Brussels Edition: Playing hardball

Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. Please participate in o

View in browser

Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. Please participate in our short survey. US President Donald Trump's shock threat to impose 30% tariffs on the EU has led to a renewal of efforts by some member states to play hardball if efforts to avert a trade war fail. France is gaining more support for its proposal to activate the bloc's most powerful trade tool in response. The so-called anti-coercion instrument gives officials broad powers to take retaliatory action, including new taxes on US tech giants, targeted curbs on US investments and limiting access to the prized EU market. More than half a dozen European capitals now back using the measure, giving trade commissioner Maros Sefcovic, who traveled to Washington yesterday, potential leverage as he tries to strike a deal. — John Ainger

What's Happening

Budget Battle | Germany rejected the European Commission's €2 trillion budget proposal hours after it was announced by Commission President Ursula von der Leyen. The package aims to fend off a range of challenges from rising global economic competition to increased defense demands. The commission also confirmed a €100 billion fund to support Ukraine. Defense Gap | EU defense industry chief Andrius Kubilius will visit Washington this week in a bid to ensure that the US pivot to the Indo-Pacific region doesn't create gaps in Europe's security. "We want to know what capacities precisely need to be replaced," he told us. Still a No | Slovak Prime Minister Robert Fico rejected guarantees offered by the commission aimed at mitigating the impact of the planned halt in Russian gas deliveries, vowing to keep blocking a new sanctions package against Russia until the issue is resolved. Ticking Bomb | Angst around how France will control its swelling budget deficit is returning to financial markets and may start to dent demand for the euro, according to analysts at ING, who called it a "ticking bomb." The euro touched its weakest level in a month this week as the French cabinet revived political tensions with proposals to sharply rein in the deficit. Italy, for one, wouldn't mind a weaker euro. Trade Optimism | Michael McGrath, the EU's justice commissioner, told us he's optimistic a deal will be reached with the US before August 1, when 30% tariffs are due to come into effect. On our podcast, he also discussed the EU's budget announcement and data protection issues. Listen in.

Around Europe

Anglo-German Pact | UK Prime Minister Keir Starmer and German Chancellor Friedrich Merz will sign a new Anglo-German treaty in London today that includes a commitment to assist each other in case of armed attack, part of a wider reset of ties. Merz's trip to London comes a week after France's Emmanuel Macron made the first state visit by a European leader to the UK since Brexit. Trump Effect | Trump had two demands of his NATO allies: one, to boost military spending; and two, to buy American. He's likely to only get one of those wishes, as Europe seeks to boost its own arms industry, potentially at the expense of the US'. Here's our deep dive.  Costly Inheritance | French far-right leader Marine Le Pen and her two sisters might be on the hook for more than €300,000 in allegedly misused EU funds. They lost a court fight over a challenge to a European Parliament order for their late father, Jean-Marie, to repay the money.  Spanish Homes | The number of homes for sale on Spain's main real estate listings website fell by 20% in the second quarter, the biggest drop since at least 2007 and a sign of the challenge the country faces to address its housing crunch. The pullback was even harsher in its two largest cities: Barcelona and Madrid. Here's why.  Fashion Crackdown | Italy is cracking down on a business model linked to some of the country's biggest names in fashion — like Armani and Valentino, which involves low paid workshops making high-price garments that are then exported across the world. It's threatening to jeopardize the "Made in Italy'' brand.

Chart of the Day

ASML, the Dutch company that's become a rare European tech champion, plunged the most since April after CEO Christophe Fouquet walked back the company's growth forecast for next year, blaming trade disputes and global tensions. The company — the only one that makes extreme ultraviolet lithography machines, which produce the advanced semiconductors that power artificial intelligence data centers and smartphones — is finding that Trump's trade policies are hurting many of its biggest clients.

Today's Agenda

All times CET 8:30 a.m. BTV interview in Brussels with commission Vice President Roxana Minzatu 12 p.m. Eurozone seasonally adjusted Inflation figures Informal meeting of competitiveness ministers in Copenhagen Commission President Ursula von der Leyen in Iceland, meets with Prime Minister Kristrún Frostadóttir German Chancellor Friedrich Merz and UK Prime Minister Keir Starmer hold talks in London Portuguese Prime Minister Luis Montenegro speaks at the state of the nation debate in parliament Commissioner Jessika Roswall participates in the 20th African Ministerial Conference for Environment in Nairobi

Like the Brussels Edition? Don't keep it to yourself. Colleagues and friends can sign up here. How are we doing? We want to hear what you think about this newsletter. Let our Brussels bureau chief know.

Follow Us

Like getting this newsletter? Subscribe to Bloomberg.com for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? Get in touch here. You received this message because you are subscribed to Bloomberg's Brussels Edition newsletter. If a friend forwarded you this message, sign up here to get it in your inbox. Unsubscribe Bloomberg.com Contact Us Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022