BRUSSELS — Europe is finally firing back at Elon Musk. Aerospace companies Airbus, Leonardo and Thales said Thursday they had reached a preliminary agreement to combine their space activities to create the kind of European champion that Commission President Ursula von der Leyen has envisaged. Announcing “a leading European player in space,” the companies said they would combine their satellite and space systems manufacturing into a €6.5 billion business that will employ around 25,000 people across Europe.  The three-way deal seeks to create a challenger to Musk’s SpaceX — especially in low-earth orbit satellites of the type that power his Starlink internet service. SpaceX’s projected 2025 revenue is around $15 billion. The deal — initially named Project Bromo after a volcano in Indonesia — has been a long time coming. Talks among the three companies were complicated by the involvement of five governments as shareholders or partners. And winning antitrust approval was always going to be a tall order. France, Italy, Germany, Spain and the U.K. will all have an interest in the new company, which will be headquartered in Toulouse in southern France but will be split out into five different legal entities to preserve sovereign interests. The governance structure mirrors that of European missilemaker MDBA.  Airbus, the European aerospace giant, will own a 35 percent stake, while Leonardo of Italy and Thales of France will own 32.5 percent each. There will be a sole yet-to-be-named CEO and managing directors for each country, an Airbus spokesperson told POLITICO. French Economy Minister Roland Lescure hailed the announcement as “excellent news.” “The creation of a European satellite champion allows us to increase investment in research and innovation in this strategic sector and reinforce our sovereignty in a context of intense global competition,” he said in a post on Bluesky. Sounding rather less enthusiastic, a spokesperson for German Economy Minister Katherina Reiche said Berlin was following the possible consolidation of the European aerospace industry “with great interest” and was in touch with Airbus and its defense subsidiary. LEAGUE OF CHAMPIONS France and Germany have been vocal on the need to create continental champions — with industry chiefs from both countries recently issuing a joint appeal to Brussels to relax its merger rules to enable companies to gain scale and compete in a global setting. In a twist of irony, the deal involves a company — Airbus — that is widely seen as the only European corporate champion ever built. With roots dating back to 1970, Airbus was created in its current incarnation through a Franco-German-Spanish merger in 2000. France and Germany each own 10 percent stakes and Spain 4 percent. Italy has a 30 percent stake in Leonardo, which in turn owns 33 percent of Thales Alenia Space.  The new company will pool, build and develop “a comprehensive portfolio of complementary technologies and end-to-end solutions, from space infrastructure to services.” It is expected to generate annual synergies producing “mid triple digit million euro” operating income five years after closing, which is expected in 2027, according to a press release.  MERGER HURDLE The tie-up requires a green light from the Commission’s competition directorate, which will have to weigh the tension between its current rulebook for reviewing mergers and von der Leyen’s desire to pick European winners. The joint venture would compete with overseas players on satellites for commercial telecommunications. However, it would face scant competition for military and public procurement tenders in the EU, for example with the European Space Agency (ESA). These are typically restricted to home-grown bidders. Rolf Densing, ESA’s director of operations, has voiced concerns that the deal would leave the agency with limited options for sourcing satellite contracts. Germany’s OHB would be left as its last remaining competitor. OHB’s CEO Marco Fuchs has warned that the deal threatens to create a monopoly that would harm customers and European industry. That could herald a rerun of the tensions that the Commission faced when it blocked a Franco-German train industry merger between Siemens and Alstom in 2019 — although today the political environment is more favorable to the companies.  The Commission’s competition directorate is under pressure to broaden its views on mergers to take into account the bloc’s wider push for growth and an increased capacity to compete with U.S. and Chinese players. A review of the bloc’s merger guidelines is due next year, according to the Commission’s latest work program. Alexandre Léchenet in Paris and Tom Schmidtgen in Berlin contributed reporting.

TIRANA — Albania has become the first country in the world to have an AI minister — not a minister for AI, but a virtual minister made of pixels and code and powered by artificial intelligence. Her name is Diella, meaning sunshine in Albanian, and she will be responsible for all public procurement, Prime Minister Edi Rama said Thursday. During the summer, Rama mused that one day the country could have a digital minister and even an AI prime minister, but few thought that day would come around so quickly.  At the Socialist Party assembly in Tirana on Thursday, where Rama announced which ministers would get the chop and which would stay on for another mandate, he also introduced Diella, the only non-human member of the government. “Diella is the first member not physically present, but virtually created by artificial intelligence,” he told party members. Rama stated that decisions on tenders would be taken “out of the ministries” and placed in the hands of Diella, who is “the servant of public procurement.” He said the process will be “step-by-step,” but Albania will be a country where public tenders are “100 percent incorruptible and where every public fund that goes through the tender procedure is 100 percent legible.” “This is not science fiction, but the duty of Diella,” he said. Diella has already been introduced to Albanian citizens as she powers the country’s e-Albania platform, which allows citizens to access almost all government services digitally. She even has an avatar, appearing as a young woman dressed in traditional Albanian clothing. Diella will evaluate tenders and have the right to “hire talents here from all over the world,” while breaking down “the fear of prejudice and rigidity of the administration.” Albania has long battled with corruption, particularly in public administration and in the area of public procurement. The matter has been repeatedly highlighted by the European Union in its annual rule of law reports. Rama swept to a historic fourth mandate in May 2025, on a ticket of joining the bloc by 2030.

Belgium will join the group of countries that will recognize the state of Palestine at this month’s U.N. General Assembly and will impose sanctions on Israel over the war in Gaza, Foreign Minister Maxime Prévot announced overnight. The recognition of Palestine would only be formalized if Hamas releases all remaining Israeli hostages kidnapped in the Oct. 7, 2023 attack and the militant group “no longer has any role in managing Palestine,” Prévot said. In the meantime, Belgium will also impose “firm sanctions” on the Israeli government, Prévot said. The measures include a ban on importing products from illegal settlements, a review of public procurement policies with Israeli companies and restrictions on consular assistance to Belgians living in illegal settlements. Prévot said two “extremist” Israeli ministers, several “violent settlers” and Hamas leaders would be designated “persona non grata” in Belgium. While he didn’t name the ministers, they are likely to be Itamar Ben-Gvir and Bezalel Smotrich, who have been sanctioned by other countries including the U.K. over accusations they incite violence against Palestinians in the West Bank. “This is not about sanctioning the Israeli people but about ensuring that their government respects international and humanitarian law and taking action to try to change the situation on the ground,” Prévot said. In July, French President Emmanuel Macron said France would recognize a Palestinian state at the U.N. meeting, due to be held from Sept. 9 to 23 in New York, and more than a dozen other Western countries have since said they would do the same. Israeli Prime Minister Benjamin Netanyahu has previously said the move feeds antisemitism, “rewards Hamas’s monstrous terrorism & punishes its victims.” In his post in the early hours of Tuesday, Prévot said Belgium would make a “firm commitment to calling for European measures targeting Hamas and supporting new Belgian initiatives to combat antisemitism, further mobilizing all our security services and involving representatives of Jewish communities.” Prévot also voiced support for the EU to suspend its association agreement with Israel. The European Commission has proposed suspending parts of the agreement dealing with research and development after concluding Israel had breached its human rights obligations under the deal, but the proposal has so far been blocked because Germany, among others, wasn’t willing to support penalizing Israel in this way. Prévot and his centrist Les Engagés party last month threatened to block government business if their Flemish nationalist and liberal coalition partners obstructed their plans to take a tougher stance against Israel. The Belgian government has since had multiple crisis meetings seeking to resolve the impasse.

LONDON — More than 70 MPs and peers have urged U.K. Prime Minister Keir Starmer to block scandal-hit tech firm Fujitsu from bidding for control of a major post-Brexit software platform. The Japanese IT giant continues to face intense public scrutiny after faulty data from its Horizon software led to 1,000 innocent workers at the U.K.’s Post Office being wrongly convicted. In a letter to the prime minister seen by POLITICO, 32 MPs and 44 peers expressed concern that Fujitsu continues to bid for public contracts, including a contract with HM Revenue and Customs to run the Trader Support Service (TSS).  Fujitsu is bidding for a £370 million contract to retain control of the platform, which helps businesses navigate complex post-Brexit customs arrangements for moving goods between Great Britain and Northern Ireland. Fujitsu’s bid was first reported by POLITICO in July. Continuing to award public contracts to the firm “raises serious questions about the standards of fairness, accountability, and due diligence guiding public procurement in this country,” the letter said. “What message does it send when a company responsible for such harm is allowed to continue profiting from public money, unpenalised and unaccountable?” The U.K. lawmakers urge the government to institute a review of Fujitsu’s eligibility to bid for critical public services, including its current re-tender for the TSS. They also ask that “any government supplier involved in systemic failures, like Fujitsu, demonstrate meaningful remediation and cooperation with compensation processes as a condition of continued commercial engagement.” “This is not only about money,” the letter added. “It is about justice, accountability, and whether it is morally acceptable for Fujitsu to continue to profit from the public purse. The Post Office Horizon scandal destroyed lives. That injustice must not be compounded by the continuing awarding of lucrative government contracts to Fujitsu.” Their letter, first reported by The Times, comes at an awkward time for the government, as Trade Minister Douglas Alexander embarks on a four-day trip to Japan to boost trade ties. A government spokesperson said: “We have been clear that those responsible for the Horizon scandal must be held to account. Fujitsu has committed to withdraw from bidding for contracts with new government customers until the Post Office Inquiry concludes. We will not hesitate to take action, where appropriate, based on the final findings.” A Fujitsu spokesperson said: “We have apologised for, and deeply regret, our role in sub-postmasters’ suffering. We hope for a swift resolution that ensures a just outcome for the victims. We are considering the recommendations set out by Sir Wyn in Volume One of the Inquiry’s report, and are engaged with Government regarding Fujitsu’s contribution to compensation.”

LONDON — The firm at the center of one of the biggest U.K. scandals in recent memory is bidding to keep running Great Britain’s border with Northern Ireland. Japanese tech firm Fujitsu has faced intense public scrutiny after faulty data from its Horizon software led to hundreds of innocent workers at the U.K.’s Post Office being wrongly convicted of theft, fraud and false accounting. Many are still awaiting compensation. It is now spearheading a bid by a group of firms, including a long-time ally of former Prime Minister Liz Truss, for the £370 million contract, five people with knowledge of the process confirmed to POLITICO. Fujitsu’s bid for the lucrative contract follows its pledge in 2024 — amid intense scrutiny of the Post Office scandal following a hit TV drama — not to bid for public sector deals unless requested by government or in cases where there is “an existing customer relationship.” Fujitsu is vying to retain control of the Trader Support Service, a software platform that helps businesses navigate complex post-Brexit customs arrangements for moving goods like chilled meat between Great Britain and Northern Ireland. Before Britain left the EU in 2020, Fujitsu, Truss ally Shanker Singham’s firm Competere and others were awarded a two-year contract to create and run the TSS customs platform. Following several extensions up to the end of 2025, the total value of that contract has ballooned to more than £500 million for the firms. If Fujitsu’s bid is successful, the contract — expected to be awarded in the autumn — would see the firm continue to run the crucial border software for at least another five years, with the potential to extend it to seven. “We continue to work with the U.K. government to ensure we adhere to the voluntary restrictions we put in place regarding bidding for new contracts while the Post Office Inquiry is ongoing,” a Fujitsu spokesperson said. News of Fujitsu’s fresh bid for public sector work comes as Westminster digests the official Post Office inquiry’s first report, published Tuesday. The report highlighted the “disastrous” impact of the scandal on those wrongly accused and prosecuted for criminal offences. The report found that some employees of Fujitsu had advance knowledge that the system at the heart of the scandal — Horizon — was capable of producing false data about what was going on in Post Office branches. “Like its predecessor, Horizon Online was also, from time to time, afflicted by bugs, errors and defects which had the effect of showing gains and losses in branch and Crown Office accounts which were illusory. I am satisfied that a number of employees of Fujitsu and the Post Office knew that this was so,” the inquiry’s chair concluded in the report. Business Secretary Jonathan Reynolds said he welcomed the publication of the report and was “committed to ensuring wronged subpostmasters are given full, fair and prompt redress.” ‘DEEPLY TROUBLING MESSAGE’ MPs are already calling for the government to step in on future Fujitsu contracts. The firm’s commitment not to bid on public contracts “appears increasingly hollow,” Labour MP Kate Osborne, a former employee at Royal Mail, warned Reynolds Monday, in a letter shared with POLITICO. The firm has targeted £1.3 billion in U.K. government contracts in the past year alone, she said. “The continued award of lucrative government contracts to Fujitsu, while victims of their failures remain inadequately compensated, sends a deeply troubling message about our values as a government,” she added. “It suggests that corporate irresponsibility carries no meaningful consequences, and that public money can be earned even after causing immense harm to innocent citizens.” Fujitsu’s bid to continue the operation of the TSS raises “profound questions about accountability in public procurement and justice for Horizon victims” and sends a “deeply troubling message about our values as a government,” the MP continued. Osborne — whose constituent Chris Head is among the subpostmasters still waiting for compensation — urged the government to implement an immediate moratorium on awarding new contracts to Fujitsu until they have made a substantial financial contribution to victims. “So many lives have been ruined by the Post Office and Fujitsu,” she said. “Whilst nothing can ever compensate for how they have been treated, it is sickening that people like my constituent Chris Head have not received any compensation yet Fujitsu are raking in billions of pounds from government contracts.” Competere’s CEO, Singham, serves as “policy lead of the Trader Support Service Consortium,” according to the firm’s website. He is also chairman of the Growth Growth Commission, a free-market economic think tank founded by Truss in 2023. He served as an advisor to the Truss back in 2020. Singham castigated the current Labour government’s new Trade Strategy late last month as chairman of the Growth Commission. The strategy is “troubling,” he wrote, citing “negative impacts of aligning to the EU” in Sanitary and Phytosanitary regulation — a move that would reduce the need for checks at the border — because it could limit trade with the U.S. Singham’s current role in the TSS is “a tiny part of the overall contract,” he said, confirming Competere is part of a wider Fujitsu-led consortium bidding to keep running the service. The U.K. government has been approached for comment.

BRUSSELS — The EU should maintain strong defense ties with the U.S. despite its deteriorating relationship with President Donald Trump, Lithuania’s finance minister told POLITICO in an interview. Rimantas Šadžius cautioned against the EU shutting the door on U.S. defense companies when it comes to joint public procurement in response to growing tensions with Washington on issues as diverse as trade and freedom of speech. “We have very important NATO partners that are aligned with us on both political terms but also in ensuring defense capabilities with us. Let’s name Norway, Canada and the United States,” Šadžius said.  “I think we should make everything possible to integrate our allies into the joint defense effort,” he added.  A Social Democratic grandee with vast economic expertise, Šadžius is considering challenging Ireland’s incumbent Paschal Donohoe for the presidency of the Eurogroup, a powerful grouping of eurozone finance ministers. “I have not yet decided myself [whether to run],” he said. “I would wish personally [that whoever is elected as president of the] Eurogroup’s activities would become more focused on the issues that concern just the euro area and be more dynamic.” SAFE DILEMMA His remarks come as the EU’s 27 ambassadors negotiate the fine print of the €150 billion Security Action For Europe regulation, a funding initiative put forward by the European Commission to bolster the EU’s defense capabilities and counter Russian influence as the U.S shifts its attention toward the Pacific.  SAFE comes with incentives to buy European military components, and keeps the door shut to foreign countries such as the U.S. and the U.K. Neither country is allowed to take part in joint purchases under this scheme unless they have so-called Security and Defence Partnership agreements with the bloc. During negotiations between EU ambassadors in recent weeks, the Netherlands led a push supported by a dozen countries to introduce positive language toward Washington in the text. This would make it easier to sell military products across the Atlantic amid calls by U.S. Vice President JD Vance for Europe to buy more American defense gear.  Nevertheless, pro-U.S. language has been absent from the drafts circulated so far and seen by POLITICO because of resistance from the French government, an EU official familiar with the discussions said. Greater openness toward Canada and the U.K is more likely to materialize, several diplomats said.    Šadžius cautioned against excluding the Americans. “The U.S. is […] maybe the most important member of the North Atlantic Treaty Organization. So they have been, are and will remain very important defense partners for the Europeans,” he said. Lithuania’s finance minister pointed out that NATO’s defense capabilities are particularly crucial to ensure his country’s continued security against Russia.   “For all border states that are on the front line with hostile neighbors, the participation of the United States [within NATO’s framework] is absolutely crucially important.” Separately, Šadžius described the upcoming EU-U.K. summit as “key for concluding the [defense] partnership between the U.K. and the European Union.”  The EU and the U.K will meet on Monday for a long-awaited summit that is expected to pave the way for closer security and defense relations after Brexit — provided that other thorny issues like fisheries are sorted. A positive outcome would also speed up the approval of the SAFE regulation, since the role of the U.K is one of the key outstanding topics.   “Participation of these partners should be properly regulated in the legislative package. So that they would not be cut artificially from the defense community in Europe” Šadžius said. 

President Donald Trump has spent the first three months of his second term imposing his will on the rest of the globe, telling long-time allies that they “don’t have the cards.” But in capitals across Europe and elsewhere, debates are raging over the hands they could play. Proposals under consideration range from minor irritants to extreme actions that could sever defense and economic relationships that have cemented alliances for nearly a century. Those include finding alternative suppliers of military equipment and munitions from U.S.-based defense contractors, enacting stronger counter-tariffs, rolling back intellectual property protections for U.S. companies and lessening their reliance on American tech giants, according to conversations with more than two dozen government officials in Europe and Canada, many of whom were granted anonymity to describe high-level discussions they’re not authorized to speak about publicly. “There’s a change in mindset. We’ve moved on from seduction to strategy,” one EU diplomat said about dealing with Trump. “We’ll take decisions to protect ourselves.” The diplomat added: “We need to strike a path that works without Washington.” Less than three months into Trump’s term, his pursuit of a transactional, mercantilist and imperialist foreign policy has rattled leaders across the globe. It started with the president’s persistence in talking about annexing Canada and Greenland, his eagerness to end the war in Ukraine largely on Russia’s terms and Vice President JD Vance’s caustic comments describing Europe as freeloaders. But Trump’s market-cratering move this month to impose massive tariffs on nearly all U.S. trading partners — based on a formula scores of economists found bizarre — caused many longtime allies to shed any last remnants of magical thinking that they could manage or contain this predictably unpredictable American president as they did during his first term. Leaders from London to Warsaw, Helsinki to Rome, are continuing efforts to de-escalate and maintain productive relationships with Washington — while considering how to “de-risk” by protecting themselves from Trump’s havoc. Their initial moves could be the first cracks in a dam that could break wide open, unleashing a torrent of increasingly punitive actions that, ultimately, could unravel a transatlantic alliance that has tied America to Europe for eight decades and refashion the global order. The White House, however, downplayed the potential for a rift, asserting that Trump’s efforts to end the war in Ukraine — which he has undertaken with little input from NATO allies — are aimed at making Europe more secure, even though many of the continent’s leaders fear that any potential concessions to Russian President Vladimir Putin will make their collective security even more precarious. “The President has led in an effort to bring the biggest conflict since WWII in Europe to a peaceful resolution, and he is helping restore international shipping lanes in the Red Sea that will also benefit European markets,” said national security council spokesperson Brian Hughes. “We will continue to work with our European allies on ways to improve security cooperation — be that through foreign military sales, encouraging our allies to increase their defense budgets, and holding our adversaries like the Houthis accountable.” Of course, private Signal messages during the attack on the Houthis laid bare how some of the president’s most senior aides view Europe as “free-loading,” with Vance lamenting that he “hated” bailing the continent out. Trump officials “seem to think Europe is this dying continent that has no future and is not capable of independent action, that Russia is the more formidable power,” said Minna Ålander, a fellow on transatlantic defense and security at the Center for European Policy Analysis. “They may soon find out that the opposite is true.” SHIFTING DEFENSE DOLLARS AWAY FROM AMERICA Few countries across Europe are more indebted or unconditionally loyal to the U.S. than Poland. And yet, posters are now showing up around Warsaw merging two silhouettes: Putin and Trump. It’s an indication of the extent to which two months of direct threats and challenges from Washington are rapidly changing public opinion — and the private calculations of government officials — in Warsaw and in other European capitals. Trump has been pushing NATO members to increase their spending on defense, saying that the alliance’s requirement that nations allocate 2 percent of GDP should be raised to 5 percent. But the result of his pressure may well be that NATO allies shift their defense investments away from American contracts, shrinking a lucrative financial arrangement upon which the U.S. relies. Poland, which borders Ukraine and Russia-aligned Belarus, is already spending 4.7 percent of its GDP on defense, the most of any NATO member. And it buys more American defense equipment than any other country in the world. Trump and Defense Secretary Pete Hegseth have praised Poland as an exemplary ally. But Warsaw is reconsidering that partnership. Prime Minister Donald Tusk has ruled out the cancellation of any existing contracts, but there are qualms in Warsaw about entering new ones. “Confidence in the USA has been severely shaken,” said Pawel Kowal, the Ukraine envoy in Tusk’s office. “I don’t think we will be placing any more major orders with the American arms industry for the time being after analyzing our experiences with what is happening now.” That’s no small statement given how much Poland’s procurement of American defense equipment, Kowal added, has helped to solidify relations with Washington, and the Trump administration in particular. Poland plans to spend $47.1 billion on defense in 2025, more than half of which will go to U.S. contractors. But Kowal says Poland now needs “to diversify our arms purchases” and “to buy in Europe or rely more on our own Polish arms industry.” Cezary Tomczyk, Poland’s deputy defense minister, said that maintaining strong ties to the U.S. remains important, noting that Trump has encouraged Europe to be more self-reliant and saying investing more in production in Poland is part of that. But Tomczyk offered a word of caution, noting that the U.S. has tangible interests in Poland as well. “If the U.S. alienates Poland, it would not be good for the U.S.,” he said. As Trump prepared to take office for the second time, European leaders strategized that they could keep him engaged with NATO by meeting his demand that they increase defense spending with commitments to direct most of their outlays to American companies. Now, they’re moving in the opposite direction. “Europe is now going to heavily increase its investments to defense. And it will be very logical that Europe is turning this money to its own economy,” said Estonian Foreign Minister Margus Tsahkna, who also referred to the sudden questions about the reliability of American-made weapons systems that arose after Trump abruptly halted defense aid to and intelligence sharing with Ukraine in March. “There must be a political trust that if you buy something, you must be sure that you can use them as well.” Many of the countries determined to boost defense spending are loath to invest in America’s defense industrial base — and newly aware that placating Trump isn’t as simple as it was during his first term. “In previous years, under Trump 1.0 and even afterward, we said, yes, we can appease him. He wants to make deals, he wants us to go on a big shopping spree from him: Buy F-35s, Patriots, liquified natural gas and all sorts of other things … and then he’ll be appeased,” said Peter Beyer, a member of Germany’s Bundestag from the conservative Christian Democrats, the party expected to lead Germany’s incoming government. “I think that’s a much too simplistic calculation. It all doesn’t add up, at least not today. It won’t work.” Trump’s willingness to use U.S.-controlled weapons systems as leverage over Ukraine in the midst of a war has given rise to new worries. Canada, Portugal, Denmark and Germany have publicly expressed reservations about continuing to purchase F-35 fighter jets from the U.S. given that Trump, in the event of a political disagreement, could block access to spare parts and software upgrades needed to keep the aircraft flying and combat-ready. German Defense Minister Boris Pistorius has asserted that Berlin will continue to honor its F-35 contracts, calling the U.S. “an important ally for us.” But he has also made clear that’s at least partly due to a lack of other options when it comes to upgrading a current fleet that is about to age out. Beyer, a former transatlantic coordinator for the German government, said that even if concerns about an F-35 “kill switch” aren’t reality-based, it would be “daft” for Berlin to continue relying so heavily on America’s security backing given the administration’s approach. “If we purchase weapons systems, be it Patriot, F-35 or whatever, Lockheed Martin, Northrop Grumman, Raytheon, we have to be aware that it’s like a Damocles sword that a shutdown could occur,” Beyer said. “This thought is now there in people’s minds, also in connection with Starlink, Elon Musk and the data for Ukraine — this discussion is in full swing.” Given that Europe is so integrated into America’s defense industrial base after decades of procurement, finding European alternatives to U.S. systems won’t happen overnight. But even the U.S.-made Patriot system has its challengers. The French-Italian SAMP/T, which takes only two years to produce, is now going through upgrades to put its range on par with Patriots. And confidence about it being a viable alternative has grown after its widespread usage by Ukraine over the last few years. TAKING COUNTER-TARIFFS TO THE EXTREME On April 2, Trump levied 20 percent tariffs on the EU as part of a sweeping policy shift aimed at erasing trade deficits, only to abruptly hit the pause button less than a week later to halt a global economic panic that was starting to affect even America’s bond market. Even if the detente holds, allies still reeling from the whiplash still face a new reality of chronic uncertainty. Hours before Trump announced he was pausing all tariffs except those on China, the EU voted to hit back with counter-tariffs on nearly €21 billion of U.S. products — soybeans, motorcycles and orange juice — but stopped short of retaliating on the 20 percent “reciprocal” tariff Trump had imposed on all EU exports to the U.S. “Right now, Europe is focusing on customs duties in response to the duties announced by the U.S., and we aren’t looking for escalation. We don’t want to fuel confrontation, but we do want to be very clear,” one senior European diplomat said. The EU quickly put its retaliatory measures on hold after Trump announced his 90-day pause. But if the tit-for-tat on trade ratchets back up, Europe could go even further. There has been some talk already about deploying the EU’s Anti-Coercion Instrument, adopted in 2023 in response to China’s attempted political blackmailing of Lithuania over its position on Taiwan. The ACI, dubbed by some EU officials the “bazooka,” sets out a step-by-step procedure if and when coercion is identified, starting with talks with the country involved to determine the best way to resolve the matter. If the economic coercion continues, the EU is then empowered to ratchet up its response with countermeasures ranging from tariffs increases and exclusion from public procurement to restrictions on intellectual property rights protection. Although Trump’s initial rationale for the tariffs — boosting American manufacturing — is not ostensibly coercive, the EU Commission is considering and discussing with member states whether the ACI could be a weapon in a prolonged trade war with the U.S., according to one EU official. “It has been discussed at the European Commission level, but it’s really the nuclear option,” the European official said. “It was devised against a systemic rival [China]. You start hitting data, services, it’s a lot more imposing, you really are widening the scope. The decision is not taken, but it’s been more than just mentioned at the Commission, it’s being discussed as a possibility.” There is hope that such a move won’t be necessary. “The brake [on Trump] could well come from the markets,” another senior European diplomat said. “Europe is not defenseless.” TARGETING SPECIFIC PRODUCTS Some countries — and their citizens — are also looking at how to hit back at individual companies or industries to cause pain or grab headlines in the United States. Some EU governments are considering weaponizing agricultural and environmental standards to discriminate against American products. They could ban specific products from certain Trump-supporting states, like Kentucky bourbon or Florida orange juice. As boycotts of Tesla have already shown — European sales were down 45 percent in January — public sentiment alone could drive people to stop buying American products on their own. Across the continent, Facebook groups devoted to organizing boycotts of American products have amassed tens of thousands of followers. In Denmark, a survey showed that roughly half the population has avoided buying American products since Trump’s inauguration. And the country’s largest grocery store operator now marks whether products sold are from European companies on its electronic price tags. There’s also tourism. Canada is among a handful of countries that have issued advisories warning about traveling to the U.S., going as far as to ask citizens to “reconsider” visiting the States. Passenger bookings on airline routes between the U.S. and Canada are down 70 percent compared to the same period a year ago, a shift that industry analysts believe will cost $2 billion in lost travel and business revenue. Similarly, travel from Europe to the U.S. has dropped by 35 percent in the last two months. If Trump imposes tariffs he is weighing on pharmaceuticals coming into the country, the EU might decide to add export controls on top of that — making Americans pay even more for popular drugs like Ozempic, Novo Nordisk’s obesity and diabetes drug, which is largely produced in Denmark. DISRUPTING SUPPLY CHAINS Some countries are also looking at ways to limit — or make more costly — essential products or services the U.S. depends on. The EU could impose export tariffs on EU-produced machinery, electrical equipment or pharmaceuticals — creating immediate price pressure on U.S. supply chains. That would come at a high cost for European countries, but some officials and analysts aren’t ruling it out. “Europe can have some chokepoints vis à vis America. Europe trades in machinery and optical equipment, we can effect a standstill of American production,” Swedish economist Fredrik Erixon said. “These products are not easily substitutable.” For instance, Europe could impose export controls on products made by Dutch company ASML, the world’s biggest provider of photolithography machines which are used to produce computer chips. This would force U.S. manufacturers that use ASML technology — American consumers — to pay more. Other choke points could be highly advanced technology products made by Nokia and Ericsson that are essential to network operators. Erixon described such moves as “the nuclear option” in a transatlantic trade war, given how intertwined their supply chains are. But, he said, “America is in a predicament because it wants to impose general tariffs, whereas the EU has the possibility of rearranging trade flows.” Some European companies have taken to disrupting supply lines on their own. A Norwegian fuel supplier refused to refuel the U.S. Navy warships and submarines after Trump and Vance berated Ukraine’s president in the Oval Office. It was an isolated incident, but illuminated how much American interests rely on and benefit from strong alliances — and what stands to be lost if relationships deteriorate. And allies closer to home have other levers to pull. Canada supplied 27,220,531 megawatt hours of electricity to the U.S. last year, not to mention 59 percent of the crude oil America imports — a point of leverage, some leaders have noted, in the event of a protracted trade war. The premier of Canada’s largest province threatened last month to shut off the electricity that powers much of New England the Great Lakes states, vowing that Americans “need to feel the pain” from Trump’s trade war. At the same time, the premier of Nova Scotia said American companies would no longer be able to bid on provincial procurement contracts and could see their existing contracts canceled, remarking that “some people need to touch the hot stove to learn.” STICKING IT TO SILICON VALLEY Musk’s involvement with the Department of Government Efficiency and the presence of a raft of tech CEOs at Trump’s inauguration have highlighted the extent to which U.S. tech leaders are increasingly in league with Trump. The EU had already been in the lead on regulating tech companies and attempting to curb the spread of misinformation on privately owned platforms like Musk’s X. But there had been a sense of wanting to work together with the U.S. on policies and standards. That’s changing. In the Netherlands, lawmakers last month approved funding for a new Dutch-controlled cloud services platform to reduce the country’s reliance on U.S. tech companies. That followed a call from then-Belgian Prime Minister Alexander De Croo for the EU to “take action” in response to Musk’s involvement in recent European elections where he advocated for far-right candidates. The EU has been investigating X, the social media platform Musk owns, for nearly a year and a half over suspected breaches of Europe’s Digital Services Act, which requires platforms with over 45 million monthly users to comply with a raft of stringent rules designed to keep users safe and curb the spread of illegal, harmful content. Cutting against the grain, Britain is considering a cut to the digital services tax levied on tech giants, although the optics of doing so would be extremely uncomfortable at a time when the government is also drawing up plans to reduce welfare payments for disabled people. In a sign of how countries can leverage their own tech markets and companies that are important to the U.S., China is harnessing its control over TikTok’s future in the U.S. Trump has been forced to delay the enforcement of a law requiring that TikTok find a new owner in the U.S. or be banned over security concerns. That’s because Beijing, upset about being hit with additional tariffs, scuttled a tentative deal giving a group of American investors a 50 percent stake in the company. GOING IT ALONE Whether allies in Europe or the Americas end up implementing some of the more aggressive responses they’re now discussing, Trump’s unilateral approach and disregard for the interwoven economic and security interests at the core of longstanding alliances has heightened the urgency of lessening their dependence on Washington. No one put it in more stark terms than Canada’s new prime minister, Mark Carney, responding to Trump’s tariffs: “The old relationship we had with the United States, based on deepening integration of our economies and tight security and military cooperation, is over,” he said in late March. Increasingly, Europe’s sudden seriousness about defense spending isn’t driven by the idea that placating Trump will help maintain American hard power as a backstop for the continent’s defense — but by the realization that in many ways Europe is already on its own. That’s a message Hegseth and Vance have conveyed directly both in private meetings and public statements. Following his election two months ago, Germany’s new chancellor, Friedrich Merz, declared his top priority to be strengthening Europe to “achieve independence from the USA,” lamenting that Trump has made clear that “the Americans … are largely indifferent to the fate of Europe.” To that end, Merz succeeded in winning the Bundeswehr’s approval to skirt Germany’s “debt brake” and dramatically boost defense spending, a striking about-face for a country that has been wary of greater militarization since the end of World War II. And as more countries follow suit, there is growing interest in forming new coalitions. Several countries in Europe’s north and east appear interested in joining the six-member Organisation for Joint Armament Cooperation, or OCCAR, which manages armament programs on behalf of France, Germany, Italy, Spain, the United Kingdom and Belgium. Denmark, which has long contributed more to NATO defenses than many larger member countries, has joined the European Sky Shield Initiative to create a multi-layered air defense system in Europe. “In three to five years, we need to be totally able to defend ourselves in Europe,” Danish Prime Minister Mette Frederiksen told POLITICO last month. Similarly on the trade front, allies are eager to insulate themselves from Trump’s erratic approach by replacing trade with the U.S. with new partners. French Trade Minister Laurent Saint-Martin said last month that Paris was suddenly rethinking its opposition to a massive EU trade pact with several South American nations, calling on leaders in Brussels to address French concerns so that the “Mercosur” deal could be finalized. Trump’s “Liberation Day” announcement, Saint-Martin said, was “a wake-up call.” After Trump’s reversal on tariffs left China as his primary target under an increased 145 percent tariff, Beijing opened negotiations with the EU to abolish the bloc’s tariffs on imported vehicles from China. Those discussions, if successful, could dramatically reduce the volume of American-made vehicles sold in the European market. In the long run, Trump’s belief that he has better cards could weaken America’s hand, reducing its leverage over longtime allies once they’re more independent from Washington. “We need to take advantage of the crisis with the U.S., to rebuild our economic, defense and energy sovereignty,” said a former French minister. “And we need to carry on hitting back.” This text is a collaboration of the Axel Springer Global Reporters Network. Eli Stokols reported from Washington, WELT’s Philipp Fritz reported from Warsaw, Clea Caulcutt reported from Paris and Emily Schultheis reported from Los Angeles. Nicholas Vinocur in Brussels and Esther Webber in London contributed to this report.

BRUSSELS — The American tech sector has a big, fat target on its back as Europe looks to respond to Washington on tariffs. If only Brussels agreed on how to hit it.  As United States President Donald Trump rolled out a roster of tariffs late Wednesday, European top officials and lawmakers noted that Big Tech firms and digital services could be Washington’s Achilles heel. The European Union has a €157 billion trade surplus in goods, which means it exports more than it imports, but it runs a deficit of €109 billion in services, including digital services. Big Tech giants like Apple, Microsoft, Amazon, Google and Meta dominate all sorts of parts of the market in Europe.  European Commission President Ursula von der Leyen mentioned technology as one of the “cards” the bloc can play when she addressed the looming tariffs in a European Parliament session on Tuesday.  But the EU is conflicted on what to do about it.  Its flagship tech laws like the Digital Markets and Digital Services acts (DMA and DSA) aren’t designed to serve as retaliation tools. Attempts to slap higher taxes on tech giants previously failed. Governments could decrease their spending on Big Tech firms by revising public procurement policies, but in many cases Europe doesn’t have its own alternatives to turn to instead. And some capitals, like Dublin, are already warning that hitting U.S. tech would badly damage the bloc’s own economy.  Directly targeting Big Tech is all but certain to trigger the ire of tech CEOs like Elon Musk, Jeff Bezos and Mark Zuckerberg, who have cultivated close ties with Trump.  Europe could also deploy its strongest trade weapon yet, the Anti-Coercion Instrument, to target U.S. tech firms specifically. But as a tool the ACI is untested: It was designed as a “trade bazooka” following the first Trump administration from 2017 to 2021 and has never been used.  LAWS VERSUS TRADE WARS The EU has yet to land some of the landmark probes it has been conducting under the DMA (on digital competition) and DSA (on content moderation).  The Commission is set to fine Apple and Meta for violating digital competition rules, the first such fines to be issued under the DMA, late this week or early next week.  Brussels has also found Elon Musk’s X in preliminary breach of the EU’s content moderation rules, which could result in fines of 6 percent of the company’s annual global turnover. Meta is also under investigation under the same rulebook.  Directly targeting Big Tech is all but certain to trigger the ire of tech CEOs like Elon Musk, Jeff Bezos and Mark Zuckerberg, who have cultivated close ties with Donald Trump. | Pool Photo by Demaree Nikhinson via Getty Images EU officials have been at pains to stress that enforcement under these laws shouldn’t be considered part of a trade war.  “The DMA is not a bargaining chip,” said French Renew lawmaker Stéphanie Yon-Courtin. “This regulation is conceived to establish fair rules of the game in Europe, not to be leveraged in a trade agreement with the United States.” The lead lawmaker on the DMA, Andreas Schwab of the center-right European People’s Party (EPP), said the Commission should have been quicker to issue its imminent decisions on Apple and Meta, precisely to show that “there is nothing political about them.” The core argument is that the EU’s tech laws exist to uphold European values, not to discriminate or to target a given country. Any suggestion to the contrary could hurt the Commission when Big Tech firms inevitably litigate the first fines and penalties under the laws. Washington, however, has suggested the opposite. The Trump administration in February threatened retaliatory tariffs against the EU tech regime specifically, citing perceived risks for U.S. companies and freedom of expression.  Wednesday’s tariff announcements from the White House have reupped calls for Brussels to pull the trigger on investigations under the rulebooks.   Since Trump is “open for negotiations, I fear that he will try to use the digital services as a negotiating tool. But I hope the European Commission will be firm,” Danish socialist MEP Christel Schaldemose said.  Greens lawmaker Alexandra Geese agreed: “Let’s strongly enforce DSA and DMA.”  TAXES AND LEVIES Proponents of a bullish response to Trump’s tariffs see several other forms of retaliation: slapping higher taxes on digital services, and excluding U.S. tech firms from bidding for government contracts. Brando Benifei, a social democrat lawmaker who leads the Parliament’s delegation to the U.S., flagged the need for “broad countermeasures that hit where it really hurts,” with “targeting services, such as big tech firms,” as one option. In a written comment he suggested retaliating against intellectual property rights or excluding U.S. companies from public procurement. Digital services will “inevitably come into focus,” said Finnish EPP lawmaker Aura Salla, who is also a former top lobbyist for Meta in Brussels. EPP President Manfred Weber said on Tuesday that the “digital giants only pay little to our digital infrastructure where they benefit so much.”  Some EU countries are adding to the chorus. On Thursday French government spokesperson Sophie Primas said the EU’s next wave of retaliation could target “digital services that are currently not taxed. ”  The Commission is set to fine Apple and Meta for violating digital competition rules, the first such fines to be issued under the DMA, late this week or early next week. | Oliver Douliery/Getty Images French liberal European lawmaker Sandro Gozi, meanwhile, mentioned “taxing American digital giants” as among the options.  The issue of a digital services tax has been simmering for a while in the EU, but the bloc’s 27 member countries have no unanimity on the issue, and taxation policy requires all EU countries to agree on joint policy. Some member countries have thus gone solo. Most recently, Belgium’s ruling coalition deal contained an agreement to install a digital tax by 2027 if there’s no deal at the international or EU level. Ireland, the European home base of several U.S. Big Tech companies, pushed back right away on Tuesday. Targeting U.S. digital services is not the EU’s position, said Irish Trade Minister Simon Harris, adding it could be very damaging for Ireland.  Gregorio Sorgi contributed reporting.

PARIS — French President Emmanuel Macron wants to lead a charm offensive to convince EU countries to stop buying U.S. defense equipment and buy French and European instead. Macron, who has been calling for years to direct defense spending toward EU products, said he wants to convince other European countries that are currently “buying American” to shift to local options. “My intention is to go and convince European states that have become accustomed to buying American,” he said on Saturday in an interview with several French media including Nice-Matin and Le Parisien. “Those who buy Patriot should be offered the new-generation Franco-Italian SAMP/T. Those who buy the F-35, should be offered the Rafale. That’s the way to increase the rate of production,” he said. Macron’s comments come as European NATO members have become even more dependent on U.S. weapons than ever before. This month, the Netherlands and Belgium confirmed they would still buy American-made F-35 fighter jets, while Portugal is wobbling about replacing its U.S.-made F-16 fighter jets with more modern F-35s because of “the recent position of the United States, in the context of NATO.” Macron said he has asked French defense companies to cut red tape and reduce costs to become a more attractive option, Nice-Matin reported. The French president also clarified what a possible deployment of European troops to help Ukraine could look like. The goal is to “deploy a few thousand men per nation, at key points, to carry out training programs” and “show our support over the long term,” he said. Macron said that the conditions laid down by Russian President Vladimir Putin to agree on a ceasefire in Ukraine “are unacceptable.” “This would mean a partial invasion of Ukraine and a freeze on the conflict, without offering any security or guarantees for the future,” Macron said. Macron announced for “the coming weeks” a reform of the so-called “Service National Universel” — a voluntary service for people aged between 15 and 17 that includes sporting activities, civic education and a stint at a state organization or nongovernmental organization — “to meet the nation’s needs and the priorities we have identified.” The French president, however, ruled out a comeback of compulsory military service.

BRUSSELS — The European Union is under pressure to step up its tech game and wean itself off a heavy reliance on United States digital infrastructure and services as transatlantic ties hit a new low. That’s going to come with a heavy price tag. European data is primarily stored on U.S. cloud services, with companies like Amazon, Microsoft and Google owning over two-thirds of the European market. Europe accounts for just 10 percent of the global microchips market. U.S.-based companies like OpenAI and Anthropic are leading the artificial intelligence revolution.  Europe’s U.S. tech addiction has long been brushed aside as a fait accompli.  That’s now in question as Germany’s incoming chancellor warned that Europe needs to “achieve independence from the USA” as U.S. President Donald Trump threatens tariffs and withdraws support from Ukraine. Efforts to make Europe more technologically “sovereign” have gone mainstream. The European Commission now has its first-ever “technology sovereignty” chief, Henna Virkkunen. Germany’s incoming ruling party, the center-right Christian Democratic Union, called for “sovereign” tech in its program for the February election. “Mounting friction across the Atlantic makes it clearer than ever that Europe must control its own technological destiny,” said Francesca Bria, an innovation professor at University College London and former president of Italy’s National Innovation Fund. STACKED Over the last year, some influential tech policy people — Bria included — have gathered around the idea of a EuroStack. They claim that to build a European tech infrastructure, three layers of core technologies stacked on top of one another must be addressed and tackled simultaneously.  The first is infrastructure, such as microchips; the second is intermediaries, such as cloud platforms, a digital ID, or the digital euro; and the third is applications, connected and driven by artificial intelligence.  Sovereignty runs through the three layers: chips designed in Europe to power data centers and cloud services that store data locally, on which European AI models are trained.  Cristina Caffarra, a competition economist, told POLITICO in January that the point is not to eliminate U.S. Big Tech in those layers but to at least “create some space for European technology.”  European data is primarily stored on U.S. cloud services, with companies like Amazon, Microsoft and Google owning over two-thirds of the European market. | Ina Fassbender/Getty Images Bria argues that a more European sovereign infrastructure ensures that “no external power can pull the plug on the EU’s digital backbone,” a risk if relations with the U.S. and China cool.  Europe has had promising pilot projects in all layers, but they have either failed to scale or were unsustainable in the long term.  The cloud is Europe’s biggest weakness. Cloud services act as the backbone for many public and business services and store sensitive data. Despite the Franco-German Gaia-X push to convince European companies to store data locally with European providers, the share of European cloud providers has consistently declined in recent years.  EuroStack advocates see that the tide can be turned only with sustained investment, guaranteed government demand, and unified rules on transferring and securing data.  Sebastiano Toffaletti, secretary-general of the Digital SME Alliance and one of the authors of a study on the EuroStack, claims that a Buy European Tech Act could be a decisive step toward a European cloud.  “Europe has plenty of industrial capacity that just needs to be federated,” he said.  “If the European companies were reassured that governments would buy from them, then they would immediately invest and overcome the fragmentation,” he said. The same goes for AI, he added. Sarah Knafo, a French far-right European lawmaker, suggested in a draft report for the European Parliament that governments should favor sourcing from European companies in some “strategic markets.” The Commission has separately recommended a “buy European” push for governments purchasing climate-friendly products. Cybersecurity entrepreneur Bert Hubert, who has advised the Dutch government, said “it is madness to continue transferring the running of European societies and governments to American clouds,” according to a February blog post. U.S.-based companies like OpenAI and Anthropic are leading the artificial intelligence revolution. | Pau Barrena/Getty Images Axel Voss, a German center-right member of Parliament, echoed this, telling POLITICO that “we do not have a reliable U.S. partner any longer” and that Europe should develop its own “sovereign AI and secure cloud” in response. PRICE TAG The EU executive has started picking up the pleas for more sovereign European tech, especially in AI. Boosting AI computing capacity in Europe has been one of the Commission’s key objectives. Virkkunen in December announced up to €2 billion in investment in seven European sites. The U.S. immediately dwarfed that amount by promising a $500 billion AI hardware plan in January. In response, the EU made an attempt in February to mobilize €200 billion for AI hardware from private investors, companies, EU countries and its own funds. The size of the investment needed is likely the biggest hurdle for building a European tech infrastructure. AI hardware is only one of the three layers needed for a sovereign European tech infrastructure. Bria points to a €300 billion price tag for building out the EuroStack over the next 10 years, as estimated in a recent study commissioned by the Bertelsmann Stiftung think tank. U.S. trade group Chamber of Progress, which includes several U.S. Big Tech companies, estimates that the full cost would be much higher, over €5 trillion. That could be too heavy a burden on the EU budget and financial capacity at a time when hundreds of billions of euros are already flowing to boost defense capacity.