be a big if considering the U.S. lack of emissions trading — the Chinese strategy might actually see some serious counterweight. By Koen Verhelst  back to the top FOOD AND DRINK What’s in the deal? Certain agricultural products could enjoy a zero-to-zero tariff relationship with the U.S., von der Leyen told reporters, but the Commission president did not specify which goods these would be. The latest, from a senior Commission official, is that the EU will lower tariffs on what they consider “non-sensitive” agricultural goods from the United States, while “sensitive” agricultural imports will continue to face the current rates. Who wins, who loses? It’s too early to say. Hints are that U.S. nuts, pet food and bison could face easier entry into EU markets as “non-sensitive” agricultural goods, while U.S. beef — considered “sensitive” — will continue to face tariffs. However, negotiators are still negotiating over zero-to-zero tariffs and determining the placement of key agri-food goods, including spirits and wine, within the overall deal agreed by the leaders.  By Lucia Mackenzie back to the top INVESTMENT What’s in the deal? A commitment by EU companies to invest an additional $600 billion in the U.S. Far from a major concession to Trump, the pledge appears to amount to little more than window dressing. “It’s largely performative,” said Nils Redeker from the Jacques Delors Centre think tank. Brussels, in fact, won’t have the power to deliver on this promise, as the investments would come exclusively from the private sector, two senior Commission officials said. One said the figure was “based on detailed discussions with different business associations and companies in order to see what their investment intentions are.” Who wins, who loses? Extra investments from Europe are likely to boost the U.S. economy. However, it’s too early to say whether this additional funding will come at the expense of investments within Europe, which would dent EU growth.  By Gregorio Sorgi

During his first term, President Donald Trump surprised a number of world leaders by offering his cell phone number, urging them to ditch the usual diplomatic protocols and simply call him up. Trump’s affinity for frequent, often informal chit-chat is now a well-established aspect of his personality. And six months into his second term, world leaders, who want to remain in the president’s good graces, regularly call and text — sometimes to discuss matters of global import, sometimes just to schmooze. “He’s talking to a lot of leaders way more than anyone realizes,” said one person familiar with the president’s calls. “A lot of the calls are about specific things, real business, but there’s also more informal, personal talk.” Those leaders include French President Emmanuel Macron, Saudi Crown Prince Mohammed bin Salman and British Prime Minister Keir Starmer, who Trump will meet for a round of golf in Scotland on Monday, according to the person and two others familiar with the calls. The three, like others in this story, were granted anonymity to discuss private talks. The informality of these conversations, although hardly different from the off-the-cuff style Trump often showcases in public settings, can still be striking to aides listening on the other end of the line. A person familiar with one of the president’s conversations with Macron recalled the two leaders “bro-ing out” as they greeted one another. “It was oddly amusing — Trump would say “Emmanuellllll” and really draw out the l and then Macron would go, ‘Donaldddddd’ and draw out the d,” they recalled. “And it sort of went back and forth.” Foreign officials credit their ability to adapt to Trump’s freewheeling style to improved personal relationships, which, they say, is leading to more favorable outcomes. One European official pointed to last month’s NATO leaders summit in The Netherlands where Trump announced that he’d changed his mind about the alliance after meeting with cohorts he lauded as “great leaders.” He told reporters that he was departing feeling “differently” and had determined that the cause of European security was “not a rip off.” And since then he has agreed to authorize more defense aid for Ukraine so long as Europe foots the bill. “There’s less friction and more alignment in some cases,” said the European official. “Some of that is the result of a lot of leaders being more hands-on with Trump, and, yes, more solicitous in private.” In the spring, after Mark Carney got elected largely on his promise to play hardball with Trump, Sen. Kevin Cramer (R-N.D.) urged the Canadian prime minister to just call Trump directly to work things out. “Donald Trump likes that,” Cramer said at the time. “He’s flattered by direct phone calls.” In early March, Starmer used WhatsApp to message Trump as he sought to repair the breach between Trump and Ukrainian President Volodymyr Zelenskyy following their disastrous Oval Office meeting. The golfing trip to Scotland on Monday is “an opportunity for the PM to build personal rapport with Trump,” said one U.K. government adviser, speaking on condition of anonymity. Starmer, who colleagues describe as buttoned-up at work and personable in private, understands the importance of a personal relationship with Trump and worked hard with aides on showing the president his more relaxed side, according to two people with knowledge of his foreign policy strategy. “They have a good relationship but this is where Starmer will need to shine in an informal setting,” said the government adviser. “He’s good with the formalities around him.” The leaders’ private communication, however, is not a one way street. Trump, said one of the three people familiar with the calls, often initiates calls with bin Salman, Starmer and Israeli Prime Minister Benjamin Netanyahu. Once, when Starmer was meeting with Trump’s special envoy to the United Kingdom, Mark Burnett, the former The Apprentice executive producer dialed up Trump and handed over the phone midway through their meal. The conversation between the two leaders appeared informal, with a photo released by the U.S. Embassy showing Starmer chatting at the table while his chief of staff Morgan McSweeney, Burnett and the embassy’s Deputy Chief of Mission Matthew Palmer looked on. And it wasn’t the only such instance. Starmer told journalists he took a late-night call from Trump in May midway through watching a football match to seal a tariff reduction deal. “President Trump has great relationships with foreign leaders, which is why he has vastly outpaced his recent predecessors on bilateral visits at 23 meetings in just six months,” White House deputy press secretary Anna Kelly told POLITICO. The spontaneity, like most engagements with the president, is largely on his terms. Finnish President Alexander Stubb, for example, flew to Florida to play a round of golf with Trump. And when Trump screenshotted and posted an effusive series of text messages from NATO Secretary General Mark Rutte on the eve of last month’s summit, crediting him for the alliance’s adoption of a new defense spending pledge, it served as a reminder to other heads of state who frequently text the president that their confidential conversations could become public. During their in-person meetings at the White House, many leaders have tried to put the president at ease with flattery and deferential gestures, even gifts — South Africa’s president had two PGA golf pros tag along with him, while Starmer delivered a letter from King Charles III inviting Trump to a state dinner that will take place at Windsor Castle in September. But the more frequent — and mostly undisclosed — phone and text conversations allow some leaders, keenly aware of the premium the president places on personal relationships, to build more chemistry with Trump. Macron, one of the few world leaders who was in office during Trump’s first term, has been among the select few heads of state to disagree with Trump publicly, as he did during last month’s NATO summit where he groused about the U.S. tariffs on the European Union. “There’s a comfort level because they’ve worked with one another for a while now, so it allows him to be more forceful at times,” said the person familiar with Macron’s calls. “But he also values the relationship they’ve established, mostly in their private conversations.” On Friday when Trump was asked about Macron announcing that France will recognize Palestinian statehood amid Gaza’s continued bombardment by Israel, he shrugged it off. “He’s a very good guy, I like him,” Trump said of Macron. “But that statement doesn’t carry any weight.”

NATO is now “becoming the opposite of” obsolete because other members of the alliance are “paying their own bills,” U.S. President Donald Trump said Tuesday. Trump, who has repeatedly criticized NATO and expressed ambivalence about its collective defense clause, appeared to soften his stance on the military alliance. He told the BBC in an interview that NATO was doing “much better” and added: “I think collective defense is fine.” The comments come after NATO Secretary-General Mark Rutte traveled to Washington to meet with Trump on Monday, seeking to convince him of the value of backing the alliance and Ukraine. During the Oval Office meeting, Trump announced that NATO allies would finance the purchase of America’s Patriot missile defense systems and other weapons for Ukraine, in his most significant move to support Kyiv. Rutte also met with Trump at last month’s NATO summit in The Hague, where he infamously referred to the U.S. president as “daddy.” Trump, who has over recent days indicated that he is losing patience with Vladimir Putin over Russia’s increasing attacks on Ukraine and refusal to agree to a peace deal, again expressed his annoyance with the Russian president — but didn’t completely indicate a break. Asked by the BBC whether he was “done” with Putin, Trump said: “I’m disappointed in him, but I’m not done with him. But I’m disappointed in him.” On Monday, Trump threatened 100 percent tariffs on Russia if Putin doesn’t end the war with Ukraine in 50 days. This is a developing story.