Brussels Edition: Bracing for no deal

EU envoys will meet this week to decide what to do in case the bloc fails to reach a trade deal with the US by Aug. 1 to stave off high tariffs.

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Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. EU envoys are due to meet as early as this week to decide what to do in case the bloc fails to seal a trade deal with the US by Aug. 1. Talks continued through last week but a breakthrough proved elusive, prompting officials in Brussels to consider a no-deal scenario. Donald Trump's negotiating position is seen to have hardened ahead of the deadline. The US president's administration is pushing for a near-universal tariff at higher than 10%, with only a few exceptions for aviation, medical devices and some spirits, we're told. Even with an accord, EU officials expect the terms won't be as favorable as before. Meanwhile, companies on both sides are having to work around one of the factors they most fear: uncertainty. — Saim Saeed

What's Happening

Retaliation Warning | China yesterday threatened to respond to EU sanctions on its firms and banks for assisting the Russian war effort. The government in Beijing said it would take necessary steps to "safeguard the legitimate rights and interests" of its companies after the EU put them on its sanctions list for providing cryptocurrency services. Asian Summits | The fresh tensions come ahead of meetings this week between European leaders and their Japanese and Chinese counterparts, with expectations  for improved defense and trade cooperation with Tokyo contrasting with limited hopes for the talks in Beijing. Commission President Ursula von der Leyen and Council President Antonio Costa will first meet with Japanese Prime Minister Shigeru Ishiba tomorrow in Tokyo, and then with Chinese President Xi Jinping and Premier Li Qiang on Thursday in Beijing. Defense Deal | Germany and the US could strike a deal this week to dispatch additional Patriot air-defense systems to Ukraine as the nation continues to come under sustained missile and drone attack from Russia. Under the deal, Berlin will send two Patriot batteries of its own to Kyiv, while the US would replace the weaponry from industry stocks. Climate Warning | The European Central Bank has told Credit Agricole it may be fined for failing to meet expectations for managing climate risks, we understand. The bank will contest the potential fine, likely to be no more than €7 million, though a final decision hasn't yet been made. Iran Talks | Iran warned France, Germany and the UK against reinstating UN sanctions, saying it would compromise their right to any future role in nuclear negotiations ahead of talks in Istanbul on Friday. The US isn't participating, while Iran is hosting Russians and Chinese officials today to discuss its nuclear program.

Around Europe

Ukraine Arrests | Ukrainian authorities arrested two investigators as part of a probe into the country's anti-corruption bureau over suspected links with Russia. One employee was detained in Kyiv accused of sending data on the identities of Ukrainian law enforcement officers to Russia's intelligence services. People Smuggling | The UK will freeze the properties and bank accounts of financiers the government says are facilitating people-smuggling, as part of a new sanctions regime. Dozens of individuals and companies, spanning gang leaders, those trading fake passports and firms selling small boat equipment used to cross the channel from France to Britain, will be targeted when the sanctions are imposed tomorrow, according to a government statement. Investment Push | More than 60 of Germany's biggest companies unveiled an investment drive worth at least €100 billion in new projects to help jumpstart the country's sclerotic economy. The initiative — in concert with the government — will pour billions into planned and new capital investments, as well as research and development. High Temperatures | Another heat wave will hit southeast Europe this week, triggering weather alerts and stressing power grids. Southern Italy faces increased wildfire risks, while highs in Sicily are expected to hit 43°C. In Greece, temperatures could reach up to 43°C on the mainland and Athens is on high wildfire alert.  X Probe | Elon Musk's social media platform X said it won't accede to French authorities' demands in a probe into alleged bias and manipulation of the platform's algorithm. X said the investigation into suspected foreign interference is "distorting French law" and restricting free speech.

Chart of the Day

Stellantis announced a surprise €2.3 billion first-half net loss, with the maker of Jeep SUVs and Fiat cars citing the costs of trade upheaval and scrapped investments in electric and hydrogen vehicles to account for reduced demand. The reverse was also driven partly by Trump dialing back US support for electric cars since he returned to the White House.

Today's Agenda

All times CET EU Trade Commissioner Maros Sefcovic meets UAE Trade Minister Thani bin Ahmed Al Zeyoudi 4 p.m. Press conference with EU Migration Commissioner Magnus Brunner following meeting of EU home and justice ministers in Copenhagen 6 p.m. German Chancellor Friedrich Merz, Czech Prime Minister Petr Fiala joint news conference after talks in Berlin

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