June arrives with a flurry of activity on the trade front, as Brussels races to lock in agreements before the summer recess.
The landmark EU–US trade deal is inching towards the finish line, with the European Parliament set to cast its final vote on June 16 following a hard-fought inter-institutional compromise. Across the Pacific, EU–China trade tensions are escalating sharply, with a widening deficit and growing calls from Member States to sharpen the EU’s tariff toolbox.
Meanwhile, the EU continues building its trade architecture in the Americas, as Ursula von der Leyen touched down in Mexico City to sign a landmark deal that caps nearly a decade of negotiations. Finally, on the investment front, freshly approved FDI screening rules set a new bar for protecting strategic European sectors from risky foreign capital.
A historic moment for transatlantic relations
An historic shift in transatlantic relations is going to hit the Western world. After months of negotiations, and severe political pressure from Washington, the European Parliament, the Council of the EU and the Commission reached a provisional agreement on the implementation of the EU-US trade deal.
The final position of the European Institutions is the epitome of compromise and a textbook example of “inter-institutional negotiations”. The deal, initially pushed forward by the Commission and almost immediately supported by the Council, was highly amended in the Parliament, which entered inter-institutional negotiations with a long list of demands.
However, once negotiations started, the Parliament was forced to water down its requests. The so-called “sunrise clause”, which would have made the agreement conditional on the US lowering its steel and aluminium tariffs to 15%, was significantly watered down. Rather than making EU tariff preferences automatically conditional on US compliance, the final text instead empowers the Commission to suspend tariff concessions if the US fails to reduce its steel and aluminium tariffs to 15% by 31 December 2026.
The final text also left out wording that would have voided the agreement in the event of U.S. threats to EU territorial integrity – a provision the Parliament had sought following President Trump’s statements on Greenland. Moreover, the EU tariff concessions will expire on 31 December 2029, a longer timeline than what was previously envisioned by the Parliament.
With the final text approved by the International Trade Committee on June 2, the European Parliament Plenary vote on Tuesday the 16th will be the last step before the agreement can enter into force. So, get your popcorn ready.
Zoom in
After warning that EU legislation “cannot be dictated by threatening social media posts from Washington”, International Trade Committee Chair Bernd Lange struck a cautiously optimistic tone on a deal that, even if not perfect, will give some stability and predictability to EU companies and consumers.
Zoom out
The EU-US trade agreement is being negotiated against a backdrop of remarkable legal instability on the American side. After the Supreme Court struck down Trump’s sweeping worldwide tariffs earlier this year, his administration turned to Section 122 of the Trade Act of 1974 to impose a 10% global tariff as a fallback — only for a federal court to rule that measure unlawful too. The ruling sets a precedent other companies could point to in pursuing similar relief, though tariffs will remain in place for most importers while the administration appeals.
Our take
The finalisation of the EU-US agreement will go down in history as a watershed moment in transatlantic relations. While its outcome remains uncertain, as the Parliament has been one of the most critical voices on the issue, its effects on broader EU policy initiatives — from trade agreements to energy, defence and tech — are likely to be deeply structural.
Invest in Europe! (But beware of the revised foreign direct investment rules)
On May 19, the European Parliament approved the provisional agreement on the revision of the EU foreign direct investment (FDI) screening framework during its plenary session. The revised rules reflect the EU’s dual objective of maintaining an attractive investment environment while increasing scrutiny over foreign investments in strategic sectors.
The reform significantly strengthens the EU screening framework by requiring all Member States to establish national screening mechanisms and by introducing a minimum mandatory scope of transactions subject to review. The sectors covered include dual use items and military equipment, critical technologies such as artificial intelligence, quantum technologies and semiconductors, critical raw materials, energy, transport and digital infrastructure, financial system entities, and electoral infrastructure.
The revised framework also seeks to streamline national screening procedures. It introduces harmonised deadlines, including a 45-calendar day limit for the initial screening phase, and establishes a shared database to facilitate information exchange between national authorities. Notably, the new rules will, for the first time, cover intra EU transactions where the investor is ultimately controlled by individuals or entities from third countries.
The revised FDI framework forms part of the EU’s broader effort to strengthen the competitiveness and resilience of strategic European industries. The Industrial Decarbonisation Accelerator Act, a recent initiative, also contains provisions relating to foreign investment and strategic sectors, complement these updated rules on foreign investment.
The regulation must still receive formal approval from the Council before entering into force. Its provisions will apply 18 months after adoption.
Will there be more to come? Probably.
EU-China trade tensions escalate as Brussels pushes for stronger defence measures
The tide is turning in EU-China trade relations. European industry is under growing pressure as China strengthens dominance in key sectors trade barriers, devaluating its currency, subsidising its domestic industries, and flooding European markets with low-cost goods. As a result, the EU’s trade deficit with China widened to EUR 359.8 billion in 2025, up 18% from 2024. This has forced many European companies to cut jobs and scale back production as they struggle to compete with cheaper Chinese imports.
This trend has prompted five Member States, led by France, to draft a joint paper urging Brussels to strengthen and expand its tariff toolbox to counter China’s and other countries’ abusive trade practices. France also called on the EU inspiration from US protectionism in strategic industries. The EU has proposed requiring European companies to source critical components from at least three suppliers in different countries in response to China’s export restrictions on key technologies. The proposal is part of wider EU efforts to reduce dependence on Chinese exports, including limits on funding for Chinese-made solar inverters, stricter foreign investment screening, and measures to curb reliance on Chinese tech firms like Huawei.
Trade tensions came to a head on May 29, when Commission President Ursula von der Leyen and senior commissioners discussed China’s critical raw material export restrictions and potential more assertive EU trade defence policy, drafted by DG Trade. The proposals will be discussed with EU leaders at a Brussels summit on June 18–19, followed by continued talks when China’s Commerce Minister Wang Wentao meets EU Trade Commissioner Maroš Šefčovič in Brussels on June 29.
After Years of Negotiation, VDL Unites Europe and Mexico in a Historic Pact
The EU–Mexico trade deal marks a major milestone in Brussels long‑running effort to modernise its economic ties with Latin America. Signed during the 22nd May EU – Mexico Summit, the agreement represented almost a decade of negotiations. Ursula von der Leyen’s trip to Mexico gave the agreement long-awaited political momentum, after years of delays caused by shifting governments, regulatory concerns, and ratification obstacles on both sides. Although negotiations to modernise the original agreement concluded in 2025, the Commission still had to prepare the legal text, secure internal EU backing, and navigate member-state sensitivities.
With this deal in place, it expands market access, updates rules on services and procurement, as well as positioning the EU as a more active player in a region where global competition, with powers such as US and China, has intensified. Beyond its economic benefits, the deal brings with it significant political importance. It can be seen as an instrument in strengthening cooperation on sustainability, climate action, labour standards and improving anti-corruption, and in return reflecting the EU’s broader vision of responsible and collective global engagement.
Its successful implementation will now depend on ratification procedures and the ability of both partners to translate the deal’s commitments into tangible benefits for businesses, workers, and consumers. The deal may serve as a model for how modern trade agreements can balance economic growth with social and environmental responsibilities.
Over on X…
Overheard in DG TRADE’s corridors: “Morto un Papa, se ne fa un altro”
On the radar:
1 June | The Juul Jørgensen Era Begins: A historic guard-changing at the Charlemagne building took effect on Monday 1, as Ditte Juul Jørgensen officially stepped into her role as Director-General, succeeding Sabine Weyand. The Danish national inherits an immediate, heavy administrative agenda focused on balancing defensive economic tools, finalising ongoing FTA legal reviews, and steering European trade policy through an increasingly volatile geopolitical landscape.
16 June | Plenary Vote on the EU–US Deal: The full European Parliament assembly will gather in Strasbourg to cast its final vote on implementing the EU’s side of the “Turnberry” accord. Fresh off a decisive endorsement from the INTA committee, Members of the European Parliament will now have to decide whether to back the lifting of import duties on hundreds of U.S. industrial and agricultural goods to avert a July 4 deadline clash with Washington.
What we are reading:
A coalition of the willing for trade: Can the EU lead a new alliance to defend rules-based trade? In Can the European Union lead a trade coalition of the willing?, Professor Cecilia Malmström argues that rising geopolitical tensions are pushing Brussels to build deeper trade ties with like-minded partners, especially CPTPP countries. The paper suggests that the EU could shape cooperation on digital trade, subsidies, carbon pricing, and supply-chain resilience, but only if its own competitiveness agenda remains open rather than protectionist.
…or a more powerful stance?: Should the EU stop waiting for trade rules to save it? In FT’s Why Europe must embrace tariffs, Soumaya Keynes argues that China’s export surge and Europe’s industrial weakness require a tougher EU trade response. Rather than relying on WTO disputes, Brussels should use targeted tariffs, quotas, procurement limits, or anti-coercion tools to reduce risky dependencies — but apply them calmly, selectively, and with trusted partners to avoid the worst lessons of Trump-style protectionism.
Alessandro Pizzi, Public Affairs Consultant
Sophia Nee, Communications Consultant
Shauna Downey, Media & Communications Trainee