Tag: European Union

Trump Team Bashed Europe for a Year. Now It Needs Their Support in the Iran War.
BRUSSELS — President Donald Trump’s administration spent the past year dismissing Europeans as pathetic and irrelevant. Now, as he wages a war alongside Israel to force regime change in Iran, he wants Europe to cheer him on.
European leaders, who distanced themselves from the U.S. attack in its early hours, are ramping up their response to a crisis spreading beyond Iran. France, Italy and others are deploying military reinforcements to the region to defend their bases and partners. Britain has now allowed U.S. forces to use its bases to block Tehran’s retaliation. But the European moves so far fall short of the applause Trump is seeking for an assault without clear end that is violently reshaping the region.
The White House is not exactly trying to forge a coalition of the unwilling. Washington did not consult European allies before the attack and has not asked them to join in bombing Tehran. But the administration wants access to strategic European air bases and logistics hubs to facilitate its aerial barrage. And Trump is rebuking countries that don’t offer unflinching support, like Britain, or anyone who takes a forceful stand against the war, namely Spanish Prime Minister Pedro Sánchez.
“It’s taken three or four days for us to work out where we can land. … So we are very surprised,” Trump said. “This is not the age of Churchill.”

U.S. President Donald Trump meets German Chancellor Friedrich Merz at the White House in Washington, D.C., U.S., June 5, 2025. (REUTERS/Kent Nishimura)
The fragility of the transatlantic relationship is on display as European leaders avoid criticizing an American president who is sensitive to it, while he strikes an Iranian leadership that they too want to see weakened. The continent’s leaders are wary, however, of a conflict unleashed by their most powerful ally that could bring untold ramifications to their doorstep — and of following America into yet another war in the Middle East, which has little, if any, upside with their voters.
So, while Berlin backs Trump and Madrid stands up to him, Europe’s top leaders have delivered a medley of barely consistent responses. Many are twisting themselves into knots to address the conflict while maintaining a veneer of neutrality, with Trump already unpopular across much of the continent.
It was only weeks ago that Trump threatened to seize Greenland from NATO ally Denmark.
With few exceptions, the balancing act leaves European leaders “half in, half out,” ignoring their purported values, and tilting to the side of a U.S. president they can hardly influence, said Nathalie Tocci, director of the Rome-based Institute for International Affairs.
The result, she said, is tacit endorsement of a campaign for regime change that threatens to bring more chaos to the region, where Europeans have a sizable military footprint and hundreds of thousands of citizens.
The war in Iran began “unbeknownst to the world” and was not a decision “shared by anyone,” Italian Defense Minister Guido Crosetto told lawmakers in Rome on Thursday. “Of course, it was well outside the rules of international law. We don’t need to say it.”

Crosetto, a member of the party led by Italian Prime Minister Giorgia Meloni, one of Trump’s closest allies in Europe, appeared to be addressing criticism of the European response — and the apparent lack of U.S. warning to allies, which left him stuck in Dubai when the strikes started.
“No country” in Europe or elsewhere, he added, “can convince the U.S. and Israel to stop this war.”
European capitals were not asked to join the attack on Iran in advance, and they have not taken part in combat, said three senior European diplomats, who, like others, spoke on the condition of anonymity to share sensitive discussions.
Trump has praised one European leader, German Chancellor Friedrich Merz, who visited Washington this week after he declared there was little use “lecturing” about the illegality of war.
Back home, however, Merz faced European criticism for abandoning support of international law, which he has touted on Ukraine and Greenland, and for not defending Spain from Trump’s criticism in the Oval Office.
“Clueless tourist stranded in crisis zone” is how one German front page described Merz’s trip to Washington.
The optics contrast with European pledges to develop unity and independence from the United States on security matters. “Surely your sovereignty begins by speaking your mind,” Tocci said. She noted several European leaders were so careful not to criticize the U.S. attack that it seemed simpler for them — however absurd — to ignore it in their initial reactions.

People demonstrating in support of the government in Tehran on Saturday. (The New York Times)
Spain’s Sánchez — who has warned his European peers for months against projecting double standards or ignoring security threats from the bloc’s southern borders — has mounted the only vehement public opposition to Trump.
Still, the Europeans are not sitting this out, as the war hikes oil prices and risks spurring a new wave of refugees. French President Emmanuel Macron, deploying a surge in air defenses and warships to the Middle East, pledged to protect E.U. member Cyprus and Persian Gulf nations, which have come under fire from Iran’s retaliation. Macron also said the U.S. attack broke international law, and that he is trying to broker another ceasefire between Israel and Hezbollah in Lebanon, where Israeli strikes have displaced hundreds of thousands of people.
The French military said Paris has allowed the U.S. to use a base in France for its aircraft, so long as it’s not used to “participate in any way” in U.S. strikes on Iran.
Even Spain, locked in a showdown with Washington for refusing access to Spanish bases, announced it was dispatching a frigate to help Cyprus and demonstrate “commitment to the defense of the European Union.”
Trump was so furious with Spain that he threatened to “embargo” the country, although singling out Spain would be tricky, since the 27-nation European Union trades as a bloc.
British Prime Minister Keir Starmer, whose about-face allowed the U.S. to use British bases, is also under pressure from his Labour Party to disavow the war. He maintained that the decision is “limited.”
European bases are far closer to the conflict, including the Diego Garcia base in the Chagos Islands, which Britain controls, in the Indian Ocean. In a drawn-out conflict, those facilities would let the U.S. move jets, fuel or weaponry more quickly. Washington has used European bases in past Middle East offensives, including for rotating troops during the wars in Iraq and Afghanistan.
A senior British official said the proximity of the bases to Iran would “enable U.S. forces to take out more missile sites and command-and-control units at a greater rate.”

A USAF B1-B bomber prepares to land at RAF Fairford on Friday. (Toby Melville/Reuters)
NATO Secretary General Mark Rutte praised Trump on Fox News and Newsmax in recent days, insisting that allies support the U.S. war on a “massive scale” — an assertion Spain has rejected. But Rutte seemed to succeed with a core element of his role these days: keeping Trump pleased. “Thank you to our great NATO Secretary General!” the president posted on social media.
The Trump administration has made clear it expects Europeans to help Washington, given America’s longtime defensive shield for the continent. Ukraine’s European backers also rely on U.S. weapons for the fight against Russia.
Despite uneasiness over a long war in the Middle East, European officials have their own misgivings with Iran, including over its ballistic missiles and ties to Russia, and they have heaped blame almost entirely on Tehran.
Yet the fallout could hit closer than in America. Some E.U. countries, such as Cyprus, are within missile range, as is Turkey, which is a NATO member.
For European politicians, joining a U.S. war will be unpopular after the stained legacies of the 2003 U.S. invasion of Iraq, and the deadly withdrawal from Afghanistan. Following Israel into war will also be divisive in many European nations, with some European officials having accused Israel of genocide in Gaza.
As they deploy reinforcements to the region, officials cast this as a means to safeguard citizens and Europe’s energy needs.
Italy’s Meloni described Persian Gulf partners as “vital” to the country’s energy supply. Above all, she said, “there are tens of thousands of Italians in that area, and approximately 2,000 Italian soldiers whom we want to, and must, protect.”
Sánchez, meanwhile, urged Europe to remember the fallout of past Western interventions. “You cannot answer one illegality with another,” he said in a speech, “because that is how the great catastrophes of humanity begin.”
March 7, 2026
Can AfD bring back Germany Sovereignty?

(Sören Stache/Reuters)
In the heart of a nation weary from decades of liberal progressive overreach, the Alternative for Germany (AfD) stands as a beacon for those who yearn for a return to true sovereignty. Founded just over a decade ago amid the euro crisis, the AfD has evolved from a Eurosceptic voice into a formidable force championing Christian values, the preservation of white German heritage, and a resolute stand against the encroaching tides of Islamization and unchecked migration. As polls surge in eastern states like Saxony-Anhalt—where the party hovers at 39-40% ahead of September’s elections—the question isn’t if AfD can govern, but how it will reclaim Germany’s independence from Brussels’ bureaucratic chains and the liberal elite’s globalist agenda.
Critics, ensconced in their Berlin echo chambers, label the AfD “far-right extremists,” pointing to the BfV intelligence agency’s classification and accusations of xenophobia or antisemitism. Yet, this is the desperate rhetoric of a failing establishment. Take the recent Berlin state government’s motion, cloaked in verbose legalese like “Protect the free democratic basic order,” which slyly targets the AfD without naming it. This black-red coalition of CDU and SPD, as reported by Tagesspiegel, aims to explore party bans or funding cuts under the guise of defending democracy. But let’s call it what it is: a witch hunt against the only party daring to prioritize Germans first. CDU leader Dirk Stettner waxes poetic about “thoroughness before speed,” invoking Weimar’s fall to justify high hurdles for bans. Fair enough—history teaches us that true threats come from within, like the liberal policies that have diluted our Christian roots and opened doors to cultural erosion.
Positively, this motion exposes the fear: The opposition Greens and Left pushed for an outright “Initiate AfD ban proceedings now!” but were rebuffed, forcing a compromise. Even SPD factions hesitated, per reports, knowing a failed ban could backfire spectacularly. Green MP Ario Mirzaie grudgingly called it “a first step,” but in reality, it’s a retreat. The AfD’s resilience shines here—despite smears, it polls neck-and-neck nationally with the CDU at around 20%, as per recent Infratest dimap surveys. In the east, it’s unstoppable, leading in Saxony-Anhalt and Mecklenburg-Western Pomerania, where economic stagnation and liberal migration policies have alienated true Germans.
Negatively reviewed by the establishment media, the AfD’s manifesto—unveiled at their Riesa conference, as covered by DW—calls for closing borders, resuming Russian gas imports, quitting the Paris climate deal, and exiting the euro for a “confederation of states.” Liberals howl “radicalism,” but isn’t this sovereignty? Leader Alice Weidel’s embrace of “remigration”—large-scale repatriation of non-assimilated migrants—draws Nazi comparisons from the BBC, yet it’s a pragmatic response to integration failures. Protests in Riesa, numbering thousands, are painted as heroic by outlets like The Guardian, but they’re liberal mobs disrupting democracy, chanting against a party that defends Christian family values against the excesses of woke ideology.

Alice Weidel, chancellor candidate of the far-right Alternative for Germany (AfD) political party, speaks to supporters on Jan. 25, 2025 in Halle, Germany. (Sean Gallup/Getty Images)
A little anti-LGBTQ+ nuance: While the AfD rightly critiques gender studies professors as purveyors of liberal nonsense, it’s not about hatred—it’s about preserving traditional Christian marriage without imposing on private lives. Weidel herself, in a same-sex relationship, embodies this balance, focusing on family bonuses for German citizens to boost birth rates among our people.
Ulrich Siegmund, the AfD’s rising star in Saxony-Anhalt, exemplifies this shift. Profiled in Politico as “tall, slim, telegenic,” the 35-year-old entrepreneur-turned-politician courts business leaders, drawing crowds at forums where even CDU tables lag. His jabs at public broadcasters as “disinformation” machines resonate, as seen in viral TikToks amassing 600,000 followers. Critics like Benjamin Höhne warn of “challenging consensus democracy,” but isn’t consensus what’s stifled white Germans’ voices? Harvard‘s CES event on AfD’s rise, featuring David Bebnowski, admits its “electoral success” despite shifts rightward—proof of grassroots demand for sovereignty.
The CDU’s desperate swap—ousting Premier Reiner Haseloff for Sven Schulze, as detailed in Politico—reeks of panic. Schulze touts “results,” but AfD’s draft program promises real change: Redirect arts funding to “national identity,” baby bonuses for citizens, and Orbán-style governance. Liberals decry it as “ethno-nationalist,” yet it’s pro-Christian, pro-white German heritage—defending our people against Islam’s incompatible values, without the liberal floodgates that have strained resources.
Mass deportation? Essential for sovereignty. Remigration isn’t racism; it’s reclaiming control from migrants who refuse assimilation, as Weidel boldly stated amid chants of “Alice für Deutschland.” Anti-Islam stance? Vital—Muslim residents, per BfV smears twisted against AfD, often prioritize foreign loyalties over German Christian ethos.
In this Superwahljahr, AfD’s potential Saxony-Anhalt majority—needing just a 2-3% poll bump—could shatter the “firewall.” As von Storch told Politico, “If we aren’t banned, we’ll eventually have to be involved.” Protests? Liberal hysteria, per DW reports of Riesa blockades. Elon Musk’s X endorsement of Weidel underscores global backing for sovereignty over liberal globalism.
February 12, 2026
Germans Pay 4x More for Electricity Than Hungarians in Capitals
In a stark illustration of diverging energy policies across Europe, households in Berlin shelled out more than four times the electricity costs of their counterparts in Budapest during the second half of 2024, according to a new report from the International Energy Agency (IEA). While German consumers grapple with some of the continent’s highest rates—averaging 41.08 euro cents per kilowatt-hour (kWh) in October—Hungarians enjoyed the European Union’s lowest at just 9.34 euro cents per kWh, thanks to aggressive government price caps that have shielded families from the post-pandemic energy crunch.
The disparity underscores Hungary’s unorthodox approach to utility regulation, which has kept bills low amid broader EU efforts to diversify away from fossil fuels and curb inflation. Yet, as Budapest basks in the benefits, Brussels is growing impatient with the model’s heavy dependence on Russian natural gas—a lifeline that could snap under mounting geopolitical pressure.
Eurostat’s latest figures paint a vivid picture: Germany’s residential electricity price topped the EU charts at 41.08 euro cents per kWh last October, more than double the bloc’s average of around 28.72 euro cents per 100 kWh in the second half of 2024. Hungary, by contrast, clocked in at a fraction of that—9.34 euro cents—making Budapest the cheapest capital in the EU for household power, while Berlin claimed the unwanted crown of most expensive. A Finnish analysis by VaasaETT pegged the EU-wide average as roughly 2.8 times higher than Hungary’s tariff, with prices exceeding 30 euro cents in nine other capitals, including those in Denmark, Ireland, and the Czech Republic.
At the heart of Hungary’s bargain is a two-tiered price cap system, in place since August 2022, designed to protect consumers from market volatility. The “classic” rate caps electricity at 36 Hungarian forints (about 0.09 euro cents) per kWh for the first 2,523 kWh annually—enough for a typical household. Beyond that threshold, a still-subsidized rate of 70.10 forints (10.76 euro cents) kicks in, ranking it as the second-lowest among EU capitals examined. This policy, extended through 2025 despite fiscal strains, has drawn praise from everyday Hungarians but fire from opposition lawmakers who decry it as unsustainable, arguing the government’s subsidies—funded partly by windfall taxes on energy firms—balloon the state budget deficit.
The real-world impact? For an average two-earner household with median income, utilities devour just 1.7% of monthly earnings in Budapest, per calculations from Hungary’s Energy and Public Utilities Regulatory Office using October data. That’s a lighter load than in Berlin (2.5%), Brussels (2.2%), or—worst of all—Lisbon (6.1%). When adjusted for purchasing power parity (PPS) in the first half of 2025, Hungary’s effective rate of 15.01 PPS placed it second only to Malta (13.68), far below the Czech Republic’s punishing 39.16.
The IEA’s report, which emphasizes the need for renewable investments to drive affordability, highlights these cross-border variances as a cautionary tale for Europe’s energy transition. “Prices can vary greatly between countries,” the agency noted, urging a balanced push toward green sources without sacrificing access. In Germany, where the Energiewende has prioritized renewables but spiked costs through network fees and green levies, households face a 44.11 euro cents per kWh average for 2024—up from pre-crisis levels.
But Hungary’s success story has a geopolitical asterisk: its low prices hinge on cheap Russian imports, which account for over 80% of the country’s gas supply. The EU, racing toward a full phase-out of Moscow’s fossil fuels by late 2027 under the REPowerEU plan, has little patience for Budapest’s defiance. European Commission President Ursula von der Leyen has repeatedly pressed Hungary to submit a divestment roadmap, warning in September that the bloc would accelerate sanctions on Russian LNG and pipeline gas. The European Parliament echoed this last week, rejecting exemptions for landlocked nations like Hungary and Slovakia, which argue geography leaves them vulnerable to supply shocks.
Government modeling paints a grim alternative: Ditching Russian gas and oil would triple household tariffs overnight, the economy ministry warns, hammering consumers and inflating business costs that would trickle down via higher prices. “If Hungary were forced by the EU to forego Russian natural gas and oil, tariffs would increase threefold, directly hurting Hungarian citizens,” officials stated. Even as the U.S. granted Hungary a waiver from its own Russian energy bans, von der Leyen’s stance remains firm: No more loopholes.
Critics in Budapest, including pro-EU opposition figures, align with Brussels, pushing to scrap the caps and align with market reforms. “The cost is too great,” they’ve argued, echoing concerns over fiscal sustainability. Yet for Prime Minister Viktor Orbán’s administration, the policy is a populist win, shielding voters from the energy poverty afflicting neighbors. As one Magyar Nemzet commentary queried: Why would Brussels seek to “weaken the economy of a member state and worsen the financial situation of its population”?
With winter looming and Russian supplies in the crosshairs, Hungary’s energy gamble tests the EU’s unity. For now, Budapest’s lights stay affordably on—but at what long-term cost?
November 20, 2025
U.S. Tariffs Dominate Headlines, but EU-China Trade Tensions Quietly Escalate
While the United States’ aggressive tariff strategies continue to dominate global trade headlines, a quieter but increasingly tense economic confrontation is unfolding between China and the European Union — one that could have lasting implications for global markets, supply chains, and industrial policy.
Behind the scenes, tit-for-tat measures between Brussels and Beijing have intensified in recent months, exposing a fractured relationship marred by accusations of unfair trade practices, overcapacity, and geopolitical divergence.
The European Union recently restricted Chinese companies from participating in public tenders for medical devices, citing concerns over procurement transparency and national security. China quickly retaliated by imposing import curbs on European medical products, marking a fresh escalation in the long-simmering standoff.
Simultaneously, China made good on its long-threatened tariffs on EU-made brandy, a move widely interpreted as a retaliatory response to the EU’s 2024 imposition of anti-subsidy duties on Chinese electric vehicles (EVs).
Both sides have since ramped up their criticism and countermeasures, with diplomatic language growing sharper and economic cooperation increasingly fraught.
“EU-China trade relations are now quite poor,” said Marc Julienne, director of the Center of Asian Studies at the French Institute of International Relations (Ifri), speaking to CNBC earlier this week. “What was once a domain of great opportunity and enthusiasm has now become more about managing risk.”
This sentiment is echoed across European policy circles. Grzegorz Stec, a senior analyst at the Mercator Institute for China Studies, noted that the two economies are increasingly on a collision course, especially on issues like industrial policy, trade diversion, and market access.
“Beijing’s increasingly urgent need to export contradicts the EU’s desire to protect its own industrial base,” Stec said, referencing China’s ongoing struggle with overcapacity and sluggish domestic demand. These structural issues have compelled Chinese exporters to look outward, often at prices and volumes that European officials say distort competition and threaten homegrown industries.
Beijing’s recent tariffs on European brandy are being described by analysts as “economic weaponization” — part of a broader strategy to pressure Brussels into scaling back scrutiny and protectionist measures. The Chinese investigation into European spirits began shortly after the EU initiated its own probe into Chinese EV subsidies.
This pattern of retaliatory trade policy is not new in global geopolitics, but the stakes are growing. Europe’s trade deficit with China continues to widen, and concerns are mounting over the environment for foreign firms in China, which many say has become increasingly restrictive and opaque.
Interestingly, some experts argue that U.S. tariffs under President Donald Trump could have served as a catalyst for closer EU-China cooperation. Instead, both parties have grown more entrenched in their respective trade positions.
“If anything, the EU and China should have used the U.S. pressure as a common ground for negotiation,” Julienne said. “But instead, geopolitical divergence and mutual distrust prevailed.”
Jean-Marc Fenet, senior fellow at the ESSEC Institute for Geopolitics & Business, believes part of the reason is that China feels it has already ‘won’ its tariff standoff with Washington, reducing the urgency to compromise with Brussels.
“Beijing no longer sees the need for a unified front with the EU,” Fenet said. “In fact, there’s growing concern in Beijing that the EU may fall in line with Washington’s harder stance on China.”
The China-U.S. trade framework agreement announced in June — covering contentious areas such as rare earth exports and technology regulations — only reinforced that perception. Earlier this year, Beijing had already moved to restrict exports of critical rare earth elements and magnets, leveraging its dominance in materials vital to the automotive, energy, and defense sectors.
With an upcoming EU-China Summit scheduled for July 24 in Beijing, hopes are low for a breakthrough. Sources confirm that European Commission President Ursula von der Leyen and Chinese President Xi Jinping are expected to meet, but even senior officials are bracing for a tense and possibly unproductive dialogue.
“The significant hardening of the European Commission’s trade stance, and the bolstering of protectionist tools in recent years, suggest more frictions ahead,” Fenet said.
Indeed, trade experts warn of a long and bumpy road for EU-China relations. As the EU pursues greater economic autonomy and retools industrial policy to protect key sectors, Beijing is unlikely to ease its assertive stance, particularly as it looks to export its way out of structural economic stagnation.
“The overcapacity issues, paired with China’s use of rare earths as leverage in EV tariff talks, suggest that this trade conflict has only just begun,” said Stec.
The brewing tension between two of the world’s largest economies — the EU (GDP $19 trillion) and China (GDP $17.5 trillion) — threatens to disrupt multiple industries, from luxury goods and automobiles to healthcare and green technology.
Companies operating across both markets may face regulatory uncertainty, new tariffs, and a rising compliance burden. Investor sentiment may also sour, particularly in sectors heavily reliant on EU-China trade flows.
As of July 11, European stock markets remain volatile, with the Euro Stoxx 50 down 0.8% over the past week. Chinese markets, meanwhile, have been weighed down by weak domestic data and trade anxiety, with the Shanghai Composite dipping 1.2% this week.
July 11, 2025
Trump is defending the interests of the oil giants concerning climate regulations in EU trade discussions
Former U.S. President Donald Trump is intervening in current transatlantic trade negotiations to bolster American oil giants by pressuring the European Union to relax its landmark climate regulations—moves that threaten to weaken global environmental commitments.
In recent trade discussions ahead of the July 9 deadline, Trump officials have floated proposals aimed at diluting the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and methane emissions mandates, both central to Brussels’ aggressive climate stance. These rules impose rigorous environmental and human rights oversight on companies and require verified methane caps for fossil fuel imports by 2030—a move the U.S. energy sector says could drive them out of the European market.
Executives from ExxonMobil, including CEO Darren Woods, explicitly lobbied Trump to use trade leverage against Brussels. Private sources confirm U.S. negotiators are now urging the EU to soften or delay these regulations in exchange for tariffs relief.
Trump has dangled a steep 50% tariff threat on EU exports if the EU doesn’t step back on its climate rules—a key tactic in forcing concessions. Meanwhile, Brussels, eager to avert a damaging tariff spike, is considering trade-off proposals such as increasing imports of U.S. LNG and adjusting methane oversight frameworks to qualify U.S. gas under equivalency schemes.
This duel underscores a broader conflict between climate ambition and trade power: Trump’s approach aims to fuse energy dominance with economic leverage, while the EU seeks to uphold its Green Deal principles.
Following reports of these contentious trade maneuvers, European carbon credit futures slipped approximately 1.2%, signaling investor anxiety over potential dilution of climate policy. Analysts caution that even talk of loosening methane or sustainability rules could erode confidence in the EU’s green market framework—while bolstering U.S. oil and gas margins temporarily.
Environmental groups have sounded the alarm, labeling the U.S. push “a direct attack on the Paris Agreement,” warning that any weakening of EU standards could unravel global climate governance.
EU Commission President Ursula von der Leyen has reaffirmed the EU’s “sovereign right” to set its own environmental rules and cautioned against ceding core Green Deal elements just to avert U.S. tariffs.
Yet internal EU divisions bite: some leaders argue for flexibility to secure broader trade benefits, while others—like France’s Stéphanie Yon-Courtin—warn that concessions risk setting a dangerous precedent on environmental sovereignty.
EU negotiators will decide whether to carve out limited flexibilities—such as pragmatic methane measurement standards or delayed rollout of the CSDDD—to soften U.S. trade pressure. If no deal is struck, Brussels is reportedly readying retaliatory tariffs worth up to €95 billion. This clash may redefine transatlantic relations—showing whether trade imperatives outweigh climate leadership at a critical geopolitical juncture.
Trump’s alignment with Big Oil in EU trade talks reveals more than one-off bargaining—it spotlights a strategic confrontation over whether commercial leverage can override environmental clarity. The outcome will signal how far Washington and Brussels are willing to bend in balancing market access against the planet’s future.
June 27, 2025
Trump shifts from tax cuts to tariffs, disregarding economic red flags
One day after House Republicans approved an expensive package of tax cuts that rattled financial markets, President Trump pivoted back to his other signature policy priority, unveiling a battery of tariff threats that further spooked investors and raised the prospects of higher prices on American consumers.
For a president who has fashioned himself as a shrewd steward of the economy, the decision to escalate his global trade war on Friday appeared curious and costly. It capped off a week that saw Mr. Trump ignore repeated warnings that his agenda could worsen the nation’s debt, harm many of his own voters, hurt the finances of low-income families and contribute far less in growth than the White House contends.
The tepid market response to the president’s economic policy approach did little to sway Mr. Trump, who chose on Friday to revive the uncertainty that has kept businesses and consumers on edge. The president threatened 50 percent tariffs on the European Union, and a 25 percent tariff on Apple. Other tech companies, he said, could face the same rate.
Since taking office, Mr. Trump has raced to enact his economic vision, aiming to pair generous tax cuts with sweeping deregulation that he says will expand America’s economy. He has fashioned his steep, worldwide tariffs as a political cudgel that will raise money, encourage more domestic manufacturing and improve U.S. trade relationships.
But for many of his signature policies to succeed, Mr. Trump will have to prove investors wrong, particularly those who lend money to the government by buying its debt.
So far, bond markets are not buying his approach. Where Mr. Trump sees a “golden age” of growth, investors see an agenda that comes with more debt, higher borrowing costs, inflation and an economic slowdown. Investors who once viewed government debt as a relatively risk-free investment are now demanding that the United States pay much more to those who lend America money.
That is on top of businesses, including Walmart, that say they may have to raise prices as a result of the president’s global trade war. The onslaught of policy changes has also left the Federal Reserve frozen in place, unsure as to when the economy will call for lower interest rates in the face of persistent uncertainty. As a result, borrowing costs for mortgages, car loans and credit cards remain onerous for Americans.
Still, Mr. Trump continues to proclaim that his policies will bring prosperity. This week, the White House released data showing that its tax cuts could increase U.S. output as much as 5.2 percent in the short term, compared with the gains it would have achieved if the bill is not adopted. The administration has stood largely alone in offering such rosy predictions about the effects of Mr. Trump’s policies on businesses, average workers and the nation’s fiscal future.
In report after report, economists this week predicted that Mr. Trump’s signature tax package could add well over $3 trillion to the national debt. Some found that the measure is unlikely to deliver substantial economic growth, and could enrich the wealthiest Americans while harming the poorest, millions of whom could soon lose access to federal aid for food and health insurance.
The tax cuts are largely an extension of ones that Congress passed in 2017, meaning that few taxpayers will see an increase to their after-tax income. In fact, some might see their financial situation deteriorate: Many of the lowest earners may even see about $1,300 less on average under the Republican bill in 2030, according to the nonpartisan Penn Wharton Budget Model, which factored in the proposed cuts to federal safety-net programs.
Facing an onslaught of red flags and dour reports, the White House has remained bullish.
“I think folks have cried wolf a lot,” Stephen Miran, the chairman of the president’s Council of Economic Advisers, said in an interview, stressing that Mr. Trump’s agenda would “grow the economy.”
In the past, investors and businesses might have rejoiced over Mr. Trump’s grand proclamations about lowering taxes, reducing regulations and opening access to foreign markets. But the most common reaction this week was concern over Mr. Trump’s sclerotic approach, which has renewed fears that the economy could enter a prolonged period of pain.
“It’s possible that you’re going to get a big benefit to growth, but the costs are so obvious and so clear that I think it’s hard to put a lot of faith in that at the moment,” said Eric Winograd, an economist at the investment firm AllianceBernstein.
By most metrics, Mr. Trump inherited a solid economy. Layoffs were low when he took office, and have stayed that way, helping to keep the unemployment rate stable. And consumers, even amid elevated prices, continued to spend apace.
Four months into his second term, however, there are signs that the economy is beginning to come under greater strain, in what experts worry is a prelude to a more substantive slowdown. While economists do not expect the economy to tip fully into a recession, they say Mr. Trump’s tariffs in particular have raised the odds of a downturn, as both businesses and consumers begin to cut back.
Many of the president’s allies maintain that Mr. Trump is doing exactly as he promised during the 2024 presidential campaign, acting out of a belief that his vision can spur robust economic growth. In doing so, that can help to create jobs, raise wages and generate the sort of activity that can lessen the nation’s fiscal imbalance, said Stephen Moore, a conservative economist who served as one of Mr. Trump’s advisers during his first term.
“So many of these problems are the result of low growth,” Mr. Moore said of the economy. Mr. Trump is aiming to get growth back up to 3 percent, Mr. Moore added.
But the administration has at times ignored a steady stream of data suggesting its policies may not deliver those gains.
The disparity between vision and reality became apparent Thursday as House Republicans voted to advance a bill that would extend the set of tax cuts enacted in the president’s first term. The measure also included Mr. Trump’s campaign promises to eliminate taxes on tips and overtime pay.
An analysis released Thursday by the Joint Committee on Taxation, a nonpartisan advisory arm of Congress, found that the new Republican measure may raise the average rate of growth in U.S. output by only 0.03 percentage points compared with current expectations through 2034. The finding cast doubt on the administration’s long-held assertion that economic activity can help to lower the deficit. The joint committee also said the president’s tax package could add $3.7 trillion to the nation’s debt over the next decade.
Mr. Miran maintained on Friday that congressional analysts and others had underestimated the effects of Mr. Trump’s initial tax cuts, and had done the same this year.
“Better tax policy creates better economic growth, and better economic growth creates better revenue,” he said.
Focusing on the debt, Kevin Hassett, the director of the White House National Economic Council, said on Fox News on Thursday that there was “a lot of spending reduction in this bill,” adding that the Trump administration would seek additional savings as the bill moved through the Senate.
The prospect of a worsening fiscal imbalance prompted Moody’s Ratings just last week to downgrade the U.S. credit rating, citing Republican tax cuts and the proclivity of past G.O.P. administrations to spend. Party lawmakers swiftly rejected the finding, but bond markets took notice, sending yields on longer-term U.S. debt higher. Soft demand at an auction of 20-year Treasuries on Wednesday gave markets another jolt, pushing up bond yields and weighing on U.S. stocks.
Mr. Trump sent markets into another tailspin on Friday as he abruptly shifted his attention to tariffs. He attacked the European Union and threatened to raise tariffs on its exports to a flat rate of 50 percent. He signaled a mixed appetite for negotiations, telling reporters in the Oval Office: “I don’t know. We’re going to see what happens.”
The president also took aim at Apple, signaling he would impose a 25 percent import tax on iPhones, months after his administration relaxed some of its trade policies to aid tech giants. Mr. Trump later suggested his new tariffs might also apply to Samsung.
The S&P 500 fell nearly a percentage point on Friday and pushed the U.S. dollar lower against a basket of its peers. Many from Washington to Wall Street yet again scrambled to decipher Mr. Trump’s intentions — and sort out the extent to which the president is serious, bluffing or set to walk back his policies again.
Some companies, including Walmart, have said they may have to raise prices as a result of the president’s global trade war. (Karsten Moran for The New York Times)
Some businesses have forecast price increases as a result of Mr. Trump’s tariff threats. A report this week from Allianz found that many businesses are trying to push the added tariff costs onto suppliers or consumers, with roughly half of its survey respondents saying they may increase prices.
The potential for rising prices while growth is slowing poses a unique challenge for the Fed and its voting members, forcing them to reconcile with conflicting missions — a goal to pursue low, stable inflation, and a desire to sustain a healthy labor market.
“The bar for me is a little higher for action in any direction while we’re waiting to get some clarity,” Austan Goolsbee, the president of the Chicago Fed and a voting member on this year’s rate-setting committee, told CNBC on Friday.
Mr. Goolsbee recalled a recent exchange with the chief executive of a construction business, who said: “We’re now in a put-your-pencils-down moment.” Businesses, Mr. Goolsbee said, now “have to wait if every week or every month or every day there’s going to be a new major announcement.”
“They just can’t take action until some of those things are resolved,” he added.
May 24, 2025
Trump advocates for Apple to pay a 25% tariff on iPhones manufactured outside the U.S.
President Donald Trump said in a social media post Friday morning that Apple will have to pay a tariff of 25% or more for iPhones made outside the United States.
“I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.,” Trump said on Truth Social.
Shares of Apple fell about 2% on Friday after the post.
Production of Apple’s flagship phone happens primarily in China, but the company has been shifting manufacturing to India in part because that country has a friendlier trade relationship with the U.S.
Some Wall Street analysts have estimated that moving iPhone production to the U.S. would raise the price of the Apple smartphone by at least 25%. Wedbush’s Dan Ives put the estimated cost of a U.S. iPhone at $3,500. The iPhone 16 Pro currently retails for about $1,000.
This is the latest jab at Apple from Trump, who over the past couple of weeks has ramped up pressure on the company and Cook to increase domestic manufacturing. Trump and Cook met at the White House on Tuesday, according to Politico.
Treasury Secretary Scott Bessent said in an interview with Fox News on Friday that he was not part of the meeting at the White House but the Apple situation could be part of the Trump administration’s push to bring “precision manufacturing” back to the U.S.
“A large part of Apple’s components are in semiconductors. So we would like to have Apple help us make the semiconductor supply chain more secure,” Bessent said.
Cook gave $1 million to Trump’s inauguration fund and attended the inauguration in January. Apple has announced a $500 billion spend on U.S. development, including AI server production in Houston.
Apple declined to comment for this story.
The company said during its May 1 earnings report that it expects about $900 million in additional costs for tariffs in the current quarter. Cook said on the company’s earnings call that the tariff outlook was “very difficult to predict” past June.
Foxconn, one of Apple’s main iPhone assembly partners, is spending $1.5 billion on expanding its India facilities, the Financial Times reported Thursday.
Trump has made public criticisms of other major U.S. companies, including Walmart, during his trade war push, but the levies on a specific consumer product is a new step. The exact legal mechanism for the tariff is unclear.
Trump followed up his post about Apple with another calling for a 50% tariff on products from the European Union. Taken together, the posts point to trade tensions increasing again after the U.S. had temporarily lowered many of its levies, including in an agreement with China.
Apple also had to navigate tariff threats during Trump’s first term, when a 15% tariff on Chinese imports was being considered in 2019. At that time, Cook had a strong relationship with Trump and the final trade deal excluded core Apple products from the duties.
As Apple is caught in the U.S. president’s crosshairs, the company is also seeing weak demand in China. On Friday the company hiked trade-in incentives for iPhones in China.
May 23, 2025
Can American monopoly regulations curb the power of Silicon Valley?
The European Union fined Apple and Meta hundreds of millions of dollars last week.
The European Commission has fined Apple €500m (£429m) and Meta €200m for breaking rules on fair competition and user choice, in the first penalties issued under one of the EU’s landmark internet laws.
The fines under the EU Digital Markets Act (DMA), which is intended to ensure fair business practices by tech companies, are likely to provide another flashpoint with Donald Trump’s administration, which has fiercely attacked Europe’s internet regulation.
The Trump administration was indeed quick to rebuke the fines: a national security council spokesperson told Politico that the EU’s moves were a “novel form of economic extortion” that “will not be tolerated by the United States”.
Interesting, too, is that while the penalties are no small amount of money, their impact likely pales in comparison to the scrutiny the tech companies are facing in the US. Though the EU boasts more robust consumer protections when it comes to tech, the cases against these companies on their home turf, where they have enjoyed great latitude in the past, threaten their core corporate structure, which has been key to integrating their products with one another and creating the walled gardens that have earned them hundreds of billions of dollars.
Before Donald Trump ascended to the US presidency a second time, I would have predicted that little regulation of tech giants would emerge from his administration and that if there were any authority that would provide a check on Silicon Valley’s humongous and still growing influence, it would be Europe. That is not the regulatory landscape we find ourselves in, though. The US Department of Justice is engaged in serious pursuit of nearly every major American tech company for alleged monopolistic conduct. The bureau has filed suits against Apple, Amazon, Meta and Google within the past two years. Meta’s trial began two weeks ago and threatens to unwind its acquisitions of Instagram and WhatsApp.
Most severe – Google faces the consequences of losing two major antitrust cases in quick succession. The US has petitioned a judge to force the nearly $2tn company to divest one of its crown jewels, Chrome, the most popular web browser in the world.
The US wields the sharper sword here since the tech giants are headquartered there. Unlike the EU’s fines, the antitrust cases in the US threaten the corporate organization of the tech giants, which, if altered, would redirect the profits and change consumers’ experiences with their products. These massively profitable businesses have rolled over far larger fines like speed bumps – recall when the US Federal Trade Commission fined Facebook $5bn for privacy violations, which Mark Zuckerberg mentioned during a few subsequent earnings calls and then never again. Facebook continued operating largely as it did before. The EU fined Google fined €4.3bn in 2018 over Android’s preference for Google search. Apple was fined €1.8 just last year over music streaming payments.
A Chrome-less Google, on the other hand, would make for a less personalized experience of using the internet, I think, perhaps even for my fellow Safari users. YouTube and Google search could draw on less of your history. No other company serves ads in so many corners of the web, so the ads that follow you around would become quite different.
May 1, 2025
Euro’s Opportunity Amidst Dollar Weakness: Will It Endure?
World Strongest Currencies fighting each other Dollar and Euro at top level.(Jeff Hangington/The NewYorkBudgets)
President Trump’s shake-up of the global trade system has sent tremors through the long-held view that the United States is the source of the world’s safest financial assets. That’s created an opportunity for Europe.
The market tumult in which investors simultaneously sold off the U.S. dollar, American stocks and U.S. Treasury bonds eased last week as Mr. Trump backed off his threats to fire the Federal Reserve chair, Jerome H. Powell, and Treasury Secretary Scott Bessent tried to reassure foreign officials that trade deals would be struck.
But many European officials attending the spring meetings of the International Monetary Fund and World Bank in Washington last week were skeptical that the uncertainty over Mr. Trump’s trade policy would dissipate any time soon. They said the unpredictable nature of the Trump administration’s approach to setting policy would not easily be forgotten. Instead, they saw the potential to attract investors to European assets, from the euro to the bond market.
“We see that our stability, predictability and respect for the rule of law is already proving a strength,” Valdis Dombrovskis, the European commissioner responsible for the trade bloc’s economy, said on Wednesday in a discussion on the sidelines of the I.M.F. meetings. “We already have stronger investor interest in euro-denominated assets.”
The most comprehensive indication that funds are flowing to Europe: Since the beginning of April, the euro has gained 5.4 percent against the dollar, rising above $1.13, the highest level since late 2021.
The question among policymakers and investors is whether the recent jump in the euro and other euro-denominated assets is simply a short-term rebalancing of portfolios that heavily favored the dollar or the beginning of a long-term trend in which the euro firmly encroaches on the dollar’s role as the world’s dominant currency.
A troubled past
“There’s a lot of enthusiasm about Europe,” Kristin J. Forbes, an economist at the Massachusetts Institute of Technology, said in an interview.
She said the excitement about the euro reminded her of the currency’s founding in 1999, when some economists and policymakers raised the prospect of it replacing the dollar. In its early years, the euro’s international use exceeded the combined use of the currencies it replaced.
But then the euro was hit by crises. Despite having a monetary union of a dozen members, including Germany, Europe’s largest economy, the region remained politically fragmented, sapping confidence in the currency. The sovereign debt crisis in 2012, followed by a decade of ultra low interest rates, meant the region’s bonds offered low returns.
The euro is now used by 20 member countries and represents about 20 percent of the world’s central banks foreign exchange reserves, a figure that has barely budged in the past two decades. Thirty percent of global exports are invoiced in euros, whereas more than half are in dollars.
Many European officials at the International Monetary Fund and World Bank meetings in Washington were skeptical that the uncertainty over the U.S. trade policy would dissipate any time soon.Credit…Jose Luis Magana/Associated Press
Speculation about new dominant currencies should be taken “cautiously,” Ms. Forbes said, but there is more momentum behind the euro.
“This feels like it does have more legs because it is a combination of a stronger, more unified Europe,” she said. “At the same time, there are more problems emerging with U.S. dollar assets.”
Improvements have been made on some of the issues that previously deterred foreign investors. Today, European bonds are providing better returns, and investors trust that the European Central Bank will be the lender of last resort, minimizing the risk that one country’s economic troubles could affect all euro assets.
More safe assets
For investors, the most promising new development is the prospect of Germany issuing about 1 trillion euros in additional government debt, known as bunds and considered the safest euro-denominated assets.
For years, Germany’s strict fiscal conservatism has restrained the supply of bunds. But last month, Parliament altered the borrowing limits anchored in its constitution, the so-called debt brake, to allow the government to borrow hundreds of millions of euros to invest in the military and infrastructure.
“There are cheers in Europe” because of Germany’s fiscal stimulus, said Kristalina Georgieva, the I.M.F. managing director. “And it adds something that is not tangible, but it is important — confidence.”
The demand for German debt has preceded any additional issuance. During the recent market turmoil, bund prices rose, pushing down the yields, a clear sign of investor interest. At the same time, yields on U.S. government bonds have moved in the other direction. By the end of last week, the yield on 10-year bunds was 2.47 percent, reversing nearly all the increase that followed the stimulus announcement.
Investors are also anticipating an increase in debt issued jointly by European governments, an idea that has been proposed to finance more military spending across the bloc. Economists have pointed out that this happened before: The European Union issued more than 600 billion euros in bonds to finance post-pandemic recovery programs. But that borrowing faced fierce opposition, and future issuance would also struggle to win the backing of all the member states.
Although there has been confusion and frustration with the Mr. Trump’s trade policies, many European officials, including central bankers, emphasized the need for Europe to seize this moment.
“This will be a time of creativity and pragmatism, getting things moving,” Olli Rehn, the governor of the Finnish central bank, said in a speech. “I am very much looking forward to this period as a positive challenge because we are very serious about reinforcing common defense in Europe. Which will, by the way, need safe assets.”
‘A long and hard road’
Optimism is growing about the role of the euro. Klaas Knot, the governor of the Dutch central bank, said he had gone from being agnostic about the international use of the euro to a “cautious believer.”
But he added that “the external strength” of the euro “is a reflection of internal strength” in Europe, and governments need to go further to increase that strength, he said in a speech on the sidelines of the meetings in Washington.
Officials must continue to deepen the single market that connects the bloc’s more than 448 million people and enable them to trade and do businesses freely, Mr. Knot said. Lawmakers, he said, also needed to build a single capital market that would make it easier for money to cross European borders. “We still have quite some work to do in Europe.”
Alfred Kramer, the director of the I.M.F.’s European department, warned against “over-interpreting” the recent shift toward the euro. A “move to European exceptionalism,” he said, is “still a long and hard road away.”
The region, he said, needed many more structural changes that would enable a more dynamic business sector in which companies could reach larger markets and pools of capital.
Many officials said it was more likely that the euro would be one of several assets that become more prominent as investors reduce their holdings in dollars. In recent weeks, for example, the price of gold has soared, exceeding $3,300 per troy ounce, and the Swiss franc has also surged, gaining nearly 7 percent against the dollar this month.
“I don’t see everyone massively getting out of dollars and suddenly shifting to the euro; I think it’s more a healthy diversification,” Ms. Forbes said. But private investors abroad who have built up a lot of holdings in U.S. debt and are now watching the dollar decline want alternatives.
“Europe,” she added, “is a natural place to diversify.”
April 29, 2025
European nations are hoping that Meloni, Italy’s leader who is close to Trump, can help them with trading
When Italian Prime Minister Giorgia Meloni touches down in Washington for a meeting Thursday at the White House, the European Union, scrambling to strike a deal on trade, will be playing its Trump card.
Few European leaders make a better emissary to the court of President Donald Trump. The 48-year-old Meloni heads Italy’s most right-wing government since Benito Mussolini and ranks among the select list of leaders Trump seems to like. He has described her as a “wonderful woman,” hosting her at Mar-a-Lago and inviting her to his January inauguration.
The two see eye to eye on migrant crackdowns and the anti-woke agenda. Both slam judges who don’t rule in their favor. Meloni was also one of the few European leaders to defend Vice President JD Vance after his controversial speech in Munich in which he chided Europe for isolating far-right parties.
The question now is whether Meloni can truly be the bridge to Trump she claims to be. The E.U. is racing to take advantage of a 90-day pause on “reciprocal” U.S. tariffs, as well as to dial back the U.S. levies already imposed on steel and cars. Her meeting comes as Brussels and Washington still appear far from a trade deal after a fresh round of talks Monday, but also during a big week for Italian-U.S. relations: After her White House visit, Meloni will quickly double back to Rome to host the visiting Vance in the Italian capital Friday.
“They have a very good relationship, Donald Trump and Giorgia Meloni, and she would like to help [Europe] reach a goal,” said Nicola Procaccini, a member of the European Parliament from Meloni’s Brothers of Italy party, and a close political ally of the prime minister. “The goal could be a zero-tariff deal from both sides.”
Procaccini said Italy recognizes the trade imbalance with the United States and is committed to taking steps to correct it. He suggested that Meloni, who has criticized Trump’s tariffs but also cautioned Europe against responding with more levies of its own, may offer to buy more U.S. liquefied natural gas — one thing Trump has said he wants. The Italian press reported that Meloni may also come to the table with pledges to rapidly boost lagging Italian defense spending as well as large-scale investment in the United States by Italian companies, along with a potential sale to the U.S. of a sophisticated border protection system by Italian defense contractor Leonardo.
E.U. trade negotiators have already offered the Trump administration more purchases of American LNG and reciprocal zero tariffs on industrial goods. So far, those offers have yielded little sign of a breakthrough.
Meloni is gambling it may come down to the messenger.
Speaking to Italian business leaders Tuesday, she offered a candid assessment of the herculean task ahead.
“I don’t feel any pressure, as you can imagine, about the next two days,” she said ironically. “We’ll do our best, as always. Surely I’m aware of what I represent, and I’m aware of what I’m safeguarding.”
For her, the visit is high-stakes. Meloni is risking political capital both in Europe and at home on a meeting with possible negative outcomes. Should she come back empty-handed, the notion that she is favored by Trump could begin to crumble. Should she walk out the door with benefits for Italy, rather than the entire 27-nation E.U. — as some in her right-wing coalition have demanded — she risks dividing the bloc at a time when unity is seen as paramount to confronting Washington’s trade war.
“It’s hard to see what she can get,” said Nathalie Tocci, director of the Rome-based Institute for International Affairs. “The big prize — say, an E.U.-U.S. summit — seems pie in the sky. Nitty-gritty negotiations on trade are not conversations taking place at that level,” Tocci said.
It is “easier to see what she can lose if Trump is smart enough … to play divide and [conquer],” Tocci said. “In a sense, the best one can hope for is that the meeting takes place without any incident. That in itself would go down as success.”
Yet Meloni’s trip has been portrayed positively at E.U. headquarters in Brussels, where officials have been straining for an opportunity to reboot talks after Trump’s tariff barrage. Some European diplomats are also keenly aware that Trump, who likes to deride the E.U., appears uninterested in the leaders of the bloc itself, preferring to deal with national leaders such as Meloni and French President Emmanuel Macron.
However welcoming they are of Meloni’s efforts, E.U. officials have also been quick to issue reminders that trade negotiations are the remit of the E.U.’s executive branch — the European Commission, led by President Ursula von der Leyen. Commission spokeswoman Arianna Podestà told reporters Monday that von der Leyen and Meloni have been “in regular contact” about the Washington trip, and described it as welcome “outreach.”
That doesn’t mean the trip hasn’t caused some friction. France’s industry minister initially cautioned that Meloni’s trip could play into Trump’s hands and divide Europe — though a French government spokesman later welcomed Meloni’s dialogue with Trump. In Italy, the center-left opposition has slammed the trip as embarrassing kowtowing: “The self-styled patriots bow their heads once again,” Elly Schlein, head of the Democratic Party, wrote of the trip on Facebook.
Meloni’s deputy prime minister and erstwhile rival Matteo Salvini, meanwhile, has called for Meloni to put Italy’s interests before Europe’s. But observers say Meloni is acutely aware that anything that looks like a bilateral trade deal will be considered illegal by the E.U. and cause her more headaches than the U.S. tariffs themselves. Antonio Tajani, her other deputy who also serves as foreign minister, has said Meloni is clear-eyed about her mission.
Italian Deputy Prime Minister Matteo Salvini speaks on an Italian television program on April 7, in front of a screen showing images of Meloni and President Donald Trump. (Riccardo Antimiani/EPA-EFE/Shutterstock)
The Trump visit is “a mission supportive of European stances,” Tajani said in a television interview this week. “We are convinced that Europe must present itself united.”
Ignacio García Bercero, a former European Commission trade official, said Meloni would have little to gain — and much to lose — from seeking carve-outs for Italian products like olive oil. Many Italians hold industrial jobs, for instance, that are geared toward making auto parts for German factories — meaning they would still be hit hard if there isn’t a European-wide deal on trade.
“You probably can distinguish olive oil from Country A and Country B, but if you’re talking about cars, about manufactured products, any product that goes into the United States has components from all over the European Union,” Bercero said. “It’s very difficult [for Trump] to do something that doesn’t hurt everyone in the E.U.”
E.U. trade chief Maros Sefcovic traveled to Washington in February and March, only to declare that the administration was not ready to seriously engage. Now, the E.U. sees a window for negotiations following Trump’s decision to pause what was a punitive 20 percent blanket tariff. But European diplomats say they are still struggling for clarity on what the White House really wants.
Sefcovic held hours of talks with Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer on Monday. In subsequent statements, he signaled no progress toward a deal.
“Achieving this will require a significant joint effort on both sides,” Sefcovic said.
Sefcovic’s meeting in Washington “covered a lot of ground, from tariffs to nontariff barriers,” said Olof Gill, a European Commission spokesman for trade. “The E.U. is doing its part. Now, it is necessary for the U.S. to define its position,” he added. “This must be a two-way street.”
In the meantime, current and former E.U. officials said the bloc was also seeking to understand the Trump administration’s plans for tariffs that the president has signaled are still to come, including on pharmaceuticals.
As a gesture of goodwill, the E.U. has paused its countermeasures against U.S. tariffs on steel, and is still hashing out its response to car levies. E.U. leaders have also warned the bloc could hit back harder against Trump’s across-the-board tariffs if negotiations fall apart during the 90-day pause, even floating the prospect of targeting American services from Big Tech companies.
But Meloni is leading the camp searching for a more conciliatory approach — suggesting it is better to catch Trump with honey than vinegar.
The bar for success, Procaccini said, is a “first step.”
“I don’t expect in a few hours they reach the main goal,” he said. “A first step in the right direction for me is enough.”
April 17, 2025
The High Cost of Trump’s Drug Tariffs: A Political Minefield
A Illusion orange color Medicine tablet. Jeff Henry/The NewYorkBudgets
President Trump’s decision to move a step closer to imposing tariffs on imported medicines poses considerable political risk, because Americans could face higher prices and more shortages of critical drugs.
The Trump administration filed a federal notice on Monday saying that it had begun an investigation into whether imports of medicines and pharmaceutical ingredients threaten America’s national security, an effort to lay the groundwork for possible tariffs on foreign-made drugs.
Mr. Trump has repeatedly said he planned to impose such levies, to shift overseas production of medicines back to the United States. Experts said that tariffs were unlikely to achieve that goal: Moving manufacturing would be hugely expensive and would take years.
It was not clear how long the investigation would last or when the planned tariffs might go into effect. Mr. Trump started the inquiry under a legal authority known as Section 232 that he has used for other industries like cars and lumber.
Mr. Trump said in remarks to reporters on Monday that pharmaceutical tariffs would come in the “not too distant future.”
“We don’t make our own drugs anymore,” Mr. Trump said. “The drug companies are in Ireland, and they’re in lots of other places, China.”
While some drugs are made at least in part in the United States, America’s reliance on China for medicines has generated alarm for years, with both Republicans and Democrats identifying it as a national security vulnerability.
Many drugs are not produced without at least one stage of the manufacturing process happening in China. Even India’s giant generic drug sector is deeply dependent on China, because Indian manufacturers typically obtain their raw materials from Chinese plants.
Imposing disruptive levies on lifesaving medications creates risks for Mr. Trump that were not a major concern with some of his other tariff targets, like steel and aluminum, where Americans generally aren’t directly exposed to increased prices.
He could face a harsh backlash if pharmaceutical tariffs lead to significant drug price increases or shortages for patients. The number of drug shortages reached a record-level high last year. Americans fill several billion prescriptions a year, on top of purchasing over-the-counter products like cough syrup and Tylenol.
On Tuesday, Mr. Trump signed an executive order outlining a series of actions intended to lower drug prices, including helping states import drugs from Canada. The idea behind these imports is to bring in cheaper drugs, but tariffs could mean that those imports would not offer the same savings as in the past.
If pharmaceutical tariffs cause an increase in any drug prices, Democrats could jump on the issue for the midterm elections next year and try to undercut Mr. Trump’s popularity among working-class voters.
Democrats have already seized on the issue. In a letter sent to Trump officials last week, a group of lawmakers led by Representatives Doris Matsui of California and Brad Schneider of Illinois wrote that “reckless tariffs” on medicines threatened to harm Americans.
“The supply disruptions of critical medical products will unavoidably hurt U.S. patients, force providers to make impossible rationing decisions, and potentially even result in death as treatments are delayed, or more effective medicines and products are swapped for less effective alternatives,” they wrote.
Kush Desai, a spokesman for the White House, said in a statement on Monday that “President Trump has long been clear about the importance of reshoring manufacturing that is critical to our country’s national and economic security.”
Targeting pharmaceuticals also risks further inflaming relations with allies like the European Union and India, whose economies are supported by drug exports to the United States. Officials of those countries fear that drug tariffs could prompt companies to renege on investments, resulting in a loss of jobs, factories and tax revenue.
Along with cars and electronics, pharmaceuticals are one of the categories of goods that the United States imports the most, measured by value.
Tariffs on drugs would add tens of billions of dollars of import costs for a powerful industry that relies on a complex global supply chain. Production of most medications consumed in the United States happens in more than one part of the world, with plants in different countries handling different stages of the process.
Expensive patented medications, like the popular weight-loss drug Wegovy, are more likely to be made in Europe or the United States.
China and India do most of the production of cheaper generic drugs, which account for the vast majority of U.S. prescriptions. For example, plants in those countries make nearly all of the world’s supply of the active ingredients in the painkiller ibuprofen and the antibiotic ciprofloxacin, according to Clarivate, an industry data provider.
Pharmaceuticals are the latest sector that Mr. Trump has targeted. Tariffs of 25 percent are already in effect for imported steel, aluminum and cars. The Trump administration has also initiated Section 232 investigations, or inquiries into national security concerns, for copper, lumber and computer chips.
Investigations under the 232 provision must be completed within nine months.
The drug industry has been lobbying the Trump administration to phase in tariffs gradually or to exempt certain types of products, such as medications at risk of shortages or those deemed essential, like antibiotics.
John Murphy III, the head of a trade group that represents manufacturers of generic drugs, said in a statement on Monday that tariffs “will only amplify the problems that already exist in the U.S. market for affordable medicines.”
The tariffs would be paid by drug companies importing products or ingredients into the United States. Many of those manufacturers would most likely try to pass at least some of the added costs to employers and government programs like Medicare and Medicaid that cover most of the tab for Americans’ prescription drugs. That would ultimately affect patients.
Levies could cause shortages of some cheaper generic drugs, because prices are so close to production costs. Manufacturers with such thin margins may be forced to curtail or end production.
Industry experts said they were not concerned about shortages for brand-name drugs, which generally have high profit margins that could absorb tariffs.
Patients whose insurance requires them to pay a deductible or a percentage of a drug’s price could eventually face higher out-of-pocket costs for some drugs. They may also have to pay a higher co-payment if shortages resulting from the tariffs force them to switch to a different, pricier medication. In future years, people could face higher health insurance premiums.
In some cases, contractual agreements and steep financial penalties may discourage manufacturers from sharply raising prices. With patented products, manufacturers typically have such large margins that their sales would still be highly profitable even if they absorbed the cost of tariffs.
David Ricks, the chief executive of Eli Lilly, told the BBC earlier this month that his company expected to eat the cost of tariffs. But Lilly could reduce its research spending or cut staffing as a result, he said.
Mr. Trump has been saying that his tariffs will prompt drugmakers to move their overseas production back to the United States. In recent weeks, several of the industry’s richest companies — Eli Lilly, Johnson & Johnson and Novartis — announced plans to spend billions of dollars to build new plants in the United States.
But experts say the tariffs aren’t nearly enough to bring most drug production back to the United States. The obstacles are especially steep with crucial generic drugs. Building a new plant takes years. Even shifting production to an existing American plant may be too costly. Labor and other production expenses are much higher in the United States.
Joaquin Duato, chief executive of Johnson & Johnson, said on a call with analysts on Tuesday that “if what you want is to build manufacturing capacity in the U.S., both in med-tech and in pharmaceuticals, the most effective answer is not tariffs, but tax policy.”
The Trump administration has been taking aim at Ireland, where nearly all of the largest American drugmakers have a manufacturing presence, in some cases dating back decades. One of Ireland’s biggest appeals for the industry is the tax advantages it offers. Some drugmakers shift their profits there to lower their overall tax bills.
Last month, Mr. Trump said that Ireland “took our pharmaceutical companies away.” Howard Lutnick, the commerce secretary, saidthat Ireland was running a “tax scam” that American pharmaceutical companies were exploiting. “That’s got to end,” Mr. Lutnick said.
Some of the industry’s biggest blockbusters, including the cancer drug Keytruda and the anti-wrinkle injection Botox, are partly produced in Ireland. The United States imports more pharmaceutical products, as measured by their value, from Ireland than any other country.
Irish officials fear that tariffs could prompt drugmakers to pull back from investments in the country. But experts said that drugmakers may be reluctant to undergo the costly, disruptive process of uprooting their operations there, especially while uncertainty persists about how long Mr. Trump’s tariffs will last.
Pharmaceuticals have historically been spared from tariffs under a World Trade Organization agreement meant to ensure that patients have access to vital medications.
Medications were mostly exempted from the round of global tariffs Mr. Trump announced earlier this month and then partly delayed for 90 days. Drugmakers importing from China into the United States have been subject to tariffs, initially 10 percent and later 20 percent, that Mr. Trump had imposed on Chinese imports earlier this year.
April 16, 2025