Latest news with #JacobFunkKirkegaard
France 24
3 days ago
- Business
- France 24
What we know so far about the EU-US trade deal
The stakes were high with a looming August 1 deadline and $1.9 trillion transatlantic trading relationship on the line. Many European businesses will breathe a sigh of relief after the leaders agreed the 27-country bloc will face a baseline levy of 15 percent instead of a threatened 30 percent -- but the deal will not satisfy everyone. Here is what we know so far: What did EU, US agree? Both sides confirmed there will be a 15-percent across-the-board rate on a majority of EU goods -- the same level secured by Japan this month -- with bilateral tariff exemptions on some products. The deal will bring relief for the bloc's auto sector, employing around 13 million people -- and hit by Trump with 25-percent tariffs, on top of a pre-existing 2.5 percent. "Obviously, it is good news for the car industry. So Germany will be happy. And all the EU members with auto supply chains, they go from 27.5 to 15 percent," said Jacob Funk Kirkegaard of the Peterson Institute For International Economics. A 15-percent levy will remain "costly" for German automakers, "but it is manageable", said trade geopolitics expert Elvire Fabry at the Jacques Delors Institute. While 15 percent is much higher than pre-existing US tariffs on European goods -- averaging 4.8 percent -- it mirrors the status quo, with companies currently facing an additional flat rate of 10 percent imposed by Trump since April. The EU also committed to buy $750 billion of liquefied natural gas, oil and nuclear fuels from the United States -- split equally over three years -- to replace Russian energy sources. And it will pour $600 billion more in additional investments in the United States. Trump said EU countries -- which recently pledged to ramp up their defence spending within NATO -- would be purchasing "hundreds of billions of dollars' worth of military equipment". Are there exemptions? Von der Leyen said the 15-percent rate applied across most sectors, including semiconductors and pharmaceuticals -- a critical export for Ireland, which the bloc has sought to protect. Trump in April launched probes that could lead to significantly steeper tariffs on the two key sectors, warning this month he could slap 200-percent levies on drugs. Brussels and Washington agreed a bilateral tariff exemption for key goods including aircraft, certain chemicals, semiconductor equipment, certain agricultural products and critical raw materials, von der Leyen said. The EU currently faces 50-percent tariffs on its steel exports to the United States, but von der Leyen said a compromise on the metal had been reached with Trump. "Between us, tariffs will be cut and a quota system will be put in place," she said. It is understood that European steel would be hit with 50-percent levies only after a certain amount of the metal arrived in the United States, but no details were initially provided on the mechanism. What happens next? The deal needs to be approved by EU member states, whose ambassadors will meet first thing Monday morning for a debrief from the European Commission. And there are still technical talks to come, since the agreement needs to be fully fleshed out. Von der Leyen described the deal as a "framework" agreement. "Details have to be sorted out, and that will happen over the next weeks," she said. In particular, she said there has yet to be a final decision on alcohol, critical since France and The Netherlands have been pushing for carve-outs for wine and beer respectively. "This is something which has to be sorted out in the next days," von der Leyen said.
Bloomberg
14-07-2025
- Business
- Bloomberg
US Threatens New Tariffs Against EU, Mexico
Jacob Funk Kirkegaard, Nonresident Senior Fellow with the Peterson Institute for International Economics, breaks down the impact of new tariffs against the EU and Mexico that were announced by the Trump administration and what impact that move could have on other trade relationships. (Source: Bloomberg)
Yahoo
11-06-2025
- Business
- Yahoo
Trump Just Got Some Bad News Before the G7 Conference
Trump's chaotic, spite-filled policies on trade and aid have led traditional allies to look elsewhere and form stronger ties among themselves. The New York Times reports that traditional allies like Japan, Britain, Canada, France, and others are working more closely together as they look to build an alliance system without the United States. These new alliances are already yielding results. Canada, Britain, and the EU just made a $170 billion defense deal. Britain, Canada, New Zealand, Australia, and Norway just placed significant sanctions on two far-right Israeli cabinet members. The deals made in recent weeks demonstrate the erosion of US diplomatic legitimacy that Trump's shirking of traditional Western order has caused—a troubling message, as the G7 summit is just days away. 'These are countries that share the broad policy goal of predictable, rules-based international affairs — obviously a goal that is no longer shared by the Trump administration,' Peterson Institute for International Economics senior fellow Jacob Funk Kirkegaard, told the Times. 'America first means America first,' he added, 'even if it means America more alone.' G7 organizers have planned various meetings without the United States, as Trump will arrive at the summit at odds on trade and tariffs with essentially every other leader there. 'Should we, in some ways, talk about a G6-plus-one?' Kirkegaard said.
Yahoo
24-04-2025
- Business
- Yahoo
Europe is shifting from supplying weapons to Ukraine to funding its defense industries
The EU is providing funds to help boost Ukraine's domestic arms manufacturing. It's a strategy to make Ukraine more self-reliant and ease pressure on Europe's own stockpiles. Ukraine is a far cheaper place to manufacture weapons at scale, one expert told BI. European countries are shifting their strategy when it comes to Ukraine, aiming to boost the country's capacity to produce enough weapons for its own defense rather than handing over ready-made weapons from their own depleting stockpiles. In March, the European Union said that half of a €2 billion ($2.3 billion) aid package, taken from frozen Russian assets, was being earmarked specifically to help Ukraine boost its own artillery production, the largest package of its kind to date. It's a trend that could have wider repercussions. Military analysts told Business Insider that directing funds to grow Ukraine's defense industry can help reduce Ukrainian dependence on foreign military aid and strengthen Europe's own growing defense sector. After decades of peace, Europe is rapidly bolstering its defenses amid waning US support and renewed threats from Russian President Vladimir Putin. Even so, its armaments industry is struggling to rebuild military stockpiles while simultaneously providing Ukraine with the shells and other weapons it needs to fend off Russia. Ukraine's own burgeoning defense sector offers a solution, Jacob Funk Kirkegaard, a senior fellow at the Bruegel think tank and a non-resident senior fellow with the Peterson Institute for International Economics, told BI. "It makes imminent financial and economic sense for especially richer Western European nations to directly finance the full utilization of expanding Ukrainian production capacity," he said. Ukraine, Kirkegaard added, is a far cheaper place to manufacture weapons at scale than Western Europe, and it already has a growing and innovative defense manufacturing sector. Refocusing European arms production in Ukraine itself is a "win-win," he suggested, enabling Europe to cut costs, boost a crucial ally, and also see weaponry tested and refined on the battlefield. In the early years of Russia's full-scale invasion, Ukraine was heavily dependent on its Western allies for weapons and ammunition, and was manufacturing only a small fraction of the weapons it needed. But it's fired up old Soviet weapons manufacturing plants and now produces around 40% of the weapons it uses at the front, Ukraine's President Volodymyr Zelenskyy said this month. Ukraine is also now a world leader in the development and production of cheap UAV drones, which have become ubiquitous weapons on the battlefield. "We've become the biggest drone manufacturer in the world, drones of tactical and strategic level," Rustem Umerov, Ukraine's defense minister, said in February. And as BI's Jake Epstein reported, Ukraine's drone makers aren't just building weapons — they are rewriting the rules of modern warfare at a pace and scale that few could have imagined only a few years ago. "With the rising importance of drones, the share of Ukrainian domestic production will also rise," said Kirkegaard. Europe's defense sector, meanwhile, has struggled to boost production to keep pace with demand, with military analysts at the UK's Royal United Services Institute in April identifying regulation and a lack of coordination as factors holding it back. "Increasing the output of domestic industry takes time," Jacob Parakilas, research leader for Defence Strategy, Policy and Capabilities at RAND Europe, told BI. "Ukrainian industry, which is already much more mobilized, can be effectively supported in the short term with direct investment and targeted knowledge transfer." Parakilas said that European countries would also get a major boost from working more closely with Ukraine to jointly raise production. "These approaches can happen simultaneously, and ideally produces synergies," he added, with "Ukrainian experience informing European understanding of the state of the art, while European money supports Ukrainian industry." Several European defense firms, including Rheinmetall in Germany, BAE Systems in the UK, and the Franco-German firm KDNS, have already set up manufacturing operations in Ukraine to make military supplies, including armored vehicles. Others, such as France's Thales, have entered into joint ventures with Ukrainian companies. And cooperation between Ukraine and NATO countries on arms production is steadily increasing. According to Ukrainian media, state arms manufacturer Ukroboronprom State Concern has been working with an unspecified NATO country to manufacture ammo since 2022. The ammunition is reportedly made to the alliance's standards, further integrating NATO and the Ukrainian military. Ukraine has also been working with Poland to manufacture shells and other equipment domestically since 2023. The latest aid packages will further boost these efforts. "This trend is expected to gain pace during 2025 as the US pivot away from Europe fuels increased defense spending across the continent," Serhii Kuzan, chairman of the Ukrainian Security and Cooperation Center, wrote for The Atlantic Council in March. Parakilas projected that with more European support, Ukraine could manufacture significantly more than 40% of its equipment domestically, and move into manufacturing more complex weapons and technology, which it still relies heavily on its allies for. But this, he said, meant the sector would become more exposed to Russian attacks and would "probably require greater and more careful investment to produce resilient returns." Even so, it seems likely that Western European and Ukrainian defense sectors are moving toward closer integration. "It will over time not be sensible to distinguish between the EU/European and Ukrainian defense sectors," Kirkegaard said. "They will become one." Read the original article on Business Insider
Business Insider
24-04-2025
- Business
- Business Insider
Europe is shifting from supplying weapons to Ukraine to funding its defense industries
The EU is providing funds to help boost Ukraine's domestic arms manufacturing. It's a strategy to make Ukraine more self-reliant and ease pressure on Europe's own stockpiles. Ukraine is a far cheaper place to manufacture weapons at scale, one expert told BI. European countries are shifting their strategy when it comes to Ukraine, aiming to boost the country's capacity to produce enough weapons for its own defense rather than handing over ready-made weapons from their own depleting stockpiles. In March, the European Union said that half of a €2 billion ($2.3 billion) aid package, taken from frozen Russian assets, was being earmarked specifically to help Ukraine boost its own artillery production, the largest package of its kind to date. It's a trend that could have wider repercussions. Military analysts told Business Insider that directing funds to grow Ukraine's defense industry can help reduce Ukrainian dependence on foreign military aid and strengthen Europe's own growing defense sector. Europe struggles to produce enough shells After decades of peace, Europe is rapidly bolstering its defenses amid waning US support and renewed threats from Russian President Vladimir Putin. Even so, its armaments industry is struggling to rebuild military stockpiles while simultaneously providing Ukraine with the shells and other weapons it needs to fend off Russia. Ukraine's own burgeoning defense sector offers a solution, Jacob Funk Kirkegaard, a senior fellow at the Bruegel think tank and a non-resident senior fellow with the Peterson Institute for International Economics, told BI. "It makes imminent financial and economic sense for especially richer Western European nations to directly finance the full utilization of expanding Ukrainian production capacity," he said. Ukraine, Kirkegaard added, is a far cheaper place to manufacture weapons at scale than Western Europe, and it already has a growing and innovative defense manufacturing sector. Refocusing European arms production in Ukraine itself is a "win-win," he suggested, enabling Europe to cut costs, boost a crucial ally, and also see weaponry tested and refined on the battlefield. Ukraine boosts weapons production In the early years of Russia's full-scale invasion, Ukraine was heavily dependent on its Western allies for weapons and ammunition, and was manufacturing only a small fraction of the weapons it needed. But it's fired up old Soviet weapons manufacturing plants and now produces around 40% of the weapons it uses at the front, Ukraine's President Volodymyr Zelenskyy said this month. Ukraine is also now a world leader in the development and production of cheap UAV drones, which have become ubiquitous weapons on the battlefield. "We've become the biggest drone manufacturer in the world, drones of tactical and strategic level," Rustem Umerov, Ukraine's defense minister, said in February. And as BI's Jake Epstein reported, Ukraine's drone makers aren't just building weapons — they are rewriting the rules of modern warfare at a pace and scale that few could have imagined only a few years ago. "With the rising importance of drones, the share of Ukrainian domestic production will also rise," said Kirkegaard. Europe's defense sector, meanwhile, has struggled to boost production to keep pace with demand, with military analysts at the UK's Royal United Services Institute in April identifying regulation and a lack of coordination as factors holding it back. "Increasing the output of domestic industry takes time," Jacob Parakilas, research leader for Defence Strategy, Policy and Capabilities at RAND Europe, told BI. "Ukrainian industry, which is already much more mobilized, can be effectively supported in the short term with direct investment and targeted knowledge transfer." Parakilas said that European countries would also get a major boost from working more closely with Ukraine to jointly raise production. "These approaches can happen simultaneously, and ideally produces synergies," he added, with "Ukrainian experience informing European understanding of the state of the art, while European money supports Ukrainian industry." European defense firms set up shop in Ukraine Several European defense firms, including Rheinmetall in Germany, BAE Systems in the UK, and the Franco-German firm KDNS, have already set up manufacturing operations in Ukraine to make military supplies, including armored vehicles. Others, such as France's Thales, have entered into joint ventures with Ukrainian companies. And cooperation between Ukraine and NATO countries on arms production is steadily increasing. According to Ukrainian media, state arms manufacturer Ukroboronprom State Concern has been working with an unspecified NATO country to manufacture ammo since 2022. The ammunition is reportedly made to the alliance's standards, further integrating NATO and the Ukrainian military. Ukraine has also been working with Poland to manufacture shells and other equipment domestically since 2023. The latest aid packages will further boost these efforts. "This trend is expected to gain pace during 2025 as the US pivot away from Europe fuels increased defense spending across the continent," Serhii Kuzan, chairman of the Ukrainian Security and Cooperation Center, wrote for The Atlantic Council in March. Parakilas projected that with more European support, Ukraine could manufacture significantly more than 40% of its equipment domestically, and move into manufacturing more complex weapons and technology, which it still relies heavily on its allies for. But this, he said, meant the sector would become more exposed to Russian attacks and would "probably require greater and more careful investment to produce resilient returns." Even so, it seems likely that Western European and Ukrainian defense sectors are moving toward closer integration. "It will over time not be sensible to distinguish between the EU/European and Ukrainian defense sectors," Kirkegaard said. "They will become one."
