Unreliable. Creating more problems than solving them. A negative force on the world stage. This is how large shares of America’s closest allies view the U.S., according to new polling, as President Donald Trump pursues a sweeping foreign policy overhaul. Pluralities in Germany and France — and a majority of Canadians — say the U.S. is a negative force globally, according to new international POLITICO-Public First polling. Views are more mixed in the United Kingdom, but more than a third of respondents there share that dim assessment. Near-majorities in all four countries also say the U.S. tends to create problems for other countries rather than solve them. The findings offer a snapshot of how Trump’s reshaping of U.S. foreign policy — including through an expansive trade agenda, sharp rhetoric toward longtime allies and reoriented military posture — is resonating across some of Washington’s closest allies. When asked whether the U.S. supports its allies around the world or challenges them, a majority of Canadians say the latter, as well as just under half of respondents in Germany and France. In the U.K., roughly 4 in 10 say the U.S. challenges, rather than supports, its allies, more than a third say it cannot be depended on in a crisis, nearly half say it creates problems for other countries, and 35 percent say the U.S. is a negative force overall. Trump has blurred traditional lines of global alliances during his first year back in office, particularly in Canada and Europe. He called Europe a “decaying” group of nations led by “weak” people in a recent POLITICO interview and his sweeping National Security Strategy argued that the continent has lost its “national identities and self-confidence.” By contrast, the strategy reserved less scathing language for Russia — even as U.S. allies in Europe gear up for what leaders have called a “hybrid war” with Moscow. Secretary of State Marco Rubio defended the administration’s approach when asked about European criticisms, saying the transatlantic alliance remains rooted in shared “civilizational” values. “I do think that at the core of these special relationships we have is the fact that we have shared history, shared values, shared civilizational principles that we should be unapologetic about,” Rubio said at a briefing last week. But as Trump disrupts long-standing relationships, skepticism among allied leaders may be seeping into public sentiment, said Matthew Kroenig, vice president and senior director of the Atlantic Council’s Scowcroft Center for Strategy and Security. “Public opinion in democracies often reflects elite opinion,” he said. “What you’re probably seeing there is that you do have politicians in these countries expressing skepticism about the United States and about the Trump administration, and that’s being reflected in the public opinion polling.” LEADERS ACROSS EUROPE AND CANADA RECALIBRATE UNDER TRUMP’S FOREIGN POLICY AGENDA That dynamic is playing out across Europe and Canada, as leaders across the countries try to keep the increasingly strained relationships intact. In Germany, wavering U.S. military support for Ukraine, questions about Washington’s commitment to NATO and Trump’s tariff war have added urgency for Chancellor Friedrich Merz to move beyond the country’s long-established limits on defense spending and economic policy. Weeks before taking office, Merz secured a historic spending overhaul that unlocked hundreds of billions of euros for defense and infrastructure investments after years of self-imposed austerity. “Every foreign policy statement by Trump is followed closely, and often discussed in light of what it may mean for U.S. policy shifts regarding European security issues, such as commitment to NATO, future U.S. troop presence in Europe, and support for Ukraine,” said Dominik Tolksdorf, a transatlantic expert at the German Council on Foreign Relations. In France, where skepticism toward the U.S. has long run deep, President Emmanuel Macron has pursued personal diplomacy with Trump while using the president’s unpredictability to bolster arguments for greater European strategic autonomy. “Handing over one’s sovereignty to another power is a mistake — De Gaulle said nothing else,” one high-ranking French military officer, who was granted anonymity to speak candidly, told POLITICO. Another defense official said Trump’s National Security Strategy had increased “awareness that something is not right.” In the U.K., Trump remains polarizing, but Prime Minister Keir Starmer has largely avoided public confrontation. His priorities now include finalizing a U.K.-U.S. trade deal and coordinating a European response to Trump’s efforts to end the war in Ukraine — without angering the White House, the delicate balance many allied leaders are trying to strike. Canada, meanwhile, has seen the sharpest deterioration in relations, which have soured amid a punishing trade war and Trump’s intermittent rhetoric on annexation. Flavio Volpe, the president of Canada’s Automotive Parts Manufacturers’ Association, described the economic disruption linked to Trump’s trade moves. “People lost their jobs — ones they worked their entire lives — and billions of dollars in Canadian capital evaporated in an unexplainable turn away from the bankable post-Cold War balance of power by the White House,” he wrote on LinkedIn. DEMOCRATS REMAIN SKEPTICAL OF THE U.S. ON THE WORLD STAGE Overall, Americans still view their country more favorably than their allies do. Nearly half — 49 percent — say the U.S. supports its allies around the world. A majority, 52 percent, say it can be depended on in a crisis, and 51 percent say the U.S. is a positive force globally. But Democrats — who have displayed deeply pessimistic views about their country since Trump’s return to office — hold far more negative views. Almost half of voters who backed former Vice President Kamala Harris last year — 47 percent — also say the U.S. is a negative force in the world overall, compared with just 13 percent of Trump voters. Three in four Trump voters say the U.S. is a positive force in the world. Many Democrats also don’t just express skepticism about the U.S., but view other countries and international blocs as stronger models: 58 percent of Harris voters say the European Union is a positive force in the world, and nearly two-thirds — 64 percent — say the same about Canada, greater than the shares who say the same about the U.S. “This tracks with our other research on the rapid change of perceptions of the U.S. over the last year,” said Seb Wride, head of polling at Public First. “Americans themselves are not blind to it.” Prior to the 2024 election, strong majorities of both Democrats and Republicans — 71 percent and 69 percent — said the U.S. was a positive force in the world over the course of its entire history, Public First polling from October of last year found. Exactly one year later, Democrats have sharply changed their views, with 77 percent of Trump voters still saying the U.S. is positive, compared with just 58 percent of Democrats. “That’s around 1 in 8 Democrats changing their views on the role the U.S. has played in its entire history, in just one year,” said Wride. Voters who backed Trump last November overwhelmingly view the U.S. in a positive light, but subtle differences emerge within his coalition. Eighty-one percent of self-identifying MAGA Trump voters say the U.S. is a positive force in the world overall, compared with 71 percent of non-MAGA Trump voters. Still, 17 percent of non-MAGA Trump voters say the opposite, that the U.S. is a negative force. POLITICO’s Matt Honeycombe-Foster contributed reporting from the United Kingdom, Victor Goury-Laffont and Laura Kayali contributed from France, Nette Nöstlinger contributed from Germany and Nick Taylor-Vaisey contributed from Canada. Giselle Ruhiyyih Ewing also contributed. ABOUT THE SURVEY The POLITICO Poll was conducted by Public First from Dec. 5 to Dec. 9, surveying 10,510 adults online, with at least 2,000 respondents each from the U.S., Canada, the U.K., France and Germany. Results were weighted to be representative of each country in terms of age, gender and geography. The overall margin of sampling error is ±2 percentage points for each country. Smaller subgroups have higher margins of error.

BRUSSELS — Denmark is holding the line and pressing ahead with plans to schedule a crucial vote of EU ambassadors on the EU-Mercosur trade deal next week, in a tug-of-war splitting countries across the bloc. “In the planning of the Danish presidency, the intention is to have the vote on the Mercosur agreement next week to enable the Commission President to sign the agreement in Brazil on Dec. 20,” an official with the Danish presidency of the Council of the EU told POLITICO. This is the first official confirmation from Copenhagen that it will go ahead with scheduling the vote over the deal with the Latin American countries in the coming days, despite warnings from France, Poland and Italy that the texts as they stand would not garner their support.  This risks leaving the Danish presidency of the Council short of the supermajority needed to get the deal over the line. Under EU rules, this would require the support of a “qualified” majority of EU member countries — meaning 15 of the bloc’s 27 members representing 65 percent of its population. The outcome of the vote will determine whether European Commission President Ursula von der Leyen can fly, as is now planned, to Brazil on Dec. 20 for a signing ceremony with her Mercosur counterparts. France however has been playing for time in an effort to delay its approval of the accord, which has been more than 25 years in the making — a strategy several diplomats warn could ultimately kill the trade deal.  They cite fears that further stalling could embolden opposition in the European Parliament or complicate the next steps when Paraguay, which is more skeptical of the agreement, takes over the presidency of the Mercosur bloc. “If we can’t agree on Mercosur, we don’t need to talk about European sovereignty anymore. We will make ourselves geopolitically irrelevant,” said a senior EU diplomat. European leaders, including French President Emmanuel Macron, are expected to descend on Brussels on Thursday for a high-stakes EU summit. While not formally on the agenda, the trade deal with Brazil, Argentina, Paraguay and Uruguay is expected to loom large. A farmers demonstration is also expected in Brussels on the same day.  Countries backing the deal, including Germany and Sweden, argue that France has 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. The instrument, which still requires validation by EU institutions, was a proposal from the Commission to placate Poland and France, whose influential farming constituencies worry they would be undercut by Latin American beef or poultry.  The texts submitted for the upcoming vote were published last week and include a temporary strengthened safeguard, committing to closely monitor market disruptions — one of the key conditions for Paris to back the deal.

BRUSSELS — Europe’s most energy-intensive industries are worried the European Union’s carbon border tax will go too soft on heavily polluting goods imported from China, Brazil and the United States — undermining the whole purpose of the measure. From the start of next year, Brussels will charge a fee on goods like cement, iron, steel, aluminum and fertilizer imported from countries with weaker emissions standards than the EU’s. The point of the law, known as the Carbon Border Adjustment Mechanism, is to make sure dirtier imports don’t have an unfair advantage over EU-made products, which are charged around €80 for every ton of carbon dioxide they emit. One of the main conundrums for the EU is how to calculate the carbon footprint of imports when the producers don’t give precise emissions data. According to draft EU laws obtained by POLITICO, the European Commission is considering using default formulas that EU companies say are far too generous. Two documents in particular have raised eyebrows. One contains draft benchmarks to assess the carbon footprint of imported CBAM goods, while the second — an Excel sheet seen by POLITICO — shows default CO2 emissions values for the production of these products in foreign countries. These documents are still subject to change. National experts from EU countries discussed the controversial texts last Wednesday during a closed-door meeting, and asked the Commission to rework them before they can be adopted. That’s expected to happen over the next few weeks, according to two people with knowledge of the talks. Multiple industry representatives told POLITICO that the proposed estimated carbon footprint values are too low for a number of countries, which risks undermining the efficiency of the CBAM. For example, some steel products from China, Brazil and the United States have much lower assumed emissions than equivalent products made in the EU, according to the tables. Ola Hansén, public affairs director of the green steel manufacturer Stegra, said he had been “surprised” by the draft default values that have been circulating, because they suggest that CO2 emissions for some steel production routes in the EU were higher than in China, which seemed “odd.” “Our recommendation would be [to] adjust the values, but go ahead with the [CBAM] framework and then improve it over time,” he said. Antoine Hoxha, director general of industry association Fertilizers Europe, also said he found the proposed default values “quite low” for certain elements, like urea, used to manufacture fertilizers. “The result is not exactly what we would have thought,” he said, adding there is “room for improvement.” But he also noted that the Commission is trying “to do a good job but they are extremely overwhelmed … It’s a lot of work in a very short period of time.” Multiple industry representatives told POLITICO that the proposed estimated carbon footprint values are too low for a number of countries, which risks undermining the efficiency of the CBAM. | Photo by VCG via Getty Images While a weak CBAM would be bad for many emissions-intensive, trade-exposed industries in the EU, it’s likely to please sectors relying on cheap imports of CBAM goods — such as European farmers that import fertilizer — as well as EU trade partners that have complained the measure is a barrier to global free trade. The European Commission declined to comment. DEFAULT VERSUS REAL EMISSIONS Getting this data right is crucial to ensure the mechanism works and encourages companies to lower their emissions to pay a lower CBAM fee. “Inconsistencies in the figures of default values and benchmarks would dilute the incentive for cleaner production processes and allow high-emission imports to enter the EU market with insufficient carbon costs,” said one CBAM industry representative, granted anonymity to discuss the sensitive talks. “This could result in a CBAM that is not only significantly less effective but most likely counterproductive.” The default values for CO2 emissions are like a stick. When the legislation was designed, they were expected to be set quite high to “punish importers that are not providing real emission data,” and encourage companies to report their actual emissions to pay a lower CBAM fee, said Leon de Graaf, acting president of the Business for CBAM Coalition. But if these default values are too low then importers no longer have any incentive to provide their real emissions data. They risk making the CBAM less effective because it allows imported goods to appear cleaner than they really are, he said. The Commission is under pressure to adopt these EU acts quickly as they’re needed to set the last technical details for the implementation of the CBAM, which applies from Jan. 1. However, de Graaf warned against rushing that process. On the one hand, importers “needed clarity yesterday” because they are currently agreeing import deals for next year and at the moment “cannot calculate what their CBAM cost will be,” he said. But European importers are worried too, because once adopted the default emission values will apply for the next two years, the draft documents suggest. The CBAM regulation states that the default values “shall be revised periodically.” “It means that if they are wrong now … they will hurt certain EU producers for at least two years,” de Graaf said.

BRUSSELS — The international world order is beyond repair and Europe should adapt to the law of the jungle — or else come up with new rules. That’s the bleak message the European Commission is set to give on Tuesday in a text detailing major challenges ahead. “We are witnessing the erosion of the international rules-based order,” several drafts of its annual Strategic Foresight Report, seen by POLITICO, say. Since taking office, U.S. President Donald Trump has consistently shown contempt for institutions like the United Nations by withdrawing funding or pulling out of key U.N. bodies like the UNHCR, its refugee agency, and UNESCO, which works in education and science. Trump’s global tariff threats have further undermined the authority of the World Trade Organization. The European Union’s executive will acknowledge that these institutions likely won’t recover from the breakdown of the global order. In fact, Europe should prepare for it not to come back. “A return to the previous status quo seems increasingly unlikely,” the draft warns. The EU could be particularly affected by this development. Key features of the bloc, such as its internal market, trade flows, international partnerships, and technical standards, all depend on a functioning multilateral system. “The instability and partial disfunction of the international order and the partial fracturing of global economies have a destabilising effect on the EU’s ability to act in the interest of its economy and the well-being of its people,” it adds. The final text of the report presented on Tuesday could still differ significantly from the drafts. EMBRACING CHANGE The Commission report aims to steer broader EU policies ranging from trade to technology, climate and other areas. It will call for Europe to be ready for the advent of artificial intelligence that matches human thinking; for regulation of technologies to dim the power of the sun; and to consider mining outer space and the deep sea for critical minerals. Instead of clinging to the old rules-based order, Europe should lead an international effort to reform it, the document will say. “The EU should actively and with a coherent approach shape the discussion about a new rule-based global order and a reform of multilateralism,” the draft reads, singling out the U.N. and the WTO, the Geneva-based trade club, as key institutions of focus. The bloc also shouldn’t shy away from forming “new alliances based on common interests,” it advises.

A U.S. federal appeals court on Friday struck down President Donald Trump’s use of emergency powers granted by Congress to impose tariffs, opening the door for the administration to potentially have to repay billions worth of duties. The 7-4 ruling raises doubt about deals Trump has struck with the European Union, Japan, South Korea and other major trading partners to reduce the “reciprocal” tariff rates on their imports, from the levels the administration originally set in April. “We conclude Congress … did not give the president wide-ranging authority to impose tariffs” of the kind Trump imposed in his sweeping executive orders, the majority wrote. The ruling also invalidates the tariffs that Trump has imposed on China, Canada and Mexico to pressure those countries to do more to stop shipments of fentanyl and precursor chemicals from entering the United States. The decision, however, will not take effect until Oct. 14, giving the Trump administration time to appeal the decision to the Supreme Court. The White House did not immediately respond to a request for comment, but Trump shared a post on social media Friday evening calling the ruling “highly partisan,” and warning that if the tariffs were ruled illegal “it would be a total disaster for the Country” and “make us financially weak.” “Now, with the help of the United States Supreme Court, we will use them to the benefit of our Nation, and Make America Rich, Strong, and Powerful Again!” Trump wrote, signaling that the White House will appeal, as expected. The ruling from the U.S. Court of Appeals for the Federal Circuit upholds a May decision by the U.S. Court of International Trade, which concluded that Trump exceeded his authority under the 1977 law he invoked to impose both the fentanyl trafficking tariffs and his worldwide tariffs, the International Emergency Economic Powers Act. “We are not addressing whether the President’s actions should have been taken as a matter of policy,” the majority wrote in its ruling, which was in response to a combined set of cases brought by several small importers and multiple Democratic-run states. “Nor are we deciding whether IEEPA authorizes any tariffs at all. Rather, the only issue we resolve on appeal is whether the Trafficking Tariffs and Reciprocal Tariffs imposed by the Challenged Executive Orders are authorized by IEEPA. We conclude they are not.” Trade and customs experts told POLITICO that repayments would be a logistical nightmare, and would likely trigger a wave of legal challenges from other businesses and industry groups seeking reimbursement. The appeals court’s majority said their conclusion that Trump’s tariffs were illegal was bolstered by a series of Supreme Court decisions articulating the “major questions doctrine,” a legal theory rejecting claims that Congress implicitly granted the executive sweeping powers. “The tariffs at issue in this case implicate the concerns animating the major questions doctrine as they are both ‘unheralded’ and ‘transformative,’” wrote the majority, which consisted of one Republican appointee and six Democratic appointees. Dissenting from the ruling Friday were Obama appointees Richard Taranto and Raymond Chen and George W. Bush appointees Kimberly Moore and Sharon Prost. Trump has not appointed any judges to the Federal Circuit Court of Appeals. “IEEPA embodies an eyes-open congressional grant of broad emergency authority in this foreign-affairs realm, which unsurprisingly extends beyond authorities available under non-emergency laws, and Congress confirmed the understood breadth by tying IEEPA’s authority to particularly demanding procedural requirements for keeping Congress informed,” Taranto wrote for the dissenters. The White House did not immediately respond to a request for comment. Trump began aggressively using the international emergency law to impose tariffs shortly after taking office, first hitting China, Canada and Mexico with the fentanyl trafficking tariffs. He then tapped the authority to impose a baseline tariff of 10 percent on almost all countries and additional tariffs ranging up to 50 percent on dozens of individual trading partners, including the 27 nations of the European Union. No president has previously used the 1977 act to impose tariffs, although they have often used it over the past five decades to impose economic sanctions on other countries. Trump said the high number of deaths due to fentanyl constituted a national emergency that justified using tariffs to pressure China, Canada and Mexico into stopping the drug and its precursor chemicals from entering the U.S. He also said the “large and persistent” U.S. trade deficit was a national emergency that justified imposing a broader set of “reciprocal” tariffs on most countries, which he then used to pressure some trading partners into negotiating trade deals. Treasury Department data shows the Trump administration took in about $107 billion in customs duties between February and July of this year. A fair portion of that are the tariffs Trump has collected using IEEPA, but it also includes other U.S. duties that aren’t affected by the appeals court ruling, including some Trump has imposed using other authorities. Another case challenging the tariffs has also been making its way through the courts. A federal district judge in Washington, D.C., in a case brought by two Illinois toy companies, ruled on May 29 that Trump did not have any authority under the International Economic Emergency Powers Act to impose tariffs. That went further than the Court of International Trade ruling, which said that the 1977 law did give Trump some tariff authority but it was not “unlimited.” The Justice Department appealed the ruling in the toy companies case to the D.C. Circuit Court of Appeals, which has scheduled oral arguments for late September.

BRUSSELS — Europe is getting fed up with Donald Trump’s trade threats — and is exploring a bold move to look east instead of west to find partners who want to play by the rules. Trump’s unilateral and arbitrary tariffs — which could ratchet up to 50 percent from July 9 if EU and U.S. negotiators fail to cut a trade deal — have tested EU chief executive Ursula von der Leyen’s patience and resolve. Her response? To team up with the CPTPP, a Pacific-centric trade group that includes like-minded nations such as Japan, Australia, Canada and Mexico. Between them, the 39 countries of the EU and (deep breath) Comprehensive and Progressive Agreement for Trans-Pacific Partnership account for 30 percent of world trade. Forming a coalition of the willing could, boosters argue, mark a first step toward reconfiguring the international trade order and escaping the institutional paralysis besetting the World Trade Organization. In a pitch to EU leaders, von der Leyen turned previous comments on possible cooperation with the CPTPP into more of a reality. The new grouping would redesign the rules of global trade, she said, reforming or perhaps even replacing the global trade rules body. Such a plan would “show to the world that free trade with a large number of countries is possible on a rules-based foundation,” von der Leyen said after an EU summit on Thursday night. “This is a project where I think we should really engage on, because CPTPP and the European Union is mighty.” MAKING THE PLEDGE But how could forming such a coalition of the willing work? One idea would be to make an up-front pledge to uphold the established rules of multilateral trade, veteran trade negotiators Tim Groser, Steve Verheul and John Clarke said in exclusive commentary shared with POLITICO. Groser, a former New Zealand trade minister; Verheul, previously Canada’s chief trade negotiator; and Clarke, until recently a senior EU trade negotiator, said the 39 EU and CPTPP countries should, in a first step, commit to a “Standstill Agreement” to keep their markets open to each other. “What it would do is send a massive signal to Washington that a very substantial part of the global economy, including nearly all the traditionally closest partners of the United States, remains committed to the rules-based system,” they said.  The U.S. had the chance to join the CPTPP, previously known as the Trans-Pacific Partnership, during the Barack Obama administration. But Trump withdrew in 2017, after taking office for the first time, before the pact could be finalized. When asked on Thursday if the U.S. would join the new initiative between the EU and CPTPP, von der Leyen replied, “As far as I understand, the Americans left at a certain point.” It would be up to the two blocs to decide if they want to let them in, she added.  Europe is getting fed up with Donald Trump’s trade threats — and is exploring a bold move to look east instead of west to find partners who want to play by the rules. | Shawn Thew/EPA Ignacio García Bercero, a former chief EU trade negotiator, believes that the potential partnership shouldn’t close the door to the Americans just yet, nor should it be seen as a move to antagonize Trump.   However, “if the U.S. is not ready to join because they don’t believe that the solution to these problems is rules, others are going to have to move ahead without the U.S.” YOU’VE GOT A FRIEND The United Kingdom has also spearheaded efforts as a newer CPTPP member to welcome the EU’s drive to strengthen ties between the two potential partners.  “I’ve been talking to the leaders in Japan, in Singapore, in Australia, New Zealand, Canada, about how we, the U.K., can trade in an easier, better way with them — whether we as a group of countries can trade with other countries in an easier and better way,” Prime Minister Keir Starmer said as he launched the U.K.’s first Trade Strategy since Brexit on Thursday.  Those countries are all members of the Asia-Pacific bloc, which the U.K. joined in December. Starmer’s government has been open to the idea of the bloc and EU teaming up. “I do think that it’s [a] difficult environment, but there are significant opportunities if we’re agile about it, if we understand the world we’re living in, and get ahead of the curve,” the prime minister told businesses during his Trade Strategy launch in Westminster.  If the EU and CPTPP can establish a new community of values and interests, that could serve as the basis to address trade challenges that have accumulated since the WTO was founded 30 years ago — but that it has been unable to resolve because the Geneva-based trade club works by consensus and its largest member, the U.S., won’t play ball. “This must start outside Geneva with a group of countries that can move more decisively,” argued Groser, Verheul and Clarke. “In the medium term, we contend that this grouping could be a focal point for developing new rules and commitments to a trading system that can deliver continued growth and prosperity to their people.” Von der Leyen is already courting the leaders of CPTPP countries, issuing a joint statement with Kiwi Prime Minister Christopher Luxon after their meeting this week in which both supported the launch of a dialogue between the EU and CPTPP “as soon as possible.” That echoed an appeal by CPTPP ministers meeting in Jeju, Korea, in mid-May. A meeting at ministerial level is planned in July, according to an EU official. “To be clear, the EU is not joining [the CPTPP] as such, but we are building bridges between the two blocs,” the official, speaking on condition of anonymity as is customary in Brussels, said before the EU summit.

Europe’s trade commissioner shared phone calls with U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer on Monday as both sides of the Atlantic seek to reach a trade deal to head off President Donald Trump’s sweeping tariff threat. “The @EU_Commission remains fully committed to constructive and focused efforts at pace towards an [EU, U.S.] deal,” Maroš Šefčovič wrote on X. “We continue to stay in constant contact.” The detente came after Trump lashed out at European negotiators last Friday, promising 50 percent tariffs starting at the beginning of June as punishment for “our discussions with them … going nowhere.” But a Sunday phone call with European Commission President Ursula von der Leyen led Trump to push back the tariffs start date from June 1 to July 9 — which significantly calmed the markets by Monday morning. Still, not everyone involved in the negotiations is projecting positivity this soon after Trump’s Friday ultimatum. “It’s irritating, and ignorant. Self-sabotaging, drivel,” said one EU official granted anonymity to discuss sensitive negotiations, describing the back and forth. “Do you need greater proof that talks are going nowhere than this nonsense?” But the Sunday call added “a new impetus” to negotiations between the two sides, Paula Pinho, chief spokesperson for the European Commission, said at a Monday press briefing. “And we will take it from there,” Pinho said. “It’s positive to see that there’s engagement also on the level of the presidents and from our side, we always said that we were ready to make a deal.” European Commission spokesperson Olof Gill reaffirmed the Commission’s belief in a zero-for-zero strategy, which would see both sides scrap their industrial tariffs, as “a very attractive starting point for a good negotiation.” In the meantime, the EU continues to work on a list of potential countermeasures in case talks with the White House on a deal fall through, Gill said at the press briefing. “As well as talking to our member states, we’re talking to industry and other stakeholders that might be interested in this to shape a final list of potential countermeasures,” Gill said. “We need to repeat in all stages that this is preparatory work we’re doing in the event that negotiations don’t work out, which is our top priority, always has been.” Ari Hawkins contributed to this report.

AMSTERDAM — The international trading system must do more to address “persistent, unsustainable imbalances,” Bank of England Governor Andrew Bailey said, acknowledging that U.S. concerns over trade distortions may have merit. Speaking exclusively to POLITICO on the fringes of a Foreign Bankers’ Association event in Amsterdam on Tuesday, the incoming chair of the Financial Stability Board said the postwar multilateral trade system “hasn’t necessarily delivered all it needs to deliver” and that a rethink was due. “We have to have a system which does identify where there are persistent, unsustainable balances,” Bailey said.  The comments come just days after a surprise détente between China and the U.S. on the tariff war launched by Donald Trump’s administration on April 2 calmed financial markets’ worst fears about outlook for the world economy. While reiterating his commitment to free trade, Bailey acknowledged that tariffs — long anathema to orthodox central banking — may have served as a necessary wake-up call to reshape the international trading system. “Obviously the U.S. administration feels it’s had to use tariffs to really get this point out there. I think all of us who believe in free trade and believe in multilateralism are happy to say, ‘Look, okay, we sort of get it.’” Bailey went on to tell the gathering of bankers that didn’t mean abandoning the WTO but rather working with the body to make it fit for purpose again. “We’ve got problems in the trade agreements and monitoring of trade agreements,” he said. “What I really hope is that we address these questions in a multinational way, and that we don’t give up on the multilateral system, because that would be a real setback.” Bailey added that reforms must address both persistent macro imbalances and enforcement weaknesses at the micro level. “The origin of persistent imbalances is in fundamental economics, so that’s where you need to start: what’s causing these fundamental systems advances?” he said, adding that the International Monetary Fund had a role to play, not least because there was now “an acceptance by countries that they have to take those things seriously and … take action upon them.” Citing IMF analysis, Bailey also noted that a significant share of new trade restrictions in the past decade had originated in China. “There has to be a way of dealing with these things, rather than just sort of letting them sit there” while the level of tension rises, he told POLITICO. Bailey’s remarks reflect an emerging openness among European monetary authorities to the argument — long pushed by Washington — that existing trade governance frameworks have failed to adjust to a more state-driven global economy. The outgoing chair of the Financial Stability Board, Klaas Knot, echoed Bailey’s points during the panel session. “Whatever you think about the U.S. administration and their communication, they are dead serious about this global imbalances issue,” Knot told the room. “Not every trade balance needs to be in balance, there’s absolutely no economic reason for it. But, on the other side, there can also be an argument that some of the imbalances actually become excessively large. I do think that there is a sort of upper limit beyond which imbalances become counterproductive.” GEOECONOMICS IN FOCUS Asked whether the increasing entanglement of economic and geopolitical objectives such as tariffs or strategic autonomy  — what some have termed “geoeconomics” — poses a threat to central bank independence, Bailey said the trend underlined rather than undermined the case for institutional autonomy. “I don’t believe [geoeconomics] invalidates independence. It underlines why it was so important to have independent central banks,” he said on the sidelines. “Our job is to take difficult decisions in difficult times … I don’t accept that our independence is politicized in any other sense.” In that respect, Bailey said recent interventions by the BoE — such as its temporary and targeted bond-buying during the so-called “LDI crisis” in 2022 — had been misunderstood in some quarters as monetary stimulus, when in fact they were narrowly targeted at market functioning and financial stability. “It was hugely important to say, ‘No, we’re not doing QE.’ This was a limited financial stability intervention. And we sold the gilts as soon as we could.” Bailey acknowledged that the visibility of central banks during periods of volatility has led to more scrutiny and criticism, but rejected any suggestion that the BoE was pursuing political objectives. Both Bailey and Knot rejected the idea that geoeconomics or the pursuit of strategic autonomy would impinge on their mandates. “In the core of our mandate, I think we will always continue to be focused on price stability [in] the medium term,” Knot said. Where such factors would have more of a bearing, however, would be in payments and in addressing supply-side constraints in the global economy. “Many of these private payment solutions are actually heavily dependent on foreign service providers,” said Knot. “If we develop a digital euro, the payment rails that will come with [it] might also offer an alternative to private initiatives to become less dependent on foreign payment service providers.” Bailey, meanwhile, highlighted that over the past five years, central bankers have had to realize that the supply side of the world economy has become less predictable. “That’s where I think we have to take it on board, but we’re not trying to influence it,” he said. DOLLAR STILL KING Despite European governments’ growing focus on strategic autonomy, both Bailey and Knot pushed back against the increasingly popular market view that Trump’s tariff agenda had ruptured the supremacy of the U.S. dollar. “I think there’s a lot more to the dollar’s status as a reserve currency than some of this commentary recognizes, and actually it’s got even more so in recent years,” Bailey said on the sidelines. “I mean, there’s a huge amount of what I call infrastructure that goes with being a reserve currency these days.” As such, he added, the world was nowhere near de-dollarization. “And by the way, I hope we’re not, because it would be quite destabilizing.”  Knot agreed in the panel session that “there is simply no alternative yet for the role that the dollar plays in a number of functions that an international reserve currency fulfils,” adding that the euro was unlikely to supersede it for as long as Europe’s markets remained fragmented along national lines. “If we can’t resolve these issues, then you cannot expect your currency to become an international sort of reserve currency vehicle,” Knot said.

The U.K. economy would face “substantial” risks if the U.S. administration sparks a trade war by ending multilateralism, the Bank of England governor warned.  Speaking to MPs on the Treasury Committee on Wednesday, Andrew Bailey said the ongoing trade disputes — with the U.S. slapping tariffs on Canada, China and Mexico, and the trio of countries responding in kind — is a “big episode” that Britain “has to take seriously.” “There is a major shift going on … in the U.S. We have to address it, and we have to be prepared and I welcome what the government’s doing on that front,” Bailey said.  “We can’t ignore it, frankly, at this point, because of the risks to the U.K. situation, to U.K. growth … the impact on inflation could be ambiguous, but the risks to the U.K. economy, and to indeed the world economy, are substantial.” Bailey also warned against what he described as a “very damaging thing for the world” if President Donald Trump decided to pull the U.S. out of organizations like the World Bank and International Monetary Fund, after the administration began a review of the country’s membership of international fora.  “If you think the world economy is somehow out of balance, the place to address those balances is in a multilateral forum, not by bilateral action,” Bailey said.

Slovak Prime Minister Robert Fico offered fulsome praise of Donald Trump to an approving audience in Washington on Friday, and applauded the U.S. president’s repudiation of America’s commitments to Ukraine and its historic allies in NATO and the European Union. “Your president is doing Europe a great service,” Fico told the Conservative Political Action Conference (CPAC) in a 15-minute speech. “The energy and determination with which your President Donald Trump has entered into the peace process in Ukraine is admirable … He is bringing truth and, we all hope, peace back to Europe,” he said. The Slovak leader and Hungarian Prime Minister Viktor Orbán have become Europe’s enfants terribles in the past few years, echoing Moscow’s talking points and pushing against continued military aid to Ukraine. “My good friend … Viktor Orbán recently complained, with a smile on his face of course, that he has been trying to hold a mirror up to the European Union for years,” Fico said. “And then Donald Trump comes along and manages to do it in a matter of days.” Trump has recently called Ukraine’s democratically elected President Volodymyr Zelenskyy “a dictator” and has said Kyiv should call new elections as soon as possible, even though Ukraine is at war and millions of its citizens have fled abroad or are fighting invading Russian troops. ‘SERIOUS SECURITY REASONS’ U.S. Defense Secretary Pete Hegseth said earlier this month that Ukraine won’t be joining NATO and that Kyiv’s goal of reclaiming all its territory is “unrealistic.” “I think they have the cards a little bit,” Trump told the BBC on Feb. 20 on Air Force One, referring to Moscow, “because they’ve taken a lot of territory.”  Fico on Friday enthusiastically backed those talking points. “No one is disputing that Russia’s use of military force in Ukraine was a violation of international law,” he said. “However, Russia had serious security reasons for doing so because it has long been misled on the issue of NATO enlargement.” The Slovak prime minister added that “the absolute majority of the EU member states with the exception of Slovakia and Hungary have endorsed the idea that the war in Ukraine should be used to weaken Russia politically and economically.” In Slovakia, the Fico government’s pro-Moscow and anti-EU policies have fueled a wave of protests that have spread to more than 50 cities and smaller towns, mostly in support of the country’s continued Western orientation. On Feb. 21, the crowds had another reason to return to the streets: the seventh anniversary of the murders of investigative journalist Ján Kuciak and his fiancée Martina Kušnírová. ‘OUR GUYS’ SYSTEM “The main architect of the ‘our guys’ system [a metaphor for corruption] is back in power,” said Ján’s father, Jozef Kuciak, to a crowd of about 10,000 in the capital Bratislava, referring to Fico. “It’s up to us to decide what is more important, freedom or passivity.” Hours later in Washington, Fico blamed the European Union for “pushing themselves to the U.S.-Russian peace negotiating table even though for three years now they have and do openly support the war in Ukraine.” Fico added that “President Zelenskyy actually needs this war. When there is war there cannot be democratic elections … When there is a war it is difficult to investigate where a huge part of the funding given to Ukraine ended up.” In closing, Fico praised Trump’s MAGA movement, saying it represents “a vision that resonates urgently not only in the United States but across the world.” “I appreciate President Donald Trump’s pragmatic approach and his clear focus on American national interests,” the Slovak leader said. “This is exactly what each and every one of us should be doing.”