The Capitals
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Welcome to the Capitals, your summary of European news by Eddy Wax, with Nicoletta Ionta, in Brussels. We welcome feedback and tips here. You can sign up here.

In today’s edition:

- Brussels' gentle approach to the US
- Kos wades into domestic politics
- New trade deal with Ukraine
- Johannes Hahn’s three new jobs

Get ready for the ultimate test for the EU's cautious approach to trade talks with Donald Trump, the man who has made tariffs his cudgel with which to beat Brussels.

Though the European Commission has prepared sector-specific counterattack tariffs worth over €100 billion, it has never really talked convincingly about using them.

With time running out ahead of the 9 July deadline on which Washington has said it will impose 50% blanket tariffs on EU goods, you don’t hear much about those counter-tariffs these days. In contrast, tariff threats, across the Atlantic, are still coming thick and fast.

In Brussels, a technocratic approach is prevailing – will it prove wise? By contrast, Friedrich Merz wants a quick and dirty deal to relieve the German car sector, and Emmanuel Macron wants the EU to slap 10% blanket tariffs on the US if Trump refuses to remove the current 10% duties. But for now, the EU executive is leaving the threats to member states.

Today, the bloc’s Trade Commissioner Maroš Šefčovič flies to Washington for more talks as part of a “technical delegation". Read Thomas Møller-Nielsen’s piece about his trip here.

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"Nobody in Europe wants to escalate,” António Costa told the Wall Street Journal on Monday.

But appeasement hasn’t necessarily worked so far. Trump raised tariffs on Europe’s steel and aluminium from 25% to 50% during the trade negotiations and threatened to raise all tariffs to 50% on May 23 – eliciting no equivalent response from Brussels.

The EU is on the defensive when it comes to political strategy too. It has been forced to deny Trump’s claims that EU digital laws to rein in big tech are on the table in the secretive trade negotiations. Ominously for Europe, Canada folded on its own digital tax after pressure from Trump.

Meanwhile, the Commission has been walking back surprising comments by Ursula von der Leyen last week that the EU was thinking of circumventing the US and using a trans-Pacific trading bloc called the CPTPP to build a new global trading system. The president yesterday reiterated her support for reforming the brain-dead World Trade Organisation.

At a meeting Monday, the Commission told diplomats it prefers a scenario in which neither the EU nor the US imposes tariffs on each other. A “best-case” scenario would be a so-called “framework agreement”, similar to the one agreed in May between the US and the UK, according to EU diplomats briefed on the discussion, who spoke to Euractiv.

“We are advancing well on the talks,” Paula Pinho, chief spokesperson, said Monday. The next update that ambassadors will get is on Friday, once Šefčovič is back.

Commissioner for Slovenia

Marta Kos, the EU’s enlargement commissioner, has given an interview to a Slovenian magazine where she states: “I don't want Slovenia to have a Janez Janša government again.” Europe’s 27 commissioners are bound by the treaties to serve the general European interest, which is typically interpreted as a need to remain above the fray of domestic politics. Her spokesperson did not respond to a request for comment.

Currently in opposition, Janša’s SDS party is leading in the polls ahead of a 2026 election. His MEPs in Brussels – part of the EPP – immediately leapt on the interview, decrying political bias and interference in domestic politics. This is the latest chapter in the standoff between Kos and Janša – who did everything he could to stop her being confirmed as commissioner last year. Kos has not given any interviews in English since starting the job in December. And as it happens, the magazine, Mladina (“Youth”) that spoke to Kos, is where one famous Slovene made his name as a journalist campaigning against the Yugoslav regime. His name? Janez Janša.

EU clinches Ukraine deal, with scant details

The EU has clinched a long-term trade deal with Ukraine, replacing the wartime tariff-free regime that expired on 5 June.

Commissioners Šefčovič (trade) and Hansen (agriculture) announced the agreement Monday, but details remained scant. The new framework includes limited openings for sensitive agri-food products like poultry, eggs, and sugar, capped with small quota increases.

MED5 to Commission: Not so fast, Paris

Mediterranean countries are pushing back on France’s migration diplomacy with the UK. In a letter sent to the European Commission – first reported by the Financial Times – the group of five Mediterranean countries, led by Italy and Spain, and supported by Malta, Cyprus, and Greece, raised concerns over Paris' reported asylum return arrangement with the UK.

The 20 June letter – excerpts of which were seen by Euractiv – slams the initiative on both substance and process, warning that any bilateral deal with London on irregular migration runs counter to previous understandings among EU capitals.

One diplomat described the letter as a simple request for clarity from the Commission on how the France-UK deal will proceed and whether it could affect other member states under EU asylum law.

The Commission confirmed it received the letter and is in touch with French and UK authorities “to ensure the necessary clarifications are made”, an EU spokesperson said.

Greens set sail in Copenhagen:

Euractiv's Magnus Lund Nielsen caught up with co-chair of the Green group, Bas Eickhout, on a Danish-presidency-related boat tour in Copenhagen this week to ask what he sees on the horizon.

Struggling for clout in a parliament where centre-right chieftain Manfred Weber is both king and kingmaker and picking his majority as he pleases, Eickhout believes the tide will soon change. “Once the summer heat really kicks in, people will start talking about climate again,” Green co-chair Eickhout⁩ said.

The party is down to just 53 seats in the 720-seat European Parliament after last year’s elections and another recent projection has them winning just 36 seats if an election were held today.

Still, Eickhout says: “We might not be talking about climate right now, but that can change – just like it did between 2016 during Brexit and Trump's initial election and 2019 when we rocked the vote.”

GERMANY
Former Chancellor Angela Merkel has again distanced herself from the border policy of the current government, led by her own party and arch nemesis Friedrich Merz. In a televised discussion with refugees who arrived in 2015 after Merkel opened the border, she emphasised the need for fair, coordinated European asylum procedures instead of turning all asylum-seekers away. Merkel also warned against letting the far right dictate migration policy, saying there was too much talking about refugees and not enough talking with them.

FRANCE
France is experiencing a record-breaking heatwave expected to last until midweek, with temperatures reaching up to 41°C and unusually high overnight lows. The Golfech nuclear power plant, located in Tarn-et-Garonne, announced on Monday that it had shut down reactor 1 on Sunday evening due to rising temperatures in the nearby Garonne river. More than 200 schools are partially or fully closed at the start of this week.

ITALY
The Italy-Albania migration protocol continues to face major roadblocks, the latest – and perhaps most significant – being a report from the Supreme Court of Cassation that deems the deal potentially unconstitutional, reigniting a political clash between the judiciary and the Meloni government. Read more.

POLAND
Polish refiner Orlen says it has officially “freed the region from Russian crude oil” after terminating its final supply contract with Russia for one of its refineries in Czechia. Read more.

[Photo: Joaquin Corchero/Europa Press via Getty Images]

The Commission is set to present the bulk of its new seven-year budget proposal on 16 July, kicking off more than two years of difficult negotiations. The outcome is likely to radically redefine both the bloc's spending priorities and its sense of what matters.

Jacob Wulf Wold reports on the five main debates that will shape the next Multiannual Financial Framework.

France’s long-overdue public broadcasting reform finally landed in parliament on Monday and immediately ran into a wall of opposition. Read more.

Germany's centre-left Social Democrats held a fractious party conference over the weekend. Vice-Chancellor and Finance Minister Lars Klingbeil was re-elected as chair with just 64.1% of the vote – raising doubts about his ability to keep the party on board with the pragmatist coalition deal he struck with Merz's Christian Democrats. Read more.

Four-jobs-Hahn: The Commission approved three new roles for EU Budget Commissioner Johannes Hahn – who stepped down after 15 years in the Berlaymont last year.

He will help the Austrian government lobby to get a temporary seat on the UN security council; he will join the European Investment Bank’s Appointment Advisory Committee, which vets candidate for top management roles; and he will join the Brussels-based humanist think tank Centre Condorcet to do some “creative brainstorming” on sustainability, which he won’t be paid for. The EU already appointed him as its Cyprus envoy.

- First day of Denmark’s EU Council presidency

- Commission President von der Leyen and Commissioner Jorgensen join a strategic dialogue with the World Economic Forum

- Trade Commissioner Šefčovič takes part in the EU-Turkey high-level dialogue in Ankara before heading to Washington

Contributors: Thomas Møller-Nielsen, Alexandra Brzozowski, Magnus Lund Nielsen, Anupriya Datta, Miriam Saénz de Tejada, Nick Alipour, Laurent Geslin, Jacob Wulf Wold, Aleksandra Krzysztoszek, Alessia Peretti.

Editors: Vince Chadwick and Sofia Mandilara.

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