Trump’s trade tariffs hit Europe as it reels from his Ukraine deal with Putin

Good morning. French President Emmanuel Macron, in an interview with the Financial Times has described Donald Trump’s return to power as an “electroshock” for the EU and a moment “to accelerate and execute”, warning that otherwise the project is at risk of failure: “It has no choice. It is running out of road.”

Last night, Donald Trump moved to impose long-threatened reciprocal trade measures on imports. Here, our trade correspondent explains what that means for Europe. And our Rome bureau chief reports on the European backlash to Giorgia Meloni’s satellite plans with Elon Musk.

Gloves off

Fight or talk? That is the bleak option facing EU member states after US President Donald Trump escalated his trade war by pledging to levy tariffs for a number of ills such as selling cars Americans like to buy and taxing tech companies on the money they make in its market, writes Andy Bounds.

Context: After slapping 25 per cent tariffs on all imports of steel and aluminium starting March 12, Trump yesterday instructed his trade advisers to draw up tariffs against countries that run a trade surplus in goods with the US, as the EU does, those that levy digital taxes, and those blocking US imports on health grounds.

The expected but still startling broadside from the EU’s largest trade and investment partner came as European capitals were still reeling from Trump’s move 24 hours earlier to begin bilateral talks with Russian President Vladimir Putin to end the war in Ukraine, cutting out Europe.

Brussels has already said it would retaliate against the metals tariffs. There is a package of up to 50 per cent tariffs on €4.8bn worth of US goods ready to go. But officials told the FT that more products could increase to try to deter Trump. 

Most member states backed negotiations in a trade ministers’ meeting on Wednesday, according to two diplomats briefed on the meeting.

Maroš Šefčovič, the EU trade commissioner, gave a sobering readout from his call with US commerce secretary nominee Howard Lutnick, but still hopes to travel to Washington next week to meet him.

“We have to respond — it’s better to negotiate from a position of strength,” said one EU diplomat.

Ignacio García Bercero, until recently a senior EU trade official, said the bloc should co-ordinate with allies that were also threatened by Trump.

“I think this needs to be treated very seriously. At the minimum all affected countries should prepare the launch of a WTO case as soon as tariffs are announced.”

Chart du jour: Arms race

European arms companies have significantly increased their output in recent years, but decades of under-investment and long-term reliance on American hardware mean the continent’s capacity remains limited. 

The Italian Job

Italy’s consideration of a $1.5bn, five-year military communication contract with Elon Musk’s Starlink has caused a furore in Europe, where critics warn that it could undermine the EU’s own satellite industry and leave Rome dependent on a mercurial tycoon, writes Amy Kazmin.

Context: Italian Prime Minister Giorgia Meloni said last month that her government had “no public alternative” to Musk’s SpaceX, as her government seeks to bolster secure military communications for its estimated 7,000 troops deployed overseas. Musk is one of US President Donald Trump’s closest advisers.

However, Christophe Grudler, a French MEP from the liberal Renew who is also the co-chair of the European parliament’s Sky and Space Intergroup, has expressed dismay at Rome’s approach, as did several other lawmakers in a European parliament debate yesterday on the subject of “threats to EU sovereignty through strategic dependencies in communication infrastructure”. 

In a letter to European Commission president Ursula von den Leyen, Grudler argued that Italy should take advantage of GOVSATCOM, an EU initiative to pool existing secure European satellite capacity from countries such as Germany, France and Italy itself, and make it available to all member states. 

The programme is supposed to start functioning this year. In his letter, Grudler asked von den Leyen to confirm that “every effort” was being made to ensure that EU member states, especially Italy, could take full advantage of a service that he said should be “fully capable of meeting Italy’s immediate needs while ensuring security and strategic autonomy”. 

Separately, citing the Renaissance-era Florentine political strategist and diplomat Niccolò Machiavelli, Grudler warned of the risks of Italy “delegating its security to private actors”, insisting it should rely on trusted allies instead.

“Elon Musk, a former Democrat supporter, has shown he can easily switch alliances in campaigns according to his business interests,” Grudler said.

What to watch today

1. Munich Security Conference begins, featuring dozens of world leaders and defence industry executives.

2. US vice-president JD Vance meets Ukraine’s President Volodymyr Zelenskyy in Munich.

3. European parliament president Roberta Metsola visits Palestine.

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