Europe’s biggest ever trade deal finally got the nod Friday after 25 years of negotiating.  It took blood, sweat, tears and tortured discussions to get there, but EU countries at last backed the deal with the Mercosur bloc — paving the way to create a free trade area that covers more than 700 million people across Europe and Latin America.  The agreement, which awaits approval from the European Parliament, will eliminate more than 90 percent of tariffs on EU exports. European shoppers will be able to dine on grass-fed beef from the Argentinian pampas. Brazilian drivers will see import duties on German motors come down.  As for the accord’s economic impact, well, that pales in comparison with the epic battles over it: The European Commission estimates it will add €77.6 billion (or 0.05 percent) to the EU economy by 2040.  Like in any deal, there are winners and losers. POLITICO takes you through who is uncorking their Malbec, and who, on the other hand, is crying into the Bordeaux. WINNERS Giorgia Meloni Italy’s prime minister has done it again. Giorgia Meloni saw which way the political winds were blowing and skillfully extracted last-minute concessions for Italian farmers after threatening to throw her weight behind French opposition to the deal.  The end result? In exchange for its support, Rome was able to secure farm market safeguards and promises of fresh agriculture funding from the European Commission — wins that the government can trumpet in front of voters back home. It also means that Meloni has picked the winning side once more, coming off as the team player despite the last-minute holdup. All in all, yet another laurel in Rome’s crown.  The German car industry  Das Auto hasn’t had much reason to cheer of late, but Mercosur finally gives reason to celebrate. Germany’s famed automotive sector will have easier access to consumers in LatAm. Lower tariffs mean, all things being equal, more sales and a boost to the bottom line for companies like Volkswagen and BMW. There are a few catches. Tariffs, now at 35 percent, aren’t coming down all at once. At the behest of Brazil, which hosts an auto industry of its own, the removal of trade barriers will be staggered. Electric vehicles will be given preferential treatment, an area that Europe’s been lagging behind on.  Ursula von der Leyen Mercosur is a bittersweet triumph for European Commission President Ursula von der Leyen. Since shaking hands on the deal with Mercosur leaders more than a year ago, her team has bent over backwards to accommodate the demands of the skeptics and build the all-important qualified majority that finally materialized Friday. Expect a victory lap next week, when the Berlaymont boss travels to Paraguay to sign the agreement. Giorgia Meloni saw which way the political winds were blowing and skillfully extracted last-minute concessions for Italian farmers after threatening to throw her weight behind French opposition to the deal. | Ettore Ferrari/EPA On the international stage, it also helps burnish Brussels’ standing at a time when the bloc looks like a lumbering dinosaur, consistently outmaneuvered by the U.S. and China. A large-scale trade deal shows that the rules-based international order that the EU so cherishes is still alive, even as the U.S. whisked away a South American leader in chains.  But the deal came at a very high cost. Von der Leyen had to promise EU farmers €45 billion in subsidies to win them over, backtracking on efforts to rein in agricultural support in the EU budget and invest more in innovation and growth.   Europe’s farmers  Speaking of farmers, going by the headlines you could be forgiven for thinking that Mercosur is an unmitigated disaster. Surely innumerable tons of South American produce sold at rock-bottom prices are about to drive the hard-working French or Polish plowman off his land, right?  The reality is a little bit more complicated. The deal comes with strict quotas for categories ranging from beef to poultry. In effect, Latin American farmers will be limited to exporting a couple of chicken breasts per European person per year. Meanwhile, the deal recognizes special protections for European producers for specialty products like Italian parmesan or French wine, who stand to benefit from the expanded market. So much for the agri-pocalpyse now.  Mercosur is a bittersweet triumph for European Commission President Ursula von der Leyen. | Olivier Matthys/EPA Then there’s the matter of the €45 billion of subsidies going into farmers’ pockets, and it’s hard not to conclude that — despite all the tractor protests and manure fights in downtown Brussels — the deal doesn’t smell too bad after all.  LOSERS Emmanuel Macron  There’s been no one high-ranking politician more steadfast in their opposition to the trade agreement than France’s President Emmanuel Macron who, under enormous domestic political pressure, has consistently opposed the deal. It’s no surprise then that France joined Poland, Austria, Ireland and Hungary to unsuccessfully vote against Mercosur.  The former investment banker might be a free-trading capitalist at heart, but he knows well that, domestically, the deal is seen as a knife in the back of long-suffering Gallic growers. Macron, who is burning through prime ministers at rates previously reserved for political basket cases like Italy, has had precious few wins recently. Torpedoing the free trade agreement, or at least delaying it further, would have been proof that the lame-duck French president still had some sway on the European stage.  Surely innumerable tons of South American produce sold at rock-bottom prices are about to drive the hard-working French or Polish plowman off his land, right? | Darek Delmanowicz/EPA Macron made a valiant attempt to rally the troops for a last-minute counterattack, and at one point it looked like he had a good chance to throw a wrench in the works after wooing Italy’s Meloni. That’s all come to nought. After this latest defeat, expect more lambasting of the French president in the national media, as Macron continues his slow-motion tumble down from the Olympian heights of the Élysée Palace.  Donald Trump Coming within days of the U.S. mission to snatch Venezuelan strongman Nicolás Maduro and put him on trial in New York, the Mercosur deal finally shows that Europe has no shortage of soft power to work constructively with like-minded partners — if it actually has the wit to make use of it smartly.  Any trade deal should be seen as a win-win proposition for both sides, and that is just not the way U.S. President Donald Trump and his art of the geopolitical shakedown works. It also has the incidental benefit of strengthening his adversaries — including Brazilian President and Mercosur head honcho Luiz Inácio Lula da Silva — who showed extraordinary patience as he waited on the EU to get their act together (and nurtured a public bromance with Macron even as the trade talks were deadlocked). China  China has been expanding exports to Latin America, particularly Brazil, during the decades when the EU was negotiating the Mercosur trade deal. The EU-Mercosur deal is an opportunity for Europe to claw back some market share, especially in competitive sectors like automotive, machines and aviation. The deal also strengthens the EU’s hand on staying on top when it comes to direct investments, an area where European companies are still outshining their Chinese competitors. Emmanuel Macron made a valiant attempt to rally the troops for a last-minute counterattack, and at one point it looked like he had a good chance to throw a wrench in the works after wooing Italy’s Meloni. | Pool photo by Ludovic Marin/EPA More politically, China has somewhat succeeded in drawing countries like Brazil away from Western points of view, for instance via the BRICS grouping, consisting of Brazil, Russia, India, China and South Africa, and other developing economies. Because the deal is not only about trade but also creates deeper political cooperation, Lula and his Mercosur counterparts become more closely linked to Europe. The Amazon rainforest  Unfortunately, for the world’s ecosystem, Mercosur means one thing: burn, baby, burn. The pastures that feed Brazil’s herds come at the expense of the nation’s once-sprawling, now-shrinking tropical rainforest. Put simply, more beef for Europe means less trees for the world. It’s not all bad news for the climate. The trade deal does include both mandatory safeguards against illegal deforestation, as well as a commitment to the Paris Climate Agreement for its signatories. 

BRUSSELS — Brussels is making a final push to get the European Union’s long-awaited trade deal with the Latin American Mercosur bloc over the finish line this week. The European Commission is expected to issue a declaration aimed at reassuring countries that have held out against the deal before a decisive vote on Friday, five officials with direct knowledge of the discussions told POLITICO. While the substance of the declaration is still unclear some of the officials, speaking on condition of anonymity, suggested they could include reassurances on payments to European farmers. That would be critical for winning back the support of Italian Prime Minister Giorgia Meloni, who pulled the emergency brake before an EU leaders’ summit in Brussels last month under pressure from her country’s powerful farming lobby. Under the EU’s voting rules, a so-called qualified majority — of 15 out of the bloc’s 27 member countries representing 65 percent of its population — would be needed to back the deal that has been in the works for a quarter century. Italy, with its large population, effectively holds the casting vote. If the Commission can offer reassurances on some money for farmers under the EU’s next seven-year budget, which runs from 2028 to 2034, that would help soften the impact of a proposed one-fifth reduction in the Common Agricultural Policy, under which the bloc distributes subsidies to farmers. The new concessions may not win over France and Poland, the main opponents of the accord with Mercosur — which groups Argentina, Brazil, Paraguay and Uruguay. But, without Italy, they and their allies would lack the votes to block the deal on Friday. The agriculture ministers of France and Poland are expected to visit Brussels Wednesday to seek reassurances that supplementary safeguards agreed on by the EU institutions to prevent European farmers from being undercut by a possible glut of South American produce are strong enough. If the vote goes through, Commission President Ursula von der Leyen would finally be free to fly to Paraguay as early as next week to sign the deal, which has been under negotiation for over a quarter of a century and would create a free-trade area of more than 700 million people and abolish duties on 90 percent of EU exports. If the vote goes through, Commission President Ursula von der Leyen would finally be free to fly to Paraguay as early as next week to sign the deal. | Olivier Hoslet/EPA POLITICO has reached out to the European Commission for comment. Earlier on Monday, chief spokesperson Paula Pinho said: “We are on the right track to envisage a signing of the agreement and we do hope that will take place quite soon.” The Italian government did not immediately respond to a request for comment.

Donald Trump started his second term by calling the European Union an “atrocity” on trade. He said it was created to “screw” Americans. As he imposed the highest tariffs in a century, he derided Europe as “pathetic.” And to round off the year, he slammed the continent as “weak” and “decaying.” In the midst of all this, Ursula von der Leyen, the EU’s top official, somehow summoned the composure to fly to Trump’s Scottish golf resort to smile and shake hands on a one-sided trade deal that will inflict untold pain on European exporters. She even managed a thumbs up in the family photo with Trump afterwards. Yes, it’s been one hell of a year for the world’s biggest trading relationship. The economic consequences will take years to materialize — but the short-term impact is manifest: in forcing Europe to face up to its overreliance on the U.S. security umbrella and find new friends to trade with. With a warning that the following might trigger flashbacks, we take you through POLITICO’s coverage of Europe’s traumatic trade year at the hands of Trump: JANUARY As Trump returns to the White House, we explore how America’s trading partners are wargaming his trade threats. The big idea? Escalate to de-escalate. It’s a playbook we later saw unfold in Trump’s clashes with China and Canada. But, in the event, the EU never dares to escalate. Trump’s return does galvanize the EU into advancing trade deals with other partners — like Mexico or Latin America’s Mercosur bloc. “Europe will keep seeking cooperation — not only with our long-time like-minded friends, but with any country we share interests with,” von der Leyen tells the World Economic Forum the day after Trump is sworn in. FEBRUARY As Trump announces that he will reimpose steel and aluminum tariffs, von der Leyen vows a “firm and proportionate response.” The bloc has strengthened its trade defenses since his first term, and needs to be ready to activate them, advises former top Commission trade official Jean-Luc Demarty: “Especially with a personality like Trump, if we don’t react, he’ll trample us.” That begs the question as to whether trade wars are as easy to win, as Trump likes to say. The short answer is, of course, “no.” Trade Commissioner Maroš Šefčovič, meanwhile, packs a suitcase full of concessions on his first mission to Washington. At the end of the month, Brussels threatens to use its trade “bazooka” — a trade-defense weapon called the Anti-Coercion Instrument — after Trump says the European Union was created to “screw” America. MARCH We called it early with this cover story by Nicholas Vinocur and Camille Gijs: Trump wants to destroy the EU — and rebuild it in his image. As Trump’s steel tariffs enter force, Brussels announces retaliatory measures that far exceed those it imposed in his first term. And, as he builds up to his “Liberation Day” tariff announcement, the EU signals retaliation extending beyond goods to services such as tech and banking. (None of these are implemented.) APRIL “They rip us off. It’s so sad to see. It’s so pathetic,” Trump taunts the EU as he throws it into the sin bin along with China, Japan, Taiwan and Korea. In his Liberation Day announcement in the White House Rose Garden, Trump whacks the EU with a 20 percent “reciprocal” tariff. Von der Leyen’s response the next morning is weak: She says only that the EU is “prepared to respond.” That’s because, even though the EU has strengthened its trade armory, its 27 member countries can’t agree to deploy it. The bloc nonetheless busies itself with drawing up a retaliation list of goods made in states run by Trump’s Republican allies — including trucks, cigarettes and ice cream. MAY The EU’s hit list gets longer in response to Trump’s Liberation Day tariffs — with planes and automobiles targeted in a €100 billion counterstrike that looks scary on paper but is never acted on.  We report exclusively that Brussels is ramping up contacts with a Pacific trade group called the CPTPP. And we assess the chances of Trump pressuring the EU into a big, beautiful trade deal by threatening to raise duties on European exports to 50 percent. The verdict? Dream on!  JUNE The setting shifts to the Canadian Rockies — where a G7 summit takes on a G6 vs. Trump dynamic as other leaders seek ways to cooperate with him on Russia and China even as he pummels them with tariffs. Von der Leyen tries her best, turning hawkish on China in a bid to find common ground. Back in Brussels, at a European leaders’ summit, von der Leyen announces her pivot to Asia — floating the idea of a world trade club without the U.S. JULY As the clock counts down to Trump’s July 9 deal deadline, the lack of unity among the EU’s 27 member countries undermines its credibility as a negotiating partner to be reckoned with. There’s still hope that the EU can lock in a 10 percent tariff, but should it take the deal or leave it? The deadline slips and, as talks drag on, it looks more likely that the EU will end up with a 15 percent baseline tariff — far higher than Europe had feared at the start of Trump’s term. Brussels is still talking about retaliation but … yeah … you already know that won’t happen. With Trump in Scotland for a golfing weekend, von der Leyen jets in to shake hands on a historic, but one-sided trade deal at his Turnberry resort. Koen Verhelst also flies in to get the big story. “It was heavy lifting we had to do,” von der Leyen said, stressing that the 15 percent tariff would be a ceiling. AUGUST Despite the thumbs-up in Turnberry, recriminations soon fly that the EU has accepted a bad deal. EU leaders defend it as the best they could get, given Europe’s reliance on the U.S. to guarantee its security. The two sides come out with a joint statement spelling out the terms — POLITICO breaks it down. Not only does the EU come off worse in the Turnberry deal, but it also sacrifices its long-term commitment to rules-based trade in return for Trump’s uncertain support for Ukraine. The realization slowly dawns that Europe’s humiliation could be profound and long-lasting. With the ink barely dry on the accord, Trump takes aim at digital taxes and regulation that he views as discriminatory. It’s a blast that is clearly aimed at Brussels. SEPTEMBER The torrent of trade news slows — allowing Antonia Zimmermann to travel to Ireland’s “Viagra Village” to report how Trump’s drive to reshore drug production threatens Europe’s top pharmaceuticals exporter. OCTOBER EU leaders resist Trump’s pressure to tear up the bloc’s business rules, instead trying to present a red tape-cutting drive pushed by von der Leyen as a self-generated reform that has the fringe benefit of addressing U.S. concerns.    NOVEMBER Attention shifts to Washington as the U.S. Supreme Court hears challenges to Trump’s sweeping tariffs. The justices are skeptical of his invocation of emergency powers to justify them. Even Trump appointees on the bench subject his lawyer to tough questioning.  A row flares on the first visit to Brussels by U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer. Lutnick presses for concessions on EU digital regulation in exchange for possible tariff relief on steel. “Blackmail,” is the counterblast from Teresa Ribera, the EU’s top competition regulator. DECEMBER The year ends as it started, with another Trump broadside against Europe and its leaders. “I think they’re weak,” he tells POLITICO. “They don’t know what to do on trade, either.”

BRUSSELS — The European Commission has done everything in its power to accommodate the concerns of member countries over the EU’s trade deal with the Latin American Mercosur bloc and get it over the finish line, Trade Commissioner Maroš Šefčovič told POLITICO. “I hope we will pass the test this week because we really went to unprecedented lengths to address the concerns which have been presented to us,” Šefčovič said in an interview on Monday.  “Now it’s a matter of credibility, and it’s a matter of being strategic,” he stressed, explaining that the huge trade deal is vital for the European Union at a time of increasingly assertive behavior by China and the United States. “Mercosur very much reflects our ambition to play a strategic role in trade, to confirm that we are the biggest trader on this planet.” The commissioner’s remarks come as time is running short to hold a vote among member countries that would allow Commission President Ursula von der Leyen to fly to Brazil on Dec. 20 for a signing ceremony with the Mercosur countries — Brazil, Argentina, Uruguay and Paraguay. “The last miles are always the most difficult,” Šefčovič added. “But I really hope that we can do it this week because I understand the anxiety on the side of our Latin American partners.”  The vote in the Council of the EU, the bloc’s intergovernmental branch, has still to be scheduled. To pass, it would need to win the support of a qualified majority of 15 member countries representing 65 percent of the bloc’s population. It’s not clear whether France — the EU country most strongly opposed to the deal — can muster a blocking minority. If Paris loses, it would be the first time the EU has concluded a big trade deal against the wishes of a major founding member. France, on Sunday evening, called for the vote to be postponed, widening a rift within the bloc over the controversial pact that has been under negotiation for more than 25 years. Several pro-deal countries warn that the holdup risks killing the trade deal, concerned that further stalling it could embolden opposition in the European Parliament or complicate next steps when Paraguay, which is skeptical toward the agreement, takes over the presidency of the Mercosur bloc from current holder Brazil. Asked whether Brussels had a Plan B if the vote does not take place on time, Šefčovič declined to speculate. He instead put the focus on a separate vote on Tuesday in the European Parliament on additional farm market safeguards proposed by the Commission to address French concerns. “There are still expectations on how much we can advance with some of the measures which are not yet approved, particularly in the European Parliament,” he stressed.  “If you look at the safeguard regulation, we never did anything like this before. It’s the first [time] ever. It’s, I would say, very, very far reaching.” 

BRUSSELS — The French government called on Sunday to postpone a crucial vote by countries on the EU-Mercosur trade agreement, widening a rift within the bloc over the controversial pact. “France is asking for the December deadlines to be pushed back so we can keep working and get the legitimate protections our European agriculture needs,” the office of Prime Minister Sébastien Lecornu said Sunday evening. The statement confirmed a POLITICO report on Thursday that Paris was pushing for a delay. It comes within sight of the finish line for the European Union to finally close the agreement with Argentina, Brazil, Uruguay and Paraguay that has been in negotiations for over 25 years and would create a common market of over 700 million people. Denmark, which holds the presidency of the Council of the EU, has vowed to hold the vote in time for European Commission President Ursula von der Leyen to fly to Brazil on Dec. 20 to sign the deal. Several countries warn that the holdup risks ultimately killing the trade deal, concerned that further stalling it could embolden opposition in the European Parliament or complicate next steps when Paraguay, which is skeptical toward the agreement, takes over the presidency of the Mercosur bloc from current holder Brazil. Pro-deal countries, including Germany, Sweden and Spain, argue that France’s concerns have already been accommodated, pointing to proposed additional safeguards designed to protect European farmers in the event of a surge in Latin American beef or poultry imports. But with those safeguards still not finalized, France says it still can’t back the deal, wary that it could enrage the country’s politically powerful farming community. Brussels also announced this month it was planning to strengthen its border controls on food, animal and plant imports. “These advances are still incomplete and must be finalized and implemented in an operational, robust and effective manner in order to produce and appreciate their full effects,” Lecornu’s office said. Denmark, which holds the presidency of the Council of the EU, has vowed to hold the vote in time for European Commission President Ursula von der Leyen to fly to Brazil on Dec. 20 to sign the deal. | Wagner Meier/Getty Images Despite Denmark’s resolve to hold the vote in time, final talks among EU member countries may not be wrapped up before a summit of European leaders on Thursday and Friday this week. A big farmers’ protest is planned in Brussels on Thursday. The Commission declined to comment.

President Donald Trump promised that a wave of emergency tariffs on nearly every nation would restore “fair” trade and jump-start the economy. Eight months later, half of U.S. imports are avoiding those tariffs. “To all of the foreign presidents, prime ministers, kings, queens, ambassadors, and everyone else who will soon be calling to ask for exemptions from these tariffs,” Trump said in April when he rolled out global tariffs based on the United States’ trade deficits with other countries, “I say, terminate your own tariffs, drop your barriers, don’t manipulate your currencies.” But in the time since the president gave that Rose Garden speech announcing the highest tariffs in a century, enormous holes have appeared. Carveouts for specific products, trade deals with major allies and conflicting import duties have let more than half of all imports escape his sweeping emergency tariffs. Some $1.6 trillion in annual imports are subject to the tariffs, while at least $1.7 trillion are excluded, either because they are duty-free or subject to another tariff, according to a POLITICO analysis based on last year’s import data. The exemptions on thousands of goods could undercut Trump’s effort to protect American manufacturing, shrink the trade deficit and raise new revenue to fund his domestic agenda. In September, the White House exempted hundreds of goods, including critical minerals and industrial materials, totaling nearly $280 billion worth of annual imports. Then in November, the administration exempted $252 billion worth of mostly agricultural imports like beef, coffee and bananas, some of which are not widely produced in the U.S. — just after cost-of-living issues became a major talking point out of Democratic electoral victories — on top of the hundreds of other carveouts. “The administration, for most of this year, spent a lot of time saying tariffs are a way to offload taxes onto foreigners,” said Ed Gresser, a former assistant U.S. trade representative under Democratic and Republican administrations, including Trump’s first term, who now works at the Progressive Policy Institute, a D.C.-based think tank. “I think that becomes very hard to continue arguing when you then say, ‘But we are going to get rid of tariffs on coffee and beef, and that will bring prices down.’ … It’s a big retreat in principle.” The Trump administration has argued that higher tariffs would rebalance the United States’ trade deficits with many of its major trading partners, which Trump blames for the “hollowing out” of U.S. manufacturing in what he evoked as a “national emergency.” Before the Supreme Court, the administration is defending the president’s use of the 1977 International Emergency Economic Powers Act to enact the tariffs, and Trump has said that a potential court-ordered end to the emergency tariffs would be “country-threatening.” In an interview with POLITICO on Monday, Trump said he was open to adding even more exemptions to tariffs. He downplayed the existing carveouts as “very small” and “not a big deal,” and said he plans to pair them with tariff increases elsewhere. Responding to POLITICO’s analysis, White House spokesperson Kush Desai said, “The Trump administration is implementing a nuanced and nimble tariff agenda to address our historic trade deficit and safeguard our national security. This agenda has already resulted in trillions in investments to make and hire in America along with over a dozen trade deals with some of America’s most important trade partners.” To date, the majority of exemptions to the “reciprocal” tariffs — the minimum 10 percent levies on most countries — have been for reasons other than new trade deals, according to POLITICO’s analysis. The White House also pushed back against the notion that November’s cuts were made in an effort to reduce food prices, saying that the exemptions were first outlined in the September order. The U.S. granted subsequent blanket exemptions, regardless of the status of countries’ trade negotiations with the Trump administration, after announcing several trade deals. Following the exemptions on agricultural tariffs, Trump announced on Monday a $12 billion relief aid package for farmers hurt by tariffs and rising production costs. The money will come from an Agriculture Department fund, though the president said it was paid for by revenue from tariffs (by law, Congress would need to approve spending the money that tariffs bring in). In addition to the exemptions from Trump’s reciprocal tariffs, more than $300 billion of imports are also exempted as part of trade deals the administration has negotiated in recent months, including with the European Union, the United Kingdom, Japan and more recently, Malaysia, Cambodia and Brazil. The deal with Brazil removed a range of products from a cumulative tariff of 50 percent, making two-thirds of imports from the country free from emergency tariffs. For Canadian and Mexican goods, Trump imposed tariffs under a separate emergency justification over fentanyl trafficking and undocumented migrants. But about half of imports from Mexico and nearly 40 percent of those from Canada will not face tariffs because of the U.S.-Mexico-Canada free trade agreement that Trump negotiated in his first term. Last year, importers claimed USMCA exemptions on $405 billion in goods; that value is expected to increase, given that the two countries are facing high tariffs for the first time in several years. The Trump administration has also exempted several products — including autos, steel and aluminum — from the emergency reciprocal tariffs because they already face duties under Section 232 of the U.S. Trade Expansion Act of 1962. The imports covered by those tariffs could total up to $900 billion annually, some of which may also be exempt under USMCA. The White House is considering using the law to justify further tariffs on pharmaceuticals, semiconductors and several other industries. For now, the emergency tariffs remain in place as the Supreme Court weighs whether Trump exceeded his authority in imposing them. In May, the U.S. Court of International Trade ruled that Trump’s use of emergency authority was unlawful — a decision the U.S. Court of Appeals upheld in August. During oral arguments on Nov. 5, several Supreme Court justices expressed skepticism that the emergency statute authorizes a president to levy tariffs, a power constitutionally assigned to Congress. As the rates of tariffs and their subsequent exemptions are quickly added and amended, businesses are struggling to keep pace, said Sabine Altendorf, an economist with the Food and Agriculture Organization of the United Nations. “When there’s uncertainty and rapid changes, it makes operations very difficult,” Altendorf said. “Especially for agricultural products where growing times and planting times are involved, it’s very important for market actors to be able to plan ahead.” ABOUT THE DATA Trump’s trade policy is not a straightforward, one-size-fits-all approach, despite the blanket tariffs on most countries of the world. POLITICO used 2024 import data to estimate the value of goods subject to each tariff, accounting for the stacking rules outlined below. Under Trump’s current system, some tariffs can “stack” — meaning a product can face more than one tariff if multiple trade actions apply to it. Section 232 tariffs cover automobiles, automobile parts, products made of steel and aluminum, copper and lumber — and are applied in that order of priority. Section 232 tariffs as a whole then take priority over other emergency tariffs. We applied this stacking priority order to all imports to ensure no double-counting. To calculate the total exclusions, we did not count the value of products containing steel, aluminum and copper, since the tariff would apply only to the known portion of the import’s metal contentand not the total import value of all products containing them. This makes the $1.7 trillion in exclusions a minimum estimate. Goods from Canada and Mexico imported under USMCA face no tariffs. Some of these products fall under a Section 232 category and may be charged applicable tariffs for the non-USMCA portion of the import. To claim exemptions under USMCA, importers must indicate the percentage of the product made or assembled in Canada or Mexico. Because detailed commodity-level data on which imports qualify for USMCA is not available, POLITICO’s analysis estimated the amount that would be excluded from tariffs on Mexican and Canadian imports by applying each country’s USMCA-exempt share to its non-Section 232 import value. For instance, 38 percent of Canada’s total imports qualified for USMCA. The non-Section 232 imports from Canada totaled around $320 billion, so we used only $121 billion towards our calculation of total goods excluded from Trump’s emergency tariffs. Exemptions from trade deals included those with the European Union, the United Kingdom, Japan, Brazil, Cambodia and Malaysia. They do not include “frameworks” for agreements announced by the administration. Exemptions were calculated in chronological order of when the deals were announced. Imports already exempted in previous orders were not counted again, even if they appeared on subsequent exemption lists.

Two U.S. Army soldiers and one U.S. civilian interpreter were killed while three service members were left wounded in an ambush attack on Saturday in Palmyra, Syria, U.S. officials confirmed. Sean Parnell, the Pentagon spokesperson, confirmed the news on X Saturday morning, saying the two soldiers “were conducting a key leader engagement” and that their mission in the city was “in support of on-going counter-ISIS / counter-terrorism operations in the region. In a press release, U.S. Central Command said the attack was carried out by a “lone ISIS gunman” who was “engaged and killed.” President Donald Trump on Saturday said that in light of the attack, which he framed as an assault on both the U.S. and Syria, there will be “serious retaliation.” The president also said the soldiers were killed “in a very dangerous part of Syria, that is not fully controlled by them.” A Pentagon official said that Saturday’s attack took place in an area where current Syrian President Ahmed al-Sharaa does not have control. As of April, the U.S. had about 2,000 troops stationed in Syria involved in advisory, training, and counter-ISIS missions. Secretary of Defense Pete Hegseth confirmed that the person who perpetrated the attack had been killed. “Let it be known, if you target Americans — anywhere in the world — you will spend the rest of your brief, anxious life knowing the United States will hunt you, find you, and ruthlessly kill you,” Hegseth added in his post on X. The Kurdish-led and U.S.-backed Syrian Democratic Forces also weighed in on X, saying, “We express our regret for the injury of a number of public security personnel and U.S. soldiers following their exposure to gunfire in the Syrian Badia while performing their duties,” according to a translation of the post from Arabic. The U.S. first deployed to Syria during the Obama administration as part of the Operation Inherent Resolve coalition to fight ISIS. After ISIS lost almost all territorial control by 2019, the U.S. did not fully withdraw but kept a smaller contingent of troops in the Middle Eastern nation to prevent the group’s resurgence. In 2024, the longstanding government of former Syrian President Bashar al-Assad fell, and a new transitional Syrian government formed with U.S. encouragement. Parnell, in his statement, said the soldiers’ names, as well as identifying information about their units, are being withheld for 24 hours after the next of kin notification. He also said an active investigation is underway.

LONDON — The British government is working to give its trade chief new powers to move faster in imposing higher tariffs on imports, as it faces pressure from Brussels and Washington to combat Chinese industrial overcapacity. Under new rules drawn up by British officials, Trade Secretary Peter Kyle will have the power to direct the Trade Remedies Authority (TRA) to launch investigations and give ministers options to set higher duty levels to protect domestic businesses. The trade watchdog will be required to set out the results of anti-dumping and anti-subsidy investigations within a year, better monitor trade distortions and streamline processes for businesses to prompt trade probes. The U.K. is in negotiations with the U.S. and the EU to forge a steel alliance to counter Chinese overcapacity as the bloc works to introduce its own updated safeguards regime. The EU is the U.K.’s largest market and Brussels is creating a new steel protection regime that is set to slash Britain’s tariff-free export quotas and place 50 percent duties on any in excess. The government said its directive to the TRA will align the U.K. with similar powers in the EU and Australia, and follow World Trade Organization rules. It is set out in a Strategic Steer to the watchdog and will be introduced as part of the finance bill due to be wrapped up in the spring. “We are strengthening the U.K.’s system for tackling unfair trade to give our producers and manufacturers — especially SMEs who have less capacity and capability — the backing they need to grow and compete,” Business and Trade Secretary Peter Kyle said in a statement. “By streamlining processes and aligning our framework with international peers, we are ensuring U.K. industry has the tools to protect jobs, attract investment and thrive in a changing global economy,” Kyle added. These moves come after the government said on Wednesday that its Steel Strategy, which plots the future of the industry in Britain and new trade protections for the sector, will be delayed until next year. The Trump administration has been concerned about the U.K.’s steps to counter China’s steel overcapacity and refused to lower further a 25 percent tariff carve-out for Britain’s steel and aluminum exports from the White House’s 50 percent global duties on the metals. Trade Secretary Kyle discussed lowering the Trump administration’s tariffs on U.K. steel with senior U.S. Cabinet members in Washington on Wednesday.  “We are very much on the case of trying to sort out precisely where we land with the EU safeguard,” Trade Minister Chris Bryant told parliament Thursday, after meeting with EU Trade Commissioner Maroš Šefčovič on Wednesday for negotiations. “We will do everything we can to make sure that we have a strong and prosperous steel sector across the whole of the U.K.,” Bryant said. The TRA has also launched a new public-facing Import Trends Monitor tool to help firms detect surges in imports that could harm their business and provide evidence that could prompt an investigation by the watchdog. “We welcome the government’s strategic steer, which marks a significant milestone in our shared goal to make the U.K.’s trade remedies regime more agile, accessible and assertive, as well as providing greater accountability,” said the TRA’s Co-Chief Executives Jessica Blakely and Carmen Suarez. Sophie Inge and Jon Stone contributed reporting.

European industry is facing a “life or death” moment, says French President Emmanuel Macron, squeezed between an ultra-competitive China and a protectionist America — and Beijing should ride to its rescue with long overdue foreign investment. “The Chinese have to do in Europe what the Europeans did 25 years ago by investing in China,” Macron told the Les Echos financial newspaper upon returning from his fourth official trip to Beijing since 2018. The continent’s trade deficit with China was €306 billion in 2024, on some €213 billion in exports against €519 billion in imports. “I am trying to explain to the Chinese that their trade surplus is untenable and that they are killing their own customers, mainly by not importing much from us,” the French leader said. A similar imbalance exists between Europe’s €232 billion investment stock in China — the total value of accumulated portfolio investments and FDI — and China’s €65 billion in Europe, according to data for 2023. “We recognize that they are very good in some areas. But we can’t be constantly importing,” Macron said. “Chinese businesses have to come to Europe, just like EDF and Airbus previously went to China, and create value and opportunities for Europe.” He added, however, that “Chinese investments in Europe must not be predatory, by which I mean in pursuit of hegemony and creating dependencies.” France takes up the 2026 presidency of the G7 group of major advanced economies on Jan. 1 and will host the G7 summit in Evian, France, in June. Bloomberg reported last month that Macron is considering inviting Chinese President Xi Jinping to the summit and intends to use its presidency to restore the G7 to its former global standing. Macron warned in the Les Echos interview that Europe might be forced to slap customs duties on Chinese imports, as the U.S. has done under Donald Trump, and accused Beijing of “hitting the heart of Europe’s innovation and industrial model.” But rather than more confrontation, the French president proposed a truce with Beijing — “the mutual dismantling of our aggressive policies, such as restrictions on the export of semiconductor machines on the European side and limitations on the export of rare earths on the Chinese side.”

LONDON — The U.K. has agreed to raise how much its National Health Service spends on new drugs, in a concession made under pressure from the Trump administration in return for tariff-free access to the U.S. market. “Today’s agreement is a major win for American workers and our innovation economy,” U.S. Commerce Secretary Howard Lutnick said in a statement on Monday. “This deal doesn’t just deepen our economic partnership with the United Kingdom — it ensures that the breakthroughs of tomorrow will be built, tested, and produced on American soil.”  The deal will see Britain increase the National Institute for Health and Care Excellence (NICE) cost-effectiveness threshold by 25 percent, as POLITICO first reported in October, and slash the cap on revenue the NHS can reclaim from drugmakers to no more than 15 percent.  The new NICE threshold will be £25,000 to £35,000 per quality adjusted life year gained over and above current treatments. The U.S. said the combined changes would increase the net price the NHS pays for new medicines by 25 percent. In exchange, the administration will grant an exemption for U.K.-made pharmaceuticals, ingredients and medical technology from U.S. tariffs for the remainder of President Donald Trump’s term.  U.K. Business and Trade Secretary Peter Kyle said: “This deal guarantees that UK pharmaceutical exports – worth at least £5 billion a year – will enter the US tariff free, protecting jobs, boosting investment and paving the way for the UK to become a global hub for life sciences. “We will continue to build on the UK-US Economic Prosperity Deal, and the record-breaking investments we secured during the US State Visit, to create jobs and raise living standards as part of our Plan for Change.” The breakthrough comes after months of back-and-forth between both sides, with the sector not covered in the Economic Prosperity Deal and Washington demanding a “preferential environment” to lift the threat of steep import duties. The administration had threatened to impose up to 100 percent tariffs on drugs.  In July, the President issued a letter to 17 drugmakers, demanding they offer their drugs to Medicaid at most-favored-nation prices, prices tied to lower prices abroad, and shift manufacturing to U.S. soil.  Update: This story has been updated following confirmation from the U.S. and U.K. governments.