Brussels Edition
The day that Europe hoped it would avoid has come
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Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

Europe’s crack team of trade officials is likely to be up late into the night as they digest the tariffs package President Donald Trump is due to unveil today — and begin deciding which elements of the “strong plan” touted by Commission President Ursula von der Leyen they will deploy. Take pharmaceuticals, for example. For more than three decades, the sector has been protected from tariffs by a WTO agreement designed to improve access to life-saving drugs. But now even those are firmly in Trump’s sights, and Ireland is at particular risk. It’s an illustration of how tricky it will be for the EU to calibrate its response. Yet, it’s not all bad news. Traders are betting that the euro will strengthen on the assumption that a trade war will actually be more detrimental to the US than to Europe. All eyes will be on Trump’s Rose Garden event scheduled to begin as US markets close at 4 p.m. in Washington.

John Ainger

What’s Happening

French Reprieve | Marine Le Pen’s hopes of running for the 2027 French presidency were given a boost after the Paris court of appeals announced yesterday it should be able to rule on a challenge to her conviction by the summer of next year — much sooner than expected. Le Pen was found guilty of embezzlement on Monday and given an immediate five-year ban on running for office.

Rome Calling | US Vice President JD Vance is planning to visit Italy later this month, as European leaders, including Premier Giorgia Meloni, grapple with how to deal with the seismic foreign-policy changes unleashed by Trump’s administration. Vance has been seen as close to Matteo Salvini, of the right-wing populist League party, who serves as vice premier in the government in Rome.

Russia Sanctions | A group of 50 Republican and Democratic US senators introduced a sanctions package to hit Russia and countries that buy its oil if President Vladimir Putin refuses to engage in good-faith ceasefire negotiations with Ukraine or breaches an eventual agreement. The punishments would include a 500% tariff on imports from countries that buy Russian oil, petroleum products, natural gas or uranium, according to a draft of the bill we’ve seen.

Car Fines | Volkswagen, Renault and Stellantis were among the hardest hit by a package of fines worth €458 million dished out by the EU against carmakers for participating in an illegal cartel for recycling vehicles. A probe revealed that, for over 15 years, 16 major car manufacturers, as well as the European Automobiles Manufacturers’ Association, forged anti-competitive agreements.

Mercedes Out | Mercedes-Benz, which avoided the EU fines because it blew the whistle on the cartel, is considering withdrawing its least expensive cars from the US because Trump’s auto tariffs would likely make their sales economically unfeasible, we’ve learned. The German automaker is mulling cutting sales of more entry-level models like the small GLA sport utility vehicle as part of broader tariff contingency plans.

Around Europe

AI Inequality | ECB President Christine Lagarde said artificial intelligence may undermine the region’s social model if countries don’t nurture the skills to harness such technology. The remarks hint at the headache faced by central bankers in assessing how AI will impact economies already struggling to adapt to multiple long-term transitions, ranging from demographics to climate change.

Spain’s Prescription | Big Pharma has aimed some choice words at European countries in recent weeks, including calling the UK “uninvestable” and warning that the region as a whole is fast losing its edge to China. Spain, though, is showing there could still be a way to build up a pharmaceutical industry: by giving companies what they want.

Anarchist Matrix | Italian authorities are investigating a possible anarchist motive behind a fire at a Tesla dealership in Rome. Interior Ministry Matteo Piantedosi suggested foul play was likely the cause of the blaze, which damaged 17 vehicles, and blamed an “anarchist-antagonist matrix.”

Military Splurge | Finland’s government plans to raise the country’s defense spending to 3% of its economic output by 2029 to help thwart a more aggressive Russia. The country is also preparing to follow Baltic nations and Poland by withdrawing from the Ottawa Convention, which bans anti-personnel landmines.

Tunnel Vision | Direct, high-speed train services between London and new destinations such as Cologne, Lyon, Frankfurt and Geneva have gotten a step closer after a report found that a depot in the UK capital has the space to store more trains. Here’s what it means for climate-friendly travel.

Chart of the Day

Sergio Ermotti of UBS was the highest-earning CEO across continental Europe’s biggest banks last year, while UniCredit boss Andrea Orcel got the largest raise. Many lenders posted bumper profits last year on the back of higher interest rates, enabling them to step up investor payouts. Here’s the full rundown on European banking’s biggest earners.

Today’s Agenda

All times CET

  • 1 p.m. Andrius Kubilius, EU defense commissioner, gives a speech and meets Poland's deputy premier ahead of an informal defense ministers meeting in Warsaw
  • 4 p.m. NATO chief Mark Rutte holds a news conference ahead of this week’s foreign ministers meeting in Brussels
  • European Committee of the Regions 165th Plenary Session

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