LONDON — Prime Minister Keir Starmer usually goes out of his way not to annoy Donald Trump. So he better hope the windmill-hating U.S. president doesn’t notice what the U.K. just did. In a fillip for the global offshore wind industry, Starmer’s government on Wednesday announced its biggest-ever down payment on the technology. It agreed to price guarantees, funded by billpayers to the tune of up to £1.8 billion (€2.08 billion) a year, for eight major projects in England, Scotland and Wales. The schemes have the capacity to generate 8.4 gigawatts of electricity, the U.K. energy department said — enough to power 12 million homes. It represented the biggest “wind auction in Europe to date,” said industry group WindEurope. It’s also an energy strategy that could have been tailor-made to rankle Trump. The U.S. president has repeatedly expressed a profound loathing for wind turbines and has tried to use his powers to halt construction on projects already underway in the U.S. — sending shockwaves across the global industry. Even when appearing alongside Starmer at press conferences, Trump has been unable to hide his disgust at the very sight of windmills. “You are paying in Scotland and in the U.K. … to have these ugly monsters all over the place,” he said, sitting next to Starmer during a visit to his Turnberry golf course last year. The spinning blades, Trump complained, would “kill all your birds.” At the time, the prime minister explained meekly that the U.K. was seeking a “mix” of energy sources. But this week’s investments speak far louder about his government’s priorities. The U.K.’s strategy — part of a plan to run the British power grid on 95 percent clean electricity by 2030 — is a clear signal that for all Starmer’s attempts to appease Trump, the U.K. will not heed Washington’s assertions that fossil fuels are the only way to deliver affordable bills and secure supply. “With these results, Britain is taking back control of our energy sovereignty,” said Starmer’s Energy Secretary Ed Miliband, a former leader of the Labour party. “With these results, Britain is taking back control of our energy sovereignty,” said Energy Secretary Ed Miliband. | Pool photo by Justin Tallis via Getty Images While not mentioning Trump or the U.S., he said the U.K. wanted to “stand on our two feet” and not depend on “markets controlled by petrostates and dictators.” WIND VS. GAS The goal of the U.K.’s offshore wind drive is to reduce reliance on gas for electricity generation. One of the most gas-dependent countries in Europe, the U.K. was hit hard in 2022 by the regional gas price spike that followed Russia’s invasion of Ukraine. The government ended up spending tens of billions of pounds to pay a portion of every household energy bill in the country to fend off widespread hardship. It’s a scenario that Miliband and Starmer want to avoid in future by focusing on producing electricity from domestic sources like offshore wind that are not subject to the ups and downs of global fossil fuel markets. Trump, by contrast, wants to keep Europe hooked on gas — specifically, American gas. The U.S. National Security Strategy, updated late last year, states Trump’s desire to use American fossil fuel exports to “project power.” Trump has already strong-armed the European Union into committing to buy $750 billion worth of American liquefied natural gas (LNG) as a quid pro quo for tariff relief. No one in Starmer’s government explicitly named Trump or the U.S. on Wednesday. But Chris Stark, a senior official in Miliband’s energy department tasked with delivering the 2030 goal, noted that “every megawatt of offshore wind that we’re bringing on is a few more metric tons of LNG that we don’t need to import.” The U.K.’s investment in offshore wind also provides welcome relief to a global industry that has been seriously shaken both by soaring inflation and interest rates — and more recently by a Trump-inspired backlash against net zero and clean energy. “It’s a relief for the offshore sector … It’s a relief generally, that the U.K. government is able to lean into very large positive investment stories in U.K. infrastructure,” said Tom Glover, U.K. country chair of the German energy firm RWE, which was the biggest winner in the latest offshore wind investment, securing contracts for 6.9 gigawatts of capacity. A second energy industry figure, granted anonymity because they were not authorized to speak on the record, said the U.K.’s plans were a “great signal for the global offshore wind sector” after a difficult few years — “not least the stuff in the U.S.” The other big winner was British firm SSE, which has plans to build one of the world’s largest-ever offshore wind projects, Berwick Bank — off the coast of Donald Trump’s beloved Scotland.

BRUSSELS — The European Parliament’s leading trade lawmakers on Wednesday postponed a decision on whether to freeze a U.S. trade deal over Donald Trump’s threat to annex Greenland.  MEPs are due to hold a vote on Jan. 26, laying out the European Parliament’s position on lifting tariffs on U.S. industrial goods — one of the key planks of a deal struck between Brussels and Washington last summer. But some MEPs, angry at Trump’s behavior, don’t want the vote to go ahead, thereby freezing the decision on lifting the tariffs.  But at a meeting of lawmakers leading on the topic, they decided to delay taking a decision on whether to postpone or go ahead with the vote, awaiting the outcome of high-stakes meetings between Washington, Nuuk and Copenhagen taking place later Wednesday. “We are not in a position to move the agreement to a vote today,” lead trade lawmaker Karin Karlsbro, of the liberal Renew Europe, told POLITICO, adding that clarity from the U.S. on Greenland was essential.  Discussions will continue next Wednesday, the chair of the international trade committee, Bernd Lange, told POLITICO as he left the room. Political groups are divided over what to do in response to Trump’s threats to annex European territory. The Socialists and Democrats, of which Lange is a member, are leaning toward freezing the vote on the trade agreement. “One camp is more like, OK, let’s cooperate with the U.S. in order to get the maximum out, and there’s the other camp that says, OK we also need to show teeth and not give in on everything,” explained Green lawmaker Anna Cavazzini, who is also the chair of the internal market committee.  Cavazzini, who is in favor of freezing the deal, added that lawmakers agreed to delay the decision to “observe the global situation,” adding that the groups also need to agree on specific clauses in the final Parliament text.  The U.S. deal “will not be postponed,” assured EPP lawmaker Željana Zovko, telling POLITICO on Wednesday that any delay would hurt businesses as it would bring instability to transatlantic relations, while only Russia and China would benefit from it.  Under the deal struck in July, the EU committed itself to legislation lifting tariffs on U.S. industrial goods and lobsters, in exchange for Washington reducing tariffs on European cars. The deal is seen as lopsided in favor of Washington across party lines, but lawmakers were willing to put up with it in exchange for having Trump commit to protecting European security. As Greenland annexation threats continue, some no longer see the point of the deal. While the U.S. has upheld its end of the bargain on the car tariffs; the EU, so far, has not, because its institutions must still approve their positions on the Commission’s proposal. The lengthy process has already tested Washington’s patience, with Trade Representative Jamieson Greer telling POLITICO in December that the U.S. wouldn’t grant further tariff exemptions unless the EU keeps its end of the bargain. After the Council of the EU agreed on its position in late November, pressure is rising on the European Parliament to vote on its own stance.

President Donald Trump has set his sights on several targets in the Western Hemisphere beyond Venezuela — from Mexico with its drug cartels to the political cause célèbre of Cuba. But one place is oddly missing from Trump’s list: Nicaragua. This is a country led not by one, but two dictators. A place where the opposition has been exiled, imprisoned or otherwise stifled so much the word “totalitarian” comes to mind. A place the first Trump administration named alongside Cuba and Venezuela as part of a “troika of tyranny.” Yet it’s barely been mentioned by the second Trump administration. That could change any moment, of course, but right now Nicaragua is in an enviable position in the region. That got me wondering: What is the regime in Managua doing right to avoid Trump’s wrath? What does it have that others don’t? Or, maybe, what does it not have? And what does Nicaragua’s absence from the conversation say about Trump’s bigger motives? Current and former government officials and activists gave me a range of explanations, including that the regime is making smart moves on battling drug trafficking, that it’s benefiting from a lack of natural resources for Trump to covet and that it doesn’t have a slew of migrants in the U.S. Taken together, their answers offer one of the strongest arguments yet that Trump’s actions in the Western Hemisphere or beyond are rarely about helping oppressed people and more about U.S. material interests. “The lesson from Nicaragua is: Don’t matter too much, don’t embarrass Washington and don’t become a domestic political issue,” said Juan Gonzalez, a former Latin America aide to then-President Joe Biden. “For an administration that doesn’t care about democracy or human rights, that’s an effective survival strategy for authoritarians.” Some Nicaraguan opposition leaders say they remain optimistic, and I can’t blame them. Trump is rarely consistent about anything. He’s threatening to bomb Iran right now because, he says, he stands with protesters fighting an unjust regime (albeit one with oil). So maybe he might direct some fury toward Nicaragua? “The fact that Nicaragua is not at the center of the current conversation doesn’t mean that Nicaragua is irrelevant,” Felix Maradiaga, a Nicaraguan politician in exile, told me. “It means that the geopolitical interests of the U.S. right now are at a different place.” Nicaragua is run by Daniel Ortega and Rosario Murillo, a husband and wife who take the term “power couple” somewhat literally. They are now co-presidents of the Central American nation of 7 million. Over the years, they’ve rigged elections, wrested control over other branches of the government and crushed the opposition, while apparently grooming their children to succeed them. It has been a strange and circular journey for a pair of one-time Sandinista revolutionaries who previously fought to bring down a dynastic dictatorship. Hundreds of thousands of Nicaraguans have fled the impoverished country, some to the United States. Meanwhile, the regime has enhanced ties to Russia, China and other U.S. adversaries, while having rocky relations with Washington. Nicaragua is part of a free trade agreement with Washington, but it has also faced U.S. sanctions, tariffs and other penalties for oppressing its people, eroding democracy and having ties to Russia. Even the current Trump administration has used such measures against it, but the regime hasn’t buckled. Nicaraguan officials I reached out to didn’t respond with a comment. Several factors appear to make Nicaragua a lower priority for Trump. Unlike Venezuela, Nicaragua isn’t a major source of oil, the natural resource Trump covets most. It has gold, but not enough of that or other minerals to truly stand out. (Although yes, I know, Trump loves gold.) It’s also not a major source of migrants to the U.S. Besides, Trump has largely shut down the border. Unlike Panama, another country Trump has previously threatened, it doesn’t have a canal key to global commerce, although there’s occasional talk of building one. Nicaragua may be placating the president and his team by taking moves to curb drug trafficking. At least, that’s what a White House official told me when I sought comment from the administration on why Nicaragua has not been a focus. “Nicaragua is cooperating with us to stop drug trafficking and fight criminal elements in their territory,” the official said. I granted the White House official anonymity to discuss a sensitive national security issue. It’s difficult to establish how this cooperation is happening, and the White House official didn’t offer details. In fact, there were reports last year of tensions between the two countries over the issue. A federal report in March said the U.S. “will terminate its Drug Enforcement Administration (DEA) operations in Nicaragua in 2025, partly due to the lack of cooperation from Nicaragua’s agencies.” The DEA didn’t reply when I asked if it had followed up with that plan, but it’s possible the regime has become more helpful recently. The U.S. and Nicaragua’s cooperation on drugs has waxed and waned over the years. In any case, although drug runners use Nicaraguan territory, it’s not a major cartel hub compared to some other countries facing Trump’s ire, such as Mexico. Some Nicaraguan opposition activists have been hoping that U.S. legal moves against Venezuelan leader Nicolas Maduro would expose narcotrafficking links between Managua and Caracas, providing a reason for the U.S. to come down harder on the regime. They’ve pointed to a 2020 U.S. criminal indictment of Maduro that mentioned Nicaragua. But the latest indictment, unveiled upon Maduro’s Jan. 3 capture, doesn’t mention Nicaragua. When I asked the White House official why the newer indictment doesn’t mention Nicaragua, the person merely insisted that “both indictments are valid.” A spokesperson for the Department of Justice declined to comment. Nicaraguan opposition leaders say that although the new indictment doesn’t mention the country, they still hope it will come up during Maduro’s trial. My sense, though, is that Ortega and Murillo are cooperating just enough with the U.S. that the administration is willing to go easy on them for now. It probably also doesn’t hurt that, despite railing frequently against Washington, Ortega and Murillo don’t openly antagonize Trump himself. They may have learned a lesson from watching how hard Trump has come down on Colombia’s president for taunting him. Another reason Nicaragua isn’t getting much Trump attention? It is not a domestic political flashpoint in the U.S. Not, for example, the way Cuba has been for decades. The Cuban American community can move far more votes than the Nicaraguan American one. Plus, none of the aides closest to Trump are known to be too obsessed with Nicaragua. Secretary of State Marco Rubio has long denounced the Nicaraguan regime, but he’s of Cuban descent and more focused on that island’s fate. Cuba’s regime also is more dependent on Venezuela than Nicaragua’s, making it an easier target. Ortega and Murillo aren’t sucking up to Trump and striking deals with him like another area strongman, El Salvador’s Nayib Bukele. But, especially since the U.S. capture of Maduro, the pair seem bent on proving their anti-imperialist credentials without angering Trump. The results can be head-scratching. For example, in recent days, the regime is reported to have detained around 60 people for celebrating Maduro’s capture. But around the same time, the regime also reportedly freed “tens” of prisoners, at least some of whom were critics of Ortega and Murillo. Those people were released after the U.S. embassy in the country called on Nicaragua to follow in Venezuela’s recent footsteps and release political prisoners. However, the regime is reported to have described the releases as a way to commemorate 19 years of its rule. Alex Gray, a former senior National Security Council official in the first Trump administration, argued that one reason the president and his current team should care more about Nicaragua is its ties to U.S. adversaries such as Russia and China — ties that could grow if the U.S. ignores the Latin American country. Russia in particular has a strong security relationship with the regime in Managua. China has significantly expanded its ties in recent years, though more in the economic space. Iran also has warm relations with Managua. Nicaragua is the “poster child” for what Trump’s own National Security Strategy called the Trump Corollary to the Monroe Doctrine, which warns the U.S. will deny its adversaries the ability to meddle in the Western Hemisphere, Gray said. The White House official said the administration is “very closely” monitoring Nicaragua’s cooperation with U.S. rivals. But even that may not be enough for Trump to prioritize Nicaragua. Regardless of what his National Security Strategy says, Trump has a mixed record of standing up to Russia and China, and Nicaragua’s cooperation with them may not be as worrisome as that of a more strategically important country. With Trump, who himself often acts authoritarian, many things must fall in place at the right moment for him to care or act, and Nicaraguan opposition activists haven’t solved that Rubik’s Cube. Many are operating in exile. (In 2023, Ortega and Murillo put 222 imprisoned opposition activists on a plane to the U.S., then stripped them of their Nicaraguan citizenship. Many are now effectively stateless but vulnerable to Trump’s immigration crackdown.) It’s not lost on these activists that Trump has left much of Maduro’s regime in place in Venezuela. It suggests Trump values stability over democracy, human rights or justice. Some hope Ortega and Murillo will be weakened by the fall of their friend, Maduro. The two surely noticed how little Russia, China and others did to help the former leader. Maybe Nicaragua’s co-dictators will ease up on internal repression as one reaction. “When you get this kind of pressure, there are things that get in motion,” said Juan Sebastian Chamorro, a Nicaraguan politician forced out of the country. “They are feeling the heat.”

President Donald Trump threatened Monday to impose a 25 percent tariff on “any country” doing business with Iran, potentially affecting U.S. trade with China, India, the United Arab Emirates, the European Union and others. “Effective immediately, any Country doing business with the Islamic Republic of Iran will pay a Tariff of 25% on any and all business being done with the United States of America,” Trump wrote in a post on Truth Social. “This Order is final and conclusive. Thank you for your attention to this matter!” However, Trump does not appear to have issued an executive order to back up his statement as of late Monday afternoon. A White House spokesperson also did not immediately respond to questions about Trump’s social media post. The threat follows reports from human rights groups that hundreds of people have been killed in a brutal crackdown on protests against the Iranian regime that intensified over the weekend. Trump has previously warned that the U.S. could intervene if Iran’s government uses violence against the protesters. “For President Trump this seems like a pretty mild response to a very significant situation in Iran and so this will probably disappoint many in the Iranian American community,” said Michael Singh, former senior director for Middle East affairs at the National Security Council under President George W. Bush, now the managing director at the Washington Institute for Near East Policy. “The problem is that we have sanctions in place against Iran that are quite tough, but they’re not being enforced — I mean Iran is selling lots of oil, and so I think the question will be what’s new here and is it going to be enforced, unlike the other sanctions that are already in place.” The U.S. has little direct trade with Iran because of its steep sanctions on the country, imposed in recent decades to punish Tehran for its nuclear program. Last year, it imported just $6.2 million worth of goods from the country and exported slightly more than $90 million worth of goods to Iran in return, according to Commerce Department statistics. However, the United States does substantial trade with countries that do business with Iran, including China, India, the United Arab Emirates and the EU. Earlier this year, Trump threatened to impose tariffs on any country that buys Russian oil but so far has only taken that action against India, sparing China in the process. He also threatened in March to impose a 25 percent tariff on any country that buys oil or gas from Venezuela, but doesn’t appear to have followed through on that threat. Phelim Kine contributed to this report.

BRUSSELS — The EU and Mercosur will sign their long-awaited trade agreement on Saturday, with European Commission President Ursula von der Leyen traveling to Paraguay on Jan. 17 for the signing ceremony. Commission spokesperson Thomas Regnier confirmed von der Leyen’s travel plans to POLITICO. She will be joined by European Council President António Costa, his cabinet confirmed. The trip comes after a majority of EU member countries on Friday voted in favor of signing the deal. The EU-Mercosur deal is set to create the world’s largest free-trade area, covering some 700 million people. From Brussels’ perspective, the agreement is a major geopolitical win in light of China’s rising share in trade and influence in Latin America and U.S. President Donald Trump’s tariff policies. Aside from Paraguay, the Mercosur bloc consists of Argentina, Brazil and Uruguay.

Kyiv is in talks with the United States about a possible free-trade agreement, as Ukraine seeks to entice a reluctant Washington to provide firm security guarantees, Ukrainian President Volodymyr Zelenskyy said. Such a deal would involve tariff-free trade with the U.S. and would give Ukraine “very serious cards,” Zelenskyy said in an interview with Bloomberg published late Friday.  He has not yet discussed it directly with U.S. President Donald Trump, Zelenskyy said, adding that he expects to meet with Trump either in the U.S. or at the Davos conference in Switzerland, which starts on Jan. 19.  Prospects of a trade deal come as all sides start to consider more seriously how to end the war in Ukraine and how to ensure peace in the future. Europe and the U.S. presented a detailed plan for Ukraine in Paris earlier this week, including security guarantees with American backing and a promise to deploy British and French troops after a ceasefire.  But Washington did not sign on to join a multinational force for Ukraine, raising concerns about its level of commitment. The offer of a free-trade deal could act as an additional incentive for the U.S. to remain committed to protecting Ukraine after the end of the war. Zelenskyy said in the Bloomberg interview that he wants specific commitments from Washington. “I don’t want everything to end up in them merely promising to react,” he said. “I really want something more concrete.” Zelenskyy said his negotiator, Rustem Umerov, had a call on Friday with Trump’s special envoys Steve Witkoff and Jared Kushner, and that U.S. representatives have been in contact with Russia recently in “some kind of format.” Ukraine has given its views on territorial proposals, which the U.S. side will share with Russia for its own responses, Zelenskyy said.  Ukraine also is considering a plan, proposed by the U.S., to create a buffer zone between the two sides after troops pull back. “The format is difficult but fair,” Zelenskyy said. Zelenskyy added that he is not opposed to European leaders talking to Russia. Italian Prime Minister Giorgia Meloni on Friday joined French President Emmanuel Macron in calling for dialogue with Moscow. 

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. 

Germans overwhelmingly don’t trust the U.S. and don’t rate President Donald Trump, according to a survey by ARD DeutschlandTrend. Only 12 percent of respondents rate his performance positively and a mere 15 percent consider the U.S. to be a trustworthy partner for Germany, the lowest figure for the U.S. in the history of the survey. Only Russia fared worse for trustworthiness, at 9 percent. The results are closely tied to Trump’s military assault on Venezuela and the capture of its president, Nicolás Maduro, last weekend. Some 72 percent of respondents said the intervention was unjustified, though opinion diverges on how German Chancellor Friedrich Merz and Brussels should respond. The survey gave Germans a concrete choice: to be “rather restrained so as not to provoke Donald Trump” or to “speak out clearly against U.S. actions even if it might upset the president.” Meanwhile, 39 percent favored restraint, citing the complexity of the situation and the need for caution, while half supported a firmer stance, even at the risk of angering Washington. But the transatlantic rupture extends beyond Venezuela. Trump’s renewed interest in seizing Greenland, tariff threats against European exports and his ambivalent stance on support for Ukraine have deepened unease in Germany, reinforcing the sense that U.S. policy is being driven less by alliance management than by presidential impulse. That message landed heavily when Trump recently questioned on Truth Social whether NATO would come to Washington’s aid if the U.S. were in need. From a leader who has repeatedly cast alliances as transactional, the remark struck at a core tenet of German postwar foreign policy. That this shift is unfolding under Merz — a self-described transatlanticist and former head of the Atlantik-Brücke, a private network that fosters political, business and cultural ties between Germany and the U.S. — underscores just how far the relationship has frayed.

LONDON — Choosing your Brexit camp was once the preserve of Britain’s Tories. Now Labour is joining in the fun.  Six years after Britain left the EU, a host of loose — and mostly overlapping — groupings in the U.K.’s ruling party are thinking about precisely how close to try to get to the bloc. They range from customs union enthusiasts to outright skeptics — with plenty of shades of grey in between. There’s a political urgency to all of this too: with Prime Minister Keir Starmer tanking in the polls, the Europhile streak among many Labour MPs and members means Brexit could become a key issue for anyone who would seek to replace him. “The more the screws and pressure have been on Keir around leadership, the more we’ve seen that play to the base,” said one Labour MP, granted anonymity like others quoted in this piece to speak frankly. Indeed, Starmer started the new year explicitly talking up closer alignment with the European Union’s single market. At face value, nothing has changed: Starmer’s comments reflect his existing policy of a “reset” with Brussels. His manifesto red lines on not rejoining the customs union or single market remain. Most of his MPs care more about aligning than how to get there. In short, this is not like the Tory wars of the late 2010s. Well, not yet. POLITICO sketches out Labour’s nascent Brexit tribes. THE CUSTOMS UNIONISTS  It all started with a Christmas walk. Health Secretary Wes Streeting told an interviewer he desires a “deeper trading relationship” with the EU — widely interpreted as hinting at joining a customs union. This had been a whispered topic in Labour circles for a while, discussed privately by figures including Starmer’s economic adviser Minouche Shafik. Deputy Prime Minister David Lammy said last month that rejoining a customs union is not “currently” government policy — which some took as a hint that the position could shift. But Streeting’s leadership ambitions (he denies plotting for the top job) and his willingness to describe Brexit as a problem gave his comments an elevated status among Labour Europhiles.  “This has really come from Wes’s leadership camp,” said one person who talks regularly to No. 10 Downing Street. Naomi Smith, CEO of the pro-EU pressure group Best for Britain, added any Labour leadership contest will be dominated by the Brexit question. MPs and members who would vote in a race “are even further ahead than the public average on all of those issues relating to Europe,” she argued. Joining a customs union would in theory allow smoother trade without returning to free movement of people. But Labour critics of a customs union policy — including Starmer himself — argue it is a non-starter because it would mean tearing up post-Brexit agreements with other countries such as India and the U.S. “It’s just absolutely nonsense,” said a second Labour MP.    Keir Starmer has argued that the customs union route would mean hard conversations with workers in the car industry after Britain secured a U.K.-U.S. tariff deal last summer. | Colin McPherson/Getty Images And since Streeting denies plotting and did not even mention a customs union by name, the identities of the players pushing for one are understandably murky beyond the 13 Labour MPs who backed a Liberal Democrat bill last month requiring the government to begin negotiations on joining a bespoke customs union with the EU. One senior Labour official said “hardly any” MPs back it, while a minister said there was no organized group, only a vague idea. “There are people who don’t really know what it is, but realize Brexit has been painful and the economy needs a stimulus,” they said. “And there are people who do know what this means and they effectively want to rejoin. For people who know about trade, this is an absolute non-starter.” Anand Menon, director of the UK in a Changing Europe think tank, said a full rejoining of the EU customs union would mean negotiating round a suite of “add-ons” — and no nations have secured this without also being in the EU single market. (Turkey has a customs union with the EU, but does not benefit from the EU’s wider trade agreements.) “I’m not convinced the customs union works without the single market,” Menon added.  Starmer has argued that the customs union route would mean hard conversations with workers in the car industry after Britain secured a U.K.-U.S. tariff deal last summer, a person with knowledge of his thinking said. “When you read anything from any economically literate commentator, the customs union is not their go-to,” added the senior Labour official quoted above. “Keir is really strong on it. He fully believes it isn’t a viable route in the national interest or economic interest.” THE SINGLE MARKETEERS (A.K.A. THE GOVERNMENT) Starmer and his allies, then, want to park the customs union and get closer to the single market.  Paymaster General Nick Thomas-Symonds has long led negotiations along these lines through Labour’s existing EU “reset.” He and Starmer recently discussed post-Brexit policy on a walk through the grounds of the PM’s country retreat, Chequers. Working on the detail with Thomas-Symonds is Michael Ellam, the former director of communications for ex-PM Gordon Brown, now a senior civil servant in the Cabinet Office. Ellam is “a really highly regarded, serious guy” and attends regular meetings with Brussels officials, said a second person who speaks regularly to No. 10.   A bill is due to be introduced to the U.K. parliament by summer which will allow “dynamic” alignment with new EU laws in areas of agreement. Two people with knowledge of his role said the bill will be steered through parliament by Cabinet Office Minister Chris Ward, Starmer’s former aide and close ally, who was by his side when Starmer was shadow Brexit secretary during the “Brexit wars” of the late 2010s. Starmer himself talked up this approach in a rare long-form interview this week with BBC host Laura Kuenssberg, saying: “We are better looking to the single market rather than the customs union for our further alignment.” While the PM’s allies insist he simply answered a question, some of his MPs spy a need to seize back the pro-EU narrative. The second person who talks regularly to No. 10 argued a “relatively small … factional leadership challenge group around Wes” is pushing ideas around a customs union, while Starmer wants to “not match that but bypass it, and say actually, we’re doing something more practical and potentially bigger.”  A third Labour MP was blunter about No. 10’s messaging: “They’re terrified and they’re worrying about an internal leadership challenge.” Starmer’s allies argue that their approach is pragmatic and recognizes what the EU will actually be willing to accept. Christabel Cooper, director of research at the pro-Labour think tank Labour Together — which plans polling and focus groups in the coming months to test public opinion on the issue — said: “We’ve talked to a few trade experts and economists, and actually the customs union is not all that helpful. To get a bigger bang for your buck, you do need to go down more of a single market alignment route.”  Stella Creasy argued that promising a Swiss-style deal in Labour’s next election manifesto (likely in 2029) would benefit the economy — far more than the “reset” currently on the table. | Nicola Tree/Getty Images Nick Harvey, CEO of the pro-EU pressure group European Movement UK, concurred: “The fact that they’re now talking about a fuller alignment towards the single market is very good news, and shows that to make progress economically and to make progress politically, they simply have to do this.”  But critics point out there are still big questions about what alignment will look like — or more importantly, what the EU will go for.  The bill will include areas such as food standards, animal welfare, pesticide use, the EU’s electricity market and carbon emissions trading, but talks on all of these remain ongoing. Negotiations to join the EU’s defense framework, SAFE, stalled over the costs to Britain. Menon said: “I just don’t see what [Starmer] is spelling out being practically possible. Even at the highest levels there has been, under the Labour Party, quite a degree of ignorance, I think, about how the EU works and what the EU wants.   “I’ve heard Labour MPs say, well, they’ve got a veterinary deal with New Zealand, so how hard can it be? And you want to say, I don’t know if you’ve noticed, but New Zealand doesn’t have a land border with the EU.”  THE SWISS BANKERS Then there are Europhile MPs, peers and campaigners who back aligning with the single market — but going much further than Starmer.  For some this takes the form of a “Swiss-style” deal, which would allow single market access for some sectors without rejoining the customs union.   This would plough through Starmer’s red lines by reintroducing EU freedom of movement, along with substantial payments to Brussels.  But Stella Creasy, chair of the Labour Movement for Europe (LME), argued that promising a Swiss-style deal in Labour’s next election manifesto (likely in 2029) would benefit the economy — far more than the “reset” currently on the table. She said: “If you could get a Swiss-style deal and put it in the manifesto … that would be enough for businesses to invest.”  Creasy said LME has around 150 MPs as members and holds regular briefings for them. While few Labour MPs back a Swiss deal — and various colleagues see Creasy as an outlier — she said MPs and peers, including herself, plan to put forward amendments to the dynamic alignment bill when it goes through parliament.  Tom Baldwin, Starmer’s biographer and the former communications director of the People’s Vote campaign (which called for a second referendum on Brexit), also suggests Labour could go further in 2029. “Keir Starmer’s comments at the weekend about aligning with — and gaining access to — the single market open up a whole range of possibilities,” he said. “At the low end, this is a pragmatic choice by a PM who doesn’t want to be forced to choose between Europe and America.   “At the upper end, it suggests Labour may seek a second term mandate at the next election by which the U.K. would get very close to rejoining the single market. That would be worth a lot more in terms of economic growth and national prosperity than the customs union deal favoured by the Lib Dems.”  A third person who speaks regularly to No. 10 called it a “boil the frog strategy.” They added: “You get closer and closer and then maybe … you go into the election saying ‘we’ll try to negotiate something more single markety or customs uniony.’”  THE REJOINERS? Labour’s political enemies (and some of its supporters) argue this could all lead even further — to rejoining the EU one day. “Genuinely, I am not advocating rejoin now in any sense because it’s a 10-year process,” said Creasy, who is about as Europhile as they come in Labour. “Our European counterparts would say ‘hang on a minute, could you actually win a referendum, given [Reform UK Leader and Brexiteer Nigel] Farage is doing so well?’”  With Prime Minister Keir Starmer tanking in the polls, the Europhile streak among many Labour MPs and members means Brexit could become a key issue for anyone who would seek to replace him. | Tom Nicholson/Getty Images Simon Opher, an MP and member of the Mainstream Labour group closely aligned with Burnham, said rejoining was “probably for a future generation” as “the difficulty is, would they want us back?” But look into the soul of many Labour politicians, and they would love to still be in the bloc — even if they insist rejoining is not on the table now. Andy Burnham — the Greater Manchester mayor who has flirted with the leadership — remarked last year that he would like to rejoin the EU in his lifetime (he’s 56). London Mayor Sadiq Khan said “in the medium to long term, yes, of course, I would like to see us rejoining.” In the meantime Khan backs membership of the single market and customs union, which would still go far beyond No. 10’s red lines.  THE ISSUES-LED MPS Then there are the disparate — yet overlapping — groups of MPs whose views on Europe are guided by their politics, their constituencies or their professional interests. To Starmer’s left, backbench rebels including Richard Burgon and Dawn Butler backed the push toward a customs union by the opposition Lib Dems. The members of the left-wing Socialist Campaign Group frame their argument around fears Labour will lose voters to other progressive parties, namely the Lib Dems, Greens and SNP, if they fail to show adequate bonds with Europe. Some other, more centrist MPs fear similar. Labour MPs with a military background or in military-heavy seats also want the U.K. and EU to cooperate further. London MP Calvin Bailey, who spent more than two decades in the Royal Air Force, endorsed closer security relations between Britain and France through greater intelligence sharing and possibly permanent infrastructure. Alex Baker, whose Aldershot constituency is known as the home of the British Army, backed British involvement in a global Defense, Security and Resilience Bank, arguing it could be key to a U.K.-EU Defence and Security Pact. The government opted against joining such a scheme.   Parliamentarians keen for young people to bag more traveling rights were buoyed by a breakthrough on Erasmus+ membership for British students at the end of last year. More than 60 Labour MPs earlier signed a letter calling for a youth mobility scheme allowing 18 to 30-year-olds expanded travel opportunities on time limited visas. It was organized by Andrew Lewin, the Welywn Hatfield MP, and signatories included future Home Office Minister Mike Tapp (then a backbencher).  Labour also has an influential group of rural MPs, most elected in 2024, who are keen to boost cooperation and cut red tape for farmers. Rural MP Steve Witherden, on the party’s left, said: “Three quarters of Welsh food and drink exports go straight to the EU … regulatory alignment is a top priority for rural Labour MPs. Success here could point the way towards closer ties with Europe in other sectors.”  THE NOT-SO-SECRET EUROPHILES (A.K.A. ALL OF THE ABOVE) Many Labour figures argue that all of the above are actually just one mega-group — Labour MPs who want to be closer to Brussels, regardless of the mechanism. Menon agreed Labour camps are not formalized because most Labour MPs agree on working closely with Brussels. “I think it’s a mishmash,” he said. But he added: “I think these tribes will emerge or develop because there’s an intra-party fight looming, and Brexit is one of the issues people use to signal where they stand.” A fourth Labour MP agreed: “I didn’t think there was much of a distinction between the camps of people who want to get closer to the EU. The first I heard of that was over the weekend.”  The senior Labour official quoted above added: “I don’t think it cuts across tribes in such a clear way … a broader group of people just want us to move faster in terms of closeness into the EU, in terms of a whole load of things. I don’t think it fits neatly.” For years MPs were bound by a strategy of talking little about Brexit because it was so divisive with Labour’s voter base. That shifted over 2025. Labour advisers were buoyed by polls showing a rise in “Bregret” among some who voted for Brexit in 2016, as well as changing demographics (bluntly, young voters come of age while older voters die).  No. 10 aides also noted last summer that Farage, the leader of the right-wing populist party Reform UK, was making Brexit less central to his campaigning. Some aides (though others dispute this) credit individual advisers such as Tim Allan, No. 10’s director of communications, as helping a more openly EU-friendly media strategy into being. For all the talk of tribes and camps, Labour doesn’t have warring Brexit factions in the same way that the Tories did at the height of the EU divorce in the 2010s. | Jakub Porzycki/Getty Images THE BLUE LABOUR HOLDOUTS  Not everyone in Labour wants to hug Brussels tight.  A small but significant rump of Labour MPs, largely from the socially conservative Blue Labour tribe, is anxious that pursuing closer ties could be seen as a rejection of the Brexit referendum — and a betrayal of voters in Leave-backing seats who are looking to Reform. One of them, Liverpool MP Dan Carden, said the failure of both London and Brussels to strike a recent deal on defense funding, even amid threats from Russia, showed Brussels is not serious.   “Any Labour MP who thinks that the U.K. can get closer to the single market or the customs union without giving up freedoms and taking instruction from an EU that we’re not a part of is living in cloud cuckoo land,” he said. A similar skepticism of the EU’s authority is echoed by the Tony Blair Institute (TBI), led by one of the most pro-European prime ministers in Britain’s history. The TBI has been meeting politicians in Brussels and published a paper translated into French, German and Italian in a bid to shape the EU’s future from within.   Ryan Wain, the TBI’s senior director for policy and politics, argued: “We live in a G2 world where there are two superpowers, China and the U.S. By the middle of this century there will likely be three, with India. To me, it’s just abysmal that Europe isn’t mentioned in that at all. It has massive potential to adapt and reclaim its influence, but that opportunity needs to be unlocked.”  Such holdouts enjoy a strange alliance with left-wing Euroskeptics (“Lexiteers”), who believe the EU does not have the interests of workers at its heart. But few of these were ever in Labour and few remain; former Leader Jeremy Corbyn has long since been cast out. At the same time many Labour MPs in Leave-voting areas, who opposed efforts to stop Brexit in the late 2010s, now support closer alignment with Brussels to help their local car and chemical industries. As such, there are now 20 or fewer MPs holding their noses on closer alignment. Just three Labour MPs, including fellow Blue Labour supporter Jonathan Brash, voted against a bill supporting a customs union proposed by the centrist, pro-Europe Lib Dems last month.  WHERE WILL IT ALL END?  For all the talk of tribes and camps, Labour doesn’t have warring Brexit factions in the same way that the Tories did at the height of the EU divorce in the 2010s. Most MPs agree on closer alignment with the EU; the question is how they get there.  Even so, Menon has a warning from the last Brexit wars. Back in the late 2010s, Conservative MPs would jostle to set out their positions — workable or otherwise. The crowded field just made negotiations with Brussels harder. “We end up with absolutely batshit stupid positions when viewed from the EU,” said Menon, “because they’re being derived as a function of the need to position yourself in a British political party.” But few of these were ever in Labour and few remain; former Leader Jeremy Corbyn has long since been cast out. | Seiya Tanase/Getty Images The saving grace could be that most Labour MPs are united by a deeper gut feeling about the EU — one that, Baldwin argues, is reflected in Starmer himself. The PM’s biographer said: “At heart, Keir Starmer is an outward-looking internationalist whose pro-European beliefs are derived from what he calls the ‘blood-bond’ of 1945 and shared values, rather than the more transactional trade benefits of 1973,” when Britain joined the European Economic Community.  All that remains is to turn a “blood-bond” into hard policy. Simple, right?

President Donald Trump on Wednesday declared he would ask Congress for a $1.5 trillion defense budget in 2027, a massive $500 billion increase from this year’s Pentagon budget. The huge boost likely reflects how expensive some of Trump’s military ambitions are, from the Golden Dome air defense effort to his call for a new battleship design. Neither of those programs could be fully funded under current spending levels. The president provided few details in his post on Truth Social, other than to say the money would pay for his “Dream Military.” Trump did suggest that tariff revenues could cover the increase, but even if he managed to circumvent Congress’ constitutionally mandated power over spending, existing tariff collections would still be several hundred billion short of what the president plans to ask for. While finding half-a-trillion dollars in new spending would prove difficult, Trump and some congressional Republicans appeared confident they could do so. The budget reached $1 trillion this year thanks to $150 billion in new money Congress voted to pour into Pentagon coffers via a reconciliation bill, although much of that will be spread out over the next five years on various long-term projects. Lawmakers have yet to complete a defense spending bill for this fiscal year, although a final agreement is expected to increase Trump’s budget request by several billion dollars. Some Republicans have long argued for significant annual increases in Pentagon funding, with a topline total of around 5 percent of GDP, up from the current 3.5 percent. Rep. Don Bacon (R-Neb.) called Trump’s aspirations “a good news story” after his administration proposed budgets defense hawks on Capitol Hill saw as lacking. “We think we need a permanent 4 percent [of GDP] or better,” Bacon said. “That’s what it’s gonna take to build our Navy, our Air Force, our ICBMs, our bombers, and take care of our troops.” The 2026 budget only reached $1 trillion due to the $150 billion added on by Congress. That one-time infusion gave a boost to Golden Dome as well as new initiatives to build more precision-guided munitions and air defense weapons. But the funding will need to be included in year-on-year spending legislation, something Trump’s new proposal appears to take into account. Trump’s surprise budget announcement came just hours after he sent defense stocks plunging by railing against the performance of major defense companies. In another social media post, Trump said he would not allow defense companies to buy back their own stocks, offer executives large salaries and issue dividends to shareholders. He also slammed the companies for moving too slowly, and charging too much, for weapons. “A lot of us are saying we want a commitment to a sustained spending [increase], not just a one-year,” Bacon said. The White House and Republicans have left open the possibility of another party-line megabill that could be used to increase defense spending again this year. It is unclear if GOP leaders are willing to pursue the procedurally and politically arduous approach again while they still maintain control of both chambers of Congress. Republicans would need to use that process again to accommodate even a portion of Trump’s request because Democrats are likely to balk at any move that slashes healthcare benefits, education and foreign aid in the ways Republicans have sought, said one defense lobbyist. “Golden Dome and Golden Fleet are completely unaffordable without budgets of this size, so the administration would need to come up with the numbers to back it up,” said the lobbyist, who was granted anonymity to discuss sensitive spending dynamics. “But my guess is that the extra money will have to be in reconciliation.” House Appropriations Chair Tom Cole (R-Okla.) said overall defense spending “needs to go up,” but wouldn’t say if the massive increase pitched by Trump is realistic. “I’ll take any request the president makes seriously, and we’ll see,” Cole said. Another senior House appropriator, Rep. Steve Womack (R-Ark.), hailed Trump as “absolutely right” in his own post. “For too long, we have underfunded our defense apparatus—undermining our national security and benefiting our foreign adversaries,” Womack said. “A strong national defense is critical to our long‑term prosperity and to protecting our country against every emerging threat. I commend President Trump for his leadership and look forward to working to advance a $1.5 trillion defense bill.”