Tuesday, April 8, 2025

Brussels Edition: The tariff wave hits

Trump's latest tariff wave hits the EU, as it moves forward with its response to previous measures
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Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union.

Donald Trump's 20% blanket levy on EU imports came into force overnight, with the bloc still working on its response to the US president's previous measures. Member states are expected today to adopt the first retaliatory package against American tariffs on steel and aluminum imports. The list totals nearly €22 billion — and is expected to be approved since most governments support the strategy of negotiating from a position of strength, we're told. Amid difficulties finding interlocutors in the White House, the commission plans early next week to present an outline of potential countermeasures to hit back at today's new levies, with US services in the bloc's sights.

Jorge Valero and Max Ramsay

What's Happening

Trump Talks | Italian Premier Giorgia Meloni will head to Washington next week to discuss tariff relief directly with Trump. The move has been coordinated with the EU and Commission President Ursula von der Leyen is aware of Meloni's plans, we've learned. Separately, we're also told Italy will reveal plans to raise defense spending to meet NATO's target by the end of June at the latest.

Buying American | The EU should look at tweaking its methane rules so it can import more US LNG to help placate Trump on trade, Lithuania's energy minister told us. The move should be combined with the delayed roadmap to phase out Russian gas, and replace it with US supplies, Zygimantas Vaiciunas added.

Merz's Cabinet | Germany's conservatives and the Social Democrats appear close to a coalition agreement, with an announcement possibly coming later today, paving the way for conservative leader Friedrich Merz to take over as chancellor. While the alliance partners may not immediately announce cabinet appointments, here's a look at the frontrunners for the four most influential ministries.

Closer Ties | The UK and EU are optimistic about striking a deal to reset post-Brexit relations at a summit on May 19 in London, we're told. Progress has been made on efforts to secure a defense and security pact ahead of that date, while discussions on a fishing agreement are continuing.

Around Europe

US-Russia Relations | Russian and US officials will hold fresh talks in Istanbul tomorrow, according to the Kremlin. The discussion will focus on restoring the countries' diplomatic missions, Russian media reported. Vladimir Putin's representative, Kirill Dmitriev, returned from two days of meetings in the US last week, during which he met Trump special envoy Steve Witkoff and US Secretary of State Marco Rubio.

China Stance | Pedro Sanchez said the EU needs to change its stance toward China, and China toward Europe, ahead of a trip to the country. The Spanish premier, who is visiting Vietnam before heading to Beijing for a meeting with President Xi Jinping, sketched out a role for his nation as a builder of a more balanced alliance between the two powers as relations with the US come under severe strain.

Growth Upgrade | The Bank of France raised its first-quarter growth estimate slightly, a small positive amid a lengthening list of downside risks for the euro region's second-biggest economy. The central bank cautioned it has little short-term visibility on how much damage tariffs will do.

Budapest Demos | Hungary's opposition again blocked main roads in central Budapest yesterday as protests in defiance of Prime Minister Viktor Orban's moves against civil society intensified. The demonstrations began as a reaction to Orban's ban on the annual Pride parade, which critics said wasn't just an attack on minority rights but part of a broader campaign to suppress dissent.

Tech Utopia | Praxis, a self-described "sovereign network" funded by Silicon Valley investors, is looking for at least 10,000 acres somewhere in the world to build its first city. CEO Dryden Brown is embarking on a "world tour" to find a location, with Athens, Rome and Kyiv on the potential list.

Chart of the Day

In the first rush for safe havens in years, global investors are finding there are credible alternatives to US Treasury bonds. For example, German bunds are at levels that makes them look more attractive than Treasuries to European investors who hedge their dollar exposure when buying US securities. Meanwhile, Europe's primary markets are showing resilience against the volatility stemming from US tariffs, with the EU attracting over €86 billion in bond-sale bids from investors for a reopening of two of its existing securities.

Today's Agenda

All times CET

  • 11:15 a.m. NATO chief Mark Rutte delivers remarks with Japan's prime minister in Tokyo, followed by joint press statements at 11:55 a.m.
  • 2 p.m. Commission President von der Leyen meets Iceland's prime minister
  • 4:30 p.m. EU foreign affairs chief Kaja Kallas, enlargement commissioner Marta Kos, Ukrainian Prime Minister Denys Shmyhal hold a press conference following the EU-Ukraine Association Council
  • Commission due to present AI Continent Action Plan following meeting of college of commissioners

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