A Milan criminal court on Wednesday acquitted Italian fashion influencer and businesswoman Chiara Ferragni of aggravated fraud in the so-called Pandorogate scandal. The case, one of Italy’s most high-profile celebrity trials, centered on allegations of misleading advertising linked to the promotion of the sweet pandoro Christmas bread — luxury sugar-dusted brioches — in 2022 and Easter eggs sold in 2021 and 2022. Prosecutors, who had requested a 20-month prison sentence, argued that consumers had been led to believe their purchases would support charitable causes, when donations had in fact already been made and were not tied to sales. Ferragni denied any wrongdoing throughout the proceedings. Judge Ilio Mannucci rejected the aggravating circumstance cited by prosecutors, reclassifying the charge as simple fraud, according to ANSA. Under Italian law, that requires a formal complaint to proceed. But because the consumer group Codacons had withdrawn its complaint last year after reaching a compensation agreement with Ferragni, the judge dismissed the case. The ruling also applies to her co-defendants, including her former close aide Fabio Damato, and Cerealitalia Chairman Francesco Cannillo. “We are all very moved,” Ferragni said outside the Milan courtroom after the verdict. “I thank everyone, my lawyers and my followers.” The scandal began in late 2023, when Ferragni partnered with confectioner Balocco to market a limited-edition pandoro to support cancer research. But Balocco had already donated a fixed €50,000 months earlier, while Ferragni’s companies earned more than €1 million from the campaign. The competition authorities fined Ferragni and Balocco more than €1.4 million, and last year, Milan prosecutors charged Ferragni with aggravated fraud for allegedly generating false expectations among buyers. Ferragni and her then-husband and rapper Fedez used to be Italy’s most politically influential Instagram couple, championing progressive causes, campaigning for LGBTQ+ rights and positioning themselves against the country’s traditionalist Catholic mainstream, often drawing sharp criticism from Prime Minister Giorgia Meloni and the Italian right. Since the scandal erupted in December 2023, however, that cultural and political empire has unraveled: the couple divorced, Ferragni retreated from public life, and Fedez reemerged in increasingly right-leaning political circles. Wednesday’s acquittal closes a legal chapter that had sparked intense political and media scrutiny, triggered regulatory fines and fueled a broader debate in Italy over influencer marketing, charity and consumer protection.

PARIS — Former European commissioner Thierry Breton urged the European Union to respond with “the utmost severity” to the Trump administration’s decision to sanction him and four other European nationals for their work on online content moderation. U.S. Secretary of State Marco Rubio last week announced Breton would be “generally barred from entering the United States,” along with British citizens Imran Ahmed and Clare Melford and Germany’s Anna-Lena von Hodenberg and Josephine Ballon, all of whom were members of organizations seeking to fight hate speech online. The U.S. State Department targeted Breton as the “mastermind of the Digital Services Act,” the EU’s rulebook for online platforms which was used to impose a €120 million fine on Elon Musk’s X and has led to a high-level dispute between Brussels and Washington. “If we accept that, as a European Commissioner, you can be ostracized, blamed, and punished for carrying out the mandate entrusted to you, then we are heading down an extraordinarily dangerous path,” Breton said Tuesday on RTL. “If we allow this situation to continue, it would mean that those who succeed me and have to exercise their European mandate would be intimidated and prevented from doing so.” “The European Commission cannot show any sign of weakness… European institutions must respond with the utmost severity,” he added. Breton said he had spoken at length with French President Emmanuel Macron after being sanctioned. The former tech industry executive, who resigned from his role as commissioner for internal market last year over claims Commission chief Ursula von der Leyen was trying to push him out, has received widespread support in Europe since the U.S. decision against him. In a statement, the Commission said it had “requested clarifications from the U.S. authorities” and would “if needed … respond swiftly and decisively.”

BRUSSELS — The fight between Brussels and Washington over tech rules is officially high politics — and shows no sign of stopping in 2026.  Last week the United States sanctioned a former top European Commission official, alleging he was a “mastermind” of the bloc’s content moderation law. The travel ban was a sign the Trump administration is ramping up its attacks on what it calls Europe’s censorship regime.  The pressure puts Brussels between a rock and a hard place.  EU leaders like France’s Emmanuel Macron and European Parliament lawmakers dismissed the U.S. move as intimidation and even suggested considering counteraction, ramping up calls for Brussels to hold its ground and reduce the EU’s reliance on U.S. technology.  It suggests that U.S. pressure on the EU’s tech rules is now a full-blown transatlantic dispute of its own, rather than just a sideshow to trade talks, and requires an appropriate response. “The real response must be political,” said Italian Social Democrat lawmaker Brando Benifei, the European Parliament’s lead on relations with the U.S., in response to the American sanctions.  “Our sleepwalking leaders must wake up, because there’s no time left.” While the Commission condemned the U.S. move, its President Ursula von der Leyen offered a muted response, highlighting only the importance of freedom of speech in a post on X. ONLY THE START The U.S. move to impose a travel ban on Frenchman Thierry Breton, who served as the EU’s internal market chief from 2019 to 2024 and led the drafting of the Digital Services Act, marked an acceleration in the U.S. campaign against the EU’s tech rules.  Breton has borne the brunt of criticism over the EU’s tech rules, particularly following his public spat with U.S. President Donald Trump’s one-time ally, X owner Elon Musk. The tech billionaire appears to be back in the president’s good books after a bitter falling-out over the summer. A letter Breton sent in August 2024 to warn Musk ahead of an upcoming livestream featuring then-presidential candidate Trump was repeatedly shared by Trump loyalists after Breton was sanctioned.  Another four individuals were sanctioned, including two from German NGO HateAid, which Berlin’s regulators have said is a “trusted” organization to flag illegal content like hate speech.   The U.S. had previously mainly threatened the EU over its tech rules, or invoked them when the EU demanded concessions from Washington such as lower steel and aluminum tariffs in early December. But after the Commission crossed the Rubicon in early December and imposed its first-ever Digital Services Act fine on Musk’s X, Washington responded with the travel bans.  The EU executive has repeatedly said its enforcement of the DSA is not political, yet Washington insists it is nothing but.  Threats of travel restrictions from the U.S. have been trickling in since the summer, but the Commission has declined to say how it plans to protect its officials.  Both sides still have room — and face internal calls to escalate — in what is now a full-blown transatlantic dispute over the limits of free speech.  Just earlier this month, when the U.S. announced its intention to require social media disclosures from people hoping to enter the country on temporary visas, Commission chief spokesperson Paula Pinho insisted these were only plans and declined to comment on how it would protect its staff working on the DSA.  Pressured by journalists about the impact on staff working on digital rules, she said tech spokesperson Thomas Regnier had no plans to visit the U.S.  Still, the sanctions announced by the State Department may be only a warning shot.  The measures announced last week targeted a former Commission official, not someone currently in office. The U.S. still has many other tools in its arsenal, which U.S. politicians say it should use.  Missouri Republican Senator Eric Schmitt called for the use of Magnitsky sanctions, which are financial measures that can cause significant operational headaches including asset freezes and barring U.S. entities from trading with sanctioned entities.  While they are normally reserved for serious human rights violations like war crimes or the murder of Saudi journalist Jamal Khashoggi, the Trump administration has already used them to go after another person deemed to be a modern agent of censorship.  In July, the Treasury and State departments announced Magnitsky sanctions against Brazilian Judge Alexandre de Moraes, including for suppressing “speech that is protected under the U.S. Constitution.”  De Moraes has drawn the same criticism as EU officials from the Trump administration and its allies, including Musk.  COUNTERACTION The Commission also faces heat from the other side, with EU country leaders and European Parliament lawmakers demanding a more political response to the situation.  The EU’s tech rules have been a regular topic of debate at the Parliament’s plenary sessions, and several lawmakers have indicated the U.S. travel restrictions could be on the agenda for the January session.  German Greens lawmaker Sergey Lagodinsky said the EU should not rule out considering some sort of counteraction.  “Europe must respond. It must raise pressure in the trade talks and consider measures against senior tech executives who actively support the U.S. administration agenda,” he said in a statement shared with POLITICO.  Breton himself accused the EU institutions of being “very weak” in an interview with TF1. Just before the break, in a rare joint address, MEPs from four political groups called for stronger action against U.S. Big Tech companies.  “The small fine against X is a good beginning, but it comes definitely too late, and it’s absolutely not enough,” said German Greens MEP Alexandra Geese. The socialists have tried to kick off a special inquiry committee to figure out if the Commission is strong enough in enforcing the DSA, although support from other groups is lacking.  The Commission has yet to announce its decisions on the meatier part of its DSA probe into X and other platforms.  Others see the U.S. sanctions as another warning to reduce reliance on U.S. technology and build up the EU’s own technological capacity.  “Lovely, but not enough,” Aurore Lalucq, a French MEP and chair of the economic affairs committee, quipped in response to the Commission’s condemnation of the U.S. sanctions.  “We need to build our independence now. It starts with our payment systems, a sovereign cloud, and an industrial policy for digital infrastructure and social networks.”

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

The top American basketball league has a megabucks plan to take over the European market. But it’s no slam dunk. European officials and major sports leagues are trying to hamstring the National Basketball Association — home to global superstars including LeBron James and Steph Curry — before it can get off the ground ahead of a mooted 2027 launch in key cities around the continent. Proponents of the NBA-backed European competition reckon it will be an essential investment for a widely popular sport that doesn’t turn a massive profit in Europe across smaller domestic tournaments. Opponents say the global behemoth’s entry across the continent would stifle national basketball leagues and instead funnel cash to American companies. The divide comes at a moment of major commercial and political tension, with U.S. President Donald Trump’s administration attempting to bend European legislators and regulators to its America-first agenda. Basketball also marks the latest clash in a broader debate over the European sports model, which is based on promotion and relegation between leagues, and solidarity payments across a pyramidal structure. The NBA operates under the American sports model, in which franchises maintain permanent places in closed leagues, generating significant revenues for team owners and creating highly paid superstars matched only by top European football clubs. For this account of the backroom negotiating currently taking place between some of the world’s most powerful sports officials, POLITICO spoke to several European political figures, sports executives and industry heavyweights with direct knowledge of talks, some of whom were granted anonymity to discuss sensitive deliberations.   NBA executives have already been sounding out Europe’s biggest multi-sport club owners and team officials about backing the project, triggering unease from other parts of the continent’s sports establishment. “The main reason we don’t support NBA Europe is that closed leagues and competitions benefit only the top percent of the commercially successful clubs, but cause significant harm to the sport at national level,” one senior European government official told POLITICO.  While the EU doesn’t run sports in Europe, it does police the marketplace in which sports operate — and officials were quick to defend the values the EU seeks to uphold.  “As policymakers, including at EU level, there is a clear duty to uphold the competition acquis, but also to give full weight to the wider EU values repeatedly underlined in court judgments, such as solidarity, openness, and fairness,” EU Sports Commissioner Glenn Micallef told POLITICO.  He added: “The current debate suggests that this balance requires recalibration, placing greater emphasis on those values to safeguard the integrity of European sport and its pyramidal model.” PRIVATE NEGOTIATIONS Business titans have long eyed the European sports market as an attractive commercial proposition, buying clubs and even moving to upend existing competitions. Proponents of the NBA-backed European competition reckon it will be an essential investment for a widely popular sport that doesn’t turn a massive profit in Europe across smaller domestic tournaments. | Gray Mortimore/Getty Images A previous attempt to set up a semi-closed American-style football league in Europe — the ill-fated Super League bid by a group of 12 leading clubs in 2021 — hit a wall of political and public resistance. Basketball is a slightly different case as the continent’s flagship Euroleague is already a semi-closed competition — a design that has faced significant blowback since its launch around the turn of the century. But NBA critics are sounding the alarm as crunch talks intensify about the potential launch in 12 proposed cities including Rome, Berlin and Madrid. Senior officials from the International Basketball Federation (FIBA) met with Micallef and key EU sports figures in Brussels earlier this month, where they pressed the case that the new league — with its semi-closed structure but pathway to Europe for clubs that perform well in their domestic leagues — would be a European success story. “Current developments in European basketball highlight long-standing concerns around closed league models,” Micallef said after the meeting, in remarks that may be interpreted as a subtle warning about the American sports model. “They also invite reflection on the growing role of investment in sport, recognising that such investment can be welcome and beneficial provided it respects sound governance principles and remains aligned with Europe’s sporting values, traditions, and structures.” He added: “While breakaway competitions usually promise growth and stability, restricting open competition comes at the expense of national leagues and the wider sporting pyramid: a lesson other sports should consider carefully.” A previous attempt to set up a semi-closed American-style football league in Europe — the ill-fated Super League bid by a group of 12 leading clubs in 2021 — hit a wall of political and public resistance. | Erica Denhoff/Icon Sportswire via Getty Images Two industry officials told POLITICO that Spain’s La Liga — the domestic football league — held a meeting with the NBA to emphasize that the format presented is contrary to the European sports model and that, if implemented, it would be met with staunch opposition from EU institutions and other sporting organizations from across Europe.  NBA officials have been approaching major European football and multi-sports club owners over the past year about joining the basketball project, according to one executive with direct knowledge of negotiations. NBA Commissioner Adam Silver and his deputy Mark Tatum have been talking regularly to Paris Saint-Germain owner Nasser al-Khelaifi, a powerful sports leader from Doha, to try and convince Qatar Sports Investments to own a new franchise in Paris — as part of the PSG group of sports clubs. The American sports bosses have also conducted talks with Barcelona and Real Madrid, the executive said. “Our conversations with various stakeholders in Europe have reinforced our belief that an enormous opportunity exists around the creation of a new league on the continent,” Silver said in a statement. “Together with FIBA, we look forward to engaging prospective clubs and ownership groups that share our vision for the game’s potential in Europe.” In an announcement Monday that the two parties were pressing ahead with the European expansion, FIBA Secretary-General Andreas Zagklis said: “The format of the league respects European sport model principles by offering any ambitious club in the continent a fair pathway to the top. The project is conceived in a way that will improve the sustainability of the entire European basketball ecosystem, including players, clubs, leagues and national federations, by generating a knock-on effect that will strongly benefit basketball fans throughout Europe.” Keen to assuage EU regulatory concerns, the NBA and FIBA added that they plan to dedicate financial support and resources to development throughout Europe’s basketball ecosystem. NO DOMINATION The announcement by the NBA and FIBA of some “permanent spots” in the league is central to the looming resistance in Brussels, which is also skeptical about the economic benefits for Europe. “What about the governance and economic value?” said Bogdan Zdrojewski, an MEP from the conservative European People’s Party group in the European Parliament. “It seems that with the NBA Europe these risk being siphoned out of Europe, leading to a lack of accountability on governance and a staggeringly high loss of economic value if we look at how the economic return — TV rights, sponsorships — generated in Europe will be systematically funneled to U.S.-based holding entities.” Zdrojewski added, “We need to look carefully at how the economic model is likely to lead to a corporate shift with traditional clubs being excluded in favor of global investment funds and state-backed clubs, who will be the only ones able to afford the prohibitive costs like the estimated $500 million to $1 billion founding franchise fees.”  At a meeting of EU sports ministers in Brussels last month, several countries — including Italy, France and Slovenia — spoke out against the NBA’s plans. Lithuania’s President Gitanas Nausėda also recently urged “basketball organizations on both sides of the Atlantic to cooperate, not compete, to take into account and appreciate the deep traditions of European basketball, and not to forget that values come before commercial interests.” Those who have built up European basketball in its current form agree.  “European basketball is built on history, identity and community. Fans here are not a market to be conquered; they are the people who have sustained clubs for decades, across generations,” said Paulius Motiejunas, CEO of the existing top competition Euroleague Basketball. “Any new project should start by respecting that and by strengthening the entire pyramid: elite competition, domestic leagues, and grassroots.” But, he added, collaboration is possible “if the goal is genuinely to grow basketball in Europe.” His terms, he said, were simple: “It has to be a partnership, not a takeover or, as they have mentioned, domination.”

BRUSSELS — If you ordered Christmas presents from a Chinese web shop, they are likely to be toxic, unsafe or undervalued. Or all of the above. The EU is trying to do something about the flood but is tripping over itself 27 times to get there. “It’s absolutely crazy…” sighs one EU official. The official, granted anonymity to discuss preparations to tackle the problem, said that at some airport freight hubs, an estimated 80 percent of such inbound packages don’t comply with EU safety rules. The numbers are dizzying. In 2024, 4.6 billion small packages with contents worth less than €150 entered the EU. That all-time record was broken in September of this year. Because these individual air-mail packages replace whole containers shipping the same product, the workload for customs officials has increased exponentially over recent years. Non-compliant, cheaply-made products — such as dangerous toys or kitchen items — bring health risks. And a growing pile of garbage. It’s a problem for everyone along the chain. Customs officers can’t keep up; buyers end up with useless products; children are put at risk; and EU makers of similar items are undercut by unfair and untaxed competition. With the situation on the ground becoming unmanageable, the EU agreed this month to charge a €3 fixed fee on all such packages. This will effectively remove a tax-free exemption on packages worth €150 — but only from July of next year. It’s a crude, and temporary, fix because existing customs IT systems can’t yet tax items according to their actual value. ALL I WANT … Which is why all European lawmaker Anna Cavazzini wants for next year’s holiday season is “better rules.” Cavazzini is a key player in a push to harmonize the EU’s 27 national customs regimes. A proposed reform, now being discussed by the EU institutions, would create a central data hub and an EU Customs Agency, or EUCA, with oversight powers. As is so often the case in the EU, though, the customs reform is only progressing slowly. The EUCA will be operational only from late 2026. And the data hub probably won’t be up and running until the next decade. “We need a fundamental discussion on the Europeanization of customs,” Cavazzini told POLITICO. As chair of the European Parliament’s Internal Market and Consumer Protection Committee (IMCO), the lawmaker from the German Greens has been pushing the Council, the EU’s intergovernmental branch, to allow the customs reform to make the bloc’s single market more of a unified reality. European lawmaker Anna Cavazzini. | Martin Bertrand and Hans Lucas/AFP via Getty Images EU capitals worry — as always — about handing over too much power to the eurocrats in Brussels. But the main outstanding issue where negotiators disagree is more prosaic: it’s about whether the law should include an explicit list of offences, such making false declarations to customs officers. While the last round of negotiations in early December brought some progress on other areas, the unsolved penalties question has kicked the reform into 2026. With the millions of boxes, packages and parcels inbound, regardless, individual countries are also considering handling fees, beside the €3 tax that all have agreed on. France has already proposed a solo fee with revenues flowing into its national budget, and Belgium and the Netherlands will probably follow suit. RACE TO THE BOTTOM Customs reform is what’s needed, not another round of fragmented fees and a race to the bottom, said Dirk Gotink, the European Parliament’s lead negotiator on the customs reform. “Right now, the ideas launched by France and others are not meant to stem the flow of packages. They are just meant to earn money,” the Dutch center-right lawmaker told a recent briefing. To inspect the myriad ways in which they are a risk, Gotink’s team bought a few items from dubious-looking web shops. “With this one, the eyes are coming off right away,” he warned before handing a plush toy to a reporter. The reporter almost succeeded in separating the head from the creature’s body without too much effort. And thin, plastic eyes trailed the toy as it was passed around the room. “On the box it says it’s meant for people over 15 years old…” one reporter commented. But the cute creature is clearly targeted at far younger audiences. Adding to the craze, K-pop stars excitedly unbox new characters in online promotional videos. The troubles aren’t limited to toys. A jar of cosmetics showed by Gotink had inscriptions on its label that didn’t resemble any known alphabet. Individual products aside, the deluge of cheap merchandise also creates unfair competition, said Cavazzini: “A lot of European companies of course also fulfill the environmental obligations and the imports don’t,” she said. “This is also creating a huge unlevel playing field.” After the holidays, Gotink and Cavazzini will pick up negotiations on the customs reform with Cyprus, which from Jan. 1 takes over the rotating presidency of the Council of the EU from Denmark. “This file will be a priority during our presidency,” a Cypriot official told POLITICO, adding that Denmark had completed most of the technical work. “We aim to conclude this important file, hoping to reach a deal with the Parliament during the first months of the Cyprus Presidency.” Despite the delays, an EU diplomat working on customs policy told POLITICO that the current speed of the policy process is unprecedented: “This huge ecommerce pressure has really made all the difference. A year ago, this would have been unimaginable.”

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It was the crown jewel of a climate agenda that defined Ursula von der Leyen’s first term as Commission president. But a little over two years after it was enacted, the European Union’s 2035 ban on gasoline-powered cars is dead. Its killers: Germany, home of Europe’s largest car industry, and the center-right European People’s Party, the pro-business political family to which von der Leyen and German Chancellor Friedrich Merz belong. It was their pressure that forced the Commission’s hand, after Berlin went from potentially abstaining on a vote to undercutting the entire combustion engine ban — all within three weeks.  Under the new proposal, the ban would be replaced by a target to reduce emissions by 90 percent in all cars sold after 2035. That means a range of vehicles will be part of the mix long past 2035, including pure combustion engines and plug-in hybrids that have both a combustion engine and an electric motor —  as long as they are offset with made-in-EU green steel and alternative fuels derived from non-fossil sources. Germany and the EPP argued the outright ban constrained the ability of European automakers to compete and took the freedom of choice away from consumers.  “Six months ago, it was unthinkable that the Commission would make this course correction,” an EU diplomat said, calling Germany’s “decisive intervention” a game changer in the fate of the law. “The ideology of pure electric is ending.”  After winning the majority of seats in the European Parliament in 2024, EPP chief Manfred Weber, also from Germany, said overturning the ban would be his top priority in the new era.  Weber claimed victory on Tuesday, calling the reformed legislation cutting the 2035 emissions target from 100 percent to 90 percent a “massive reduction.”   “We only can win the fight against climate change if we combine it with an economically reasonable approach. The combustion engine is allowed to be sold in the European Union after 2035,” he told a Tuesday press conference ahead of the announcement.  Cars account for 16 percent of EU emissions, making the ban an important — and certainly the most visible — pillar of the EU’s climate policy of reducing net greenhouse gas emissions to zero by 2050. By the Commission’s own calculations, dropping the emissions target to 90 percent means that 25 percent of the cars sold after 2035 would emit CO2, equivalent to roughly 2.6 million vehicles. The new targets are part of a broader automotive package put forward by the European Commission on Tuesday that included a new regulation mandating zero-emissions corporate fleet targets for each EU country, a battery booster to increase supply, and a regulatory red-tape cutting measure that introduces a new small-car initiative.  German Chancellor Merz, who also advocated reversing the ban in his bid for office, took a more measured tone, calling the revised ban “a clear signal” that it is the right way to “better align climate targets, market realities, companies and jobs.| Kay Nietfeld/Getty Images) The combined measures are meant to boost Europe’s automakers, which are facing a trade war courtesy of U.S. President Donald Trump, stiff competition from Chinese incumbents with high-tech electric vehicles, and stagnant sales across the bloc.  German Chancellor Merz, who also advocated reversing the ban in his bid for office, took a more measured tone, calling the revised ban “a clear signal” that it is the right way to “better align climate targets, market realities, companies and jobs.” For months Merz had tried to corral his governing coalition — which combines the conservative Christian Democrats and the center-left Social Democrats — into a common position on the ban. While the CDU pushed hard for it to be overturned, the SPD wanted to hold the line. Ultimately the conservatives won, putting forward a request for regulation that walks a line between industrial competitiveness and protecting the climate. NO ONE’S HAPPY While the Commission calls it a balanced approach that still paves the way for electric vehicles to take over from CO2-emitting cars, political groups across the spectrum call it a disaster — albeit for different reasons.  The left says reversing the ban will deal a blow to the climate and yet fail to give Europe’s automakers a competitive boost.  “The real problem facing Europe’s car industry is not a law that takes effect in 10 years. It is the collapse of European car sales in China and the steady global decline of combustion-engine markets,” said German Greens MEP Michael Bloss. “Continuing to bet on combustion engines is not an industrial strategy — it is a failure of one.” For the far right, meanwhile, the measures don’t go far enough. MEP Volker Schnurrbusch, a member of Germany’s opposition AfD party, said in a debate in the Parliament that the real issue is the Commission “dictating” what form of transport consumers use. The European Conservatives and Reformists, meanwhile, called the reformed 2035 law a missed opportunity that “falls short of providing the bold actions” needed to make the sector more globally competitive. The differing views on the ban’s reversal will continue to be heard in negotiations among the EU’s institutions, particularly in the Council where EU capitals will battle it out with Cyprus — a small country with no automotive sector — acting as referee. Already, France is gearing up for a fight. “The negotiations are just beginning,” a Paris officials said, adding that allowing combustion engine cars to be sold past 2035 is a red line for the country, even as it gets its desired European preference requirements. Behind the scenes, the automotive sector will continue to lobby to undercut the regulation even more. “The announced measures to mandate the greening of corporate fleets risk running counter to the necessary market and incentive-based approach,” EU car lobby ACEA said in a statement.   Yet that is exactly what the Commission is hoping, with multiple industry officials telling POLITICO that the corporate fleets measure is meant to act as a backstop for the gutting of the combustion engine ban. Climate Commissioner Wopke Hoekstra admitted as much in his remarks before the Parliament Tuesday evening.   “Corporate fleets will steer the clean transition and will help the automakers meet their targets,” he said. The proposal must now be debated by member countries and in the European Parliament.

The European Commission on Tuesday reversed its flagship ban on producing new combustion engine cars by 2035, even as it vowed to meet its ambitious climate targets. In a major win for industry, the current requirement for automakers to reduce tailpipe emissions from new vehicles by 100 percent by 2035 is now gone. The reformed legislative proposal, published Tuesday, will now call on companies to lower these emissions by 90 percent from 2021 levels. “This will allow for plug-in hybrids, range extenders, mild hybrids, and internal combustion engine vehicles to still play a role beyond 2035, in addition to full electric and hydrogen vehicles,” the Commission said in a press release unveiling its automotive package on Tuesday afternoon. The package, which includes a new regulation on greening corporate fleets, a battery initiative and regulatory simplification measures, marks a major victory for the automotive industry and the center right, which had campaigned ahead of the 2024 European election on overturning the ban. European People’s Party chief Manfred Weber was elated by the changes, telling media on Tuesday morning that the 90 percent target was “clearly an EPP request. We were amending this also when the legislation was first time discussed in the Parliament four years ago. So we are coming back to our original EPP positioning.” For its part, the Commission staunchly maintains the ban is still in place but with added flexibilities for European automakers struggling with a U.S.-led trade war, lackluster car sales and stiff competition from Chinese incumbents with their glitzy electric vehicles. ALL ABOUT AVERAGES The Commission is also watering down its target of a 50 percent reduction in emissions by 2030 by allowing automakers to calculate average emissions over three years (2030 to 2032). The change mirrors an amendment signed into law earlier this year that averaged the 2025 emissions target over three years after intense lobbying from the industry and their political allies. Both the 2025 and 2030 targets are part of the overarching 2035 law that banned new CO2-emitting vehicles, with the interim targets intended as goalposts to keep automakers on track. The EU executive is also altering the 2030 emissions-reduction target for light-commercial vehicles, such as delivery vans, lowering it from a 50 percent reduction to 40 percent of 2021 levels. CREATING DEMAND The measure for greening corporate fleets — vehicles owned or leased by companies for business purposes — sets targets for what proportion of each EU country’s fleet should be zero- or low-emission, based on their GDP. It is hoped the regulation will create a second-hand market for EVs to foster a “swifter transition away from older combustion engine” cars, and act as a demand mechanism to complement the 2035 law. While the targets are binding, the Commission says it is giving discretion to the capitals on how the targets should be achieved. It anticipates most will incorporate favorable tax policies for companies, pointing to Belgium as an example, which has boosted its share of EVs on the road through tax breaks. Under the proposal, plug-in hybrids, range extenders and combustion engine vehicles would all count toward the target but with the same caveats. Under the reform, all powertrains will be available as part of the 10 percent, but the Commission is mandating that automakers offset the emissions with made-in-EU green steel and alternative fuels. Small and mid-sized companies will be exempt from the law, a Commission official said in a media briefing Tuesday ahead of the Parliament presentation. SMALLER IS BETTER The automotive omnibus — a regulatory red-tape cutting scheme — focuses on a small-car initiative that Commission President Ursula von der Leyen announced during her September State of the Union address. A small EV will be defined as measuring 4 meters and 20 centimeters in length, the size of a compact car. The cars have their own regulatory category in the legislation and have been given specific concessions like subsidies and reserved parking spaces. Companies that produce small cars would also get a coefficient of 1.3 in the emissions target calculations, meaning that if a carmaker sold 10 small EVs they would get emissions credits worth 13 cars. But the initiative will only be in place until 2034, the EU executive said. As with corporate fleets, manufacturers will have to comply with local content requirements when manufacturing small EVs in order to get the emissions credits. France has long demanded that any flexibilities around the ban be tied to local content requirements — a request it put forward in October alongside Spain.

The European Commission is set to water down the EU’s 2035 de facto combustion engine ban by requiring automakers to lower their emissions by 90 percent instead of the original 100 percent, multiple officials with knowledge of the discussions told POLITICO. The change effectively marks the end of the ban, giving the center-right political parties and the automotive sector a massive win after months of heavy lobbying. Under the deal, which is still being negotiated at the time of publication, automakers can sell plug-in hybrids and range extenders after 2035. But those flexibilities will be tied to automakers “offsetting” the 10 percent extra emissions by using green steel and alternative fuels. How the offsets will work and what percentage of fuels or steel will need to be consumed in production is still being negotiated. The industry argues the law banning the new sale of CO2-emitting vehicles cuts them off at the knees and makes them less able to compete against Chinese incumbents that are ahead of them on electric vehicles.  Automakers are facing further headwinds courtesy of a trade war launched by U.S. President Donald Trump and sluggish sales at home. Climate advocates say the Commission needs to stay the course.  “The EU is playing for time when the next game has already started. Every euro diverted into plug-in hybrids is a euro not spent on EVs while China races further ahead,” said William Todts, executive director of green NGO Transport & Environment. The deal mirrors one announced by Manfred Weber, head of the European People’s Party, on Dec. 11. He told German media that the combustion engine ban had been overturned, with the 2035 target of 100 percent CO2 reduction cut to only 90 percent. The Financial Times was the first to report the 10 percent reduction. New details are emerging, however, about what powertrains will be allowed after 2035. In the current plan, range extenders — small combustion engines that give batteries more range — will count for a further emissions reduction than plug-in hybrids, which have both a combustion engine and an electric motor. Essentially, the scheme would give automakers more emission credits for range extenders than plug-in hybrids because they emit less CO2 than the hybrids, two officials said. The 2035 reform is part of a broader automotive package being put forward by the Commission on Tuesday that will include a new regulation on greening corporate fleets — vehicles owned or leased by companies for business purposes — and an automotive omnibus that was obtained by POLITICO. Essentially, the scheme would give automakers more emission credits for range extenders than plug-in hybrids because they emit less CO2 than the hybrids, two officials said. | Lorenzo Di Cola | Getty Images For the 2035 legislation, automakers will be allowed to pool, meaning that a brand that doesn’t meet the 90 percent target can buy credits from an automaker that over delivers. The pooling scheme is a lucrative business for all-electric manufacturers like Tesla. A separate initiative will focus on boosting small electric vehicles — a demand put forward by Commission President Ursula von der Leyen in her State of the Union address in September. Companies that produce the small cars would get a coefficient of 1.3 in the target calculations. So if a carmaker sold 10 of the small EVs, they would get the emissions credit of 13 cars. Manufacturers will have to comply with yet-to-be-defined local content requirements when creating the small EVs in order for the automaker to get the emission credit. France has long demanded that any flexibilities around the ban be tied to local content requirements — a request it put forward in October alongside Spain. The draft marks the first step in a long, politically fraught journey to becoming law. It will now go to Parliament and the EU capitals, where political groups remain divided over how far the Commission should go to rescue the automotive sector. The EPP has pushed hard to overturn the ban and the far right has campaigned on the issue, too, which could prompt yet another alliance between the two in Parliament to push to further weaken the law. EU capitals also have competing ideas. Spain wants the target to remain unchanged, while Germany is balking at France’s push for “Buy European” requirements, over fears it will spark a global trade war with the U.S. and China.