Trump escalates, Ursula hesitates

Euractiv

2 days ago

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Today: EU-US trade talks analysis
Rutte meets Trump
Macron's defence splurge
MEPs fight over migration files
Around the bloc In the capital
It's legacy time.
Ursula von der Leyen now has 18 days to keep Donald Trump from slapping European exporters with a 30% tariff after he upped the ante over the weekend.
Make no mistake: Failure to secure better terms by the 1 August deadline would be disastrous for the EU's economy. The fact that Trump's escalation triggered little more than a whimper from Brussels over the weekend illustrated the degree to which von der Leyen's 'don't poke the bear' strategy has failed.
Instead of engaging with Trump directly, von der Leyen relied on her best man – Maroš Šefčovič, a Slovak-born former communist who has made a career in Brussels as his country's forever commissioner.
Šefčovič is a nice guy by all accounts but he crashed and burned. Barring a last minute reversal by Washington, which seems unlikely, von der Leyen's decision to hand full negotiating power to Šefčovič looks to have been a massive fiasco.
Which raises the question: Where was Ursula? Von der Leyen vowed to only to go go to Washington when a 'concrete' deal was ready. Well, it's ready alright.
European trade ministers are due to meet in Brussels today, following a Sunday gathering of ambassadors, who strongly supported von der Leyen's decision to keep a €21 billion retaliation package in the freezer until August 1, Euractiv's Thomas Møller-Nielsen tells me. The Commission will also present ministers with a separate list of countermeasures targeting roughly €72 billion worth of US exports, EU diplomats said.
"Both packages will be locked and loaded and ready to be used in early August, if negotiations don't yield an acceptable outcome,' said an EU diplomat.
But if the EU isn't willing to use the smaller retaliation package now, how credible is the larger threat? And remember, that package – designed as a response to 25% steel and aluminium tariffs – did not change after Trump bumped up those tariffs to 50%, mid-negotiations.
Trump, as ever, appears to have escalation dominance .
The mood music before Trump's Saturday announcement signalled that a preliminary deal was close. Trump termed the EU 'very nice' and Brussels was preparing to swallow the 10% tariffs already in place. Some doubted a dreaded Trumpian letter would materialise.
Now things are moving rapidly in the wrong direction but that seems to have triggered little soul searching in the Berlaymont. The EU is still sticking with diplomatic yoga, flattery and contortions with no sign of it working, Euractiv's Alexandra Brzozowski reports.
The conflicting messages from Paris, Berlin and Rome haven't helped matters. France wants a more assertive, punchy approach – and has emphasised the need to hit back with tariffs. Germany wanted a quick and dirty deal to spare its car sector. In the end neither has happened and the EU is still sitting in self-imposed limbo.
Calls for the EU to get real and retaliate are growing – American economist Paul Krugman, a vocal Trump critic, said the EU should hit back, and so do members of the European Parliament, like trade committee chair Bernd Lange. French MEP Marie-Pierre Vedrenne called for the EU's anti-coercion instrument to be put on the table for trade ministers today (it won't be). Enrico Letta is also fulminating. Still, Italy really, really doesn't want to escalate, as made clear by Giorgia Meloni last night.
The Commission is at pains to show it has other options. Von der Leyen announced a trade deal (or rather, an agreement to agree one) with Indonesia over the weekend. EU-Indonesia trade is worth roughly 2% of what EU-US trade is worth.
The good news is that the EU is in a better position than when Trump was threatening 50% tariffs; the bad news is that suddenly Brexit looks smarter: the UK escaped with just 10% tariffs. Trade is an area where the European Commission has the exclusive competence to act on behalf of EU countries. It's the one thing it's supposed to be good at.
Which is why capitals around Europe have a very Trumpian question this morning: 'What in the hell happened, Ursula?'
Rutte to meet Trump
Some people, however, are getting a lot of facetime with Trump. NATO boss Mark Rutte will meet him in Washington today, their first meeting since the Hague summit where European countries agreed to hike their defence spending. Trump has teased a mysterious big announcement on Russia today.
Trump has said he wants NATO countries to buy American weapons for Ukraine; in Brussels, EU defence commissioner Andrius Kubilius is encouraging countries to use their SAFE scheme loans to buy weapons for Ukraine.
Listen to what Lindsey Graham said on Sunday: "Stay tuned about seized assets ... stay tuned about a plan to go after the seized assets more aggressively, stay tuned for a plan where America will begin to sell to our European allies tremendous amount of weapons that will benefit Ukraine."
Will the former Dutch PM put in a good word for the EU on trade while he's there?
Parliament migration fight
Renew, the Greens, and the Left want to stop the ECR group from leading negotiations on a key migration bill. Those groups are calling for a vote in the Civil Liberties committee this week to overturn a controversial move by the EPP – backed by the far-right – that handed a key file to the ECR and broke Parliament rules on dossier distribution. Around the bloc
GERMANY | Friedrich Merz and Keir Starmer will sign a friendship treaty on 17 July this week, as first revealed by Euractiv. The first bilateral deal of its kind, it will put a strong focus on security and touch on last year's Trinity House defence pact.
FRANCE | Emmanuel Macron last night announced plans to raise defence spending by €3.5 billion in 2026, and then by a further €3 billion in 2027. More here.
The €40 billion austerity plan for 2026 that Prime Minister François Bayrou will unveil on Tuesday is expected to be rejected by all opposition parties. This could lead to the fall of the government when parliament votes on the proposal in autumn. Read more.
SPAIN | Plans for full fiscal autonomy for Catalonia will be announced by a joint committee comprising the national government and the regional government, as Pedro Sánchez comes under pressure from separatists to grant them control over taxation. Read more.
CZECHIA & SLOVAKIA | Czech PM Petr Fiala wrote to his Slovak counterpart Robert Fico asking him not to block the EU's 18th sanctions package against Russia, invoking their nations' shared history of Soviet occupation. On Saturday, Fico said he hoped to reach a deal by Tuesday. Read more. Also on Euractiv