The EU voted to impose tariffs of 10% to 25% on U.S. goods.

On Wednesday, April 9, EU member states approved, by an overwhelming majority, the imposition of retaliatory tariffs on U.S. goods. Twenty-six of the EU’s 27 member states voted in favor of imposing “rebalancing” tariffs of 10% to 25% on U.S. goods—including tobacco, motorcycles, poultry, steel, and aluminum. Only Hungary voted against the tariffs. Following the vote, the European Commission issued a statement saying: “The EU considers the U.S. tariffs unjustified and damaging, causing economic harm to both sides—and to the global economy.” The Commission also stated that it would continue seeking a negotiated solution with Washington, and that the EU could suspend its countermeasures at any time should the U.S. agree to a fair negotiated outcome. The first round of tariffs will enter into force on April 15; most tariffs will take effect on May 16. Import duties on other products—including soybeans and nuts—will come into effect on December 1. Earlier, Trump had hinted that if Brussels retaliated, Washington would sever trade relations with the EU, claiming these policies were necessary to revitalize U.S. manufacturing.

The EU’s two-trillion-euro, seven-year budget: who must approve its five new revenue sources?

The figure proposed by the Commission last July 16 totals approximately €2 trillion over seven years—equivalent to 1.26% of the EU’s Gross National Income (GNI). Ireland, currently holding the Council presidency for the first half of the year, plans to present its own negotiating text during the first week of October for discussion at the Brussels summit on October 15. For this budget to be adopted, it requires unanimous agreement by all 27 Council members and approval by the European Parliament; moreover, the portion introducing new own resources must undergo separate ratification by each member state according to its national constitutional procedures. How much of that 1.26% represents newly allocated spending? First, consider the structure. At 2025 constant prices, the Commission proposes a ceiling on commitments of €176.31 billion; at current prices—and including repayments of the ‘NextGenerationEU’ borrowing—the total budget approaches €198.4 billion, of which €16.8 billion (0.11% of GNI) is earmarked for servicing and repaying the joint borrowing undertaken in 2020. The expenditure profile has changed significantly. The previously separate Cohesion Policy and Common Agricultural Policy have been merged into the ‘National and Regional Partnership Programme’, with allocations to member states remaining broadly at current levels, while mandatory minimums have been introduced for less-developed regions. A newly established ‘European Competitiveness Fund’ includes a single window for defense and space totaling €131 billion—roughly five times the corresponding expenditure in the previous seven-year period. The external action heading ‘Global Europe’ amounts to €200 billion, including a €15 billion crisis reserve, plus up to €100 billion available for Ukraine between 2028 and 2034. This proposal simultaneously accomplishes three objectives: consolidating the two major legacy pillars; creating substantially larger funding envelopes for defense and Ukraine; and beginning repayment of the prior round of joint borrowing. While the first two goals attract political willingness to fund, the third does not. How many approvals does each of the five new revenue sources require? To finance the budget, the Commission has proposed five new own resources, with estimated annual revenues as follows: €9.6 billion from the Emissions Trading System (ETS), €1.4 billion from the Carbon Border Adjustment Mechanism (CBAM), €15 billion from electronic waste levies, €11.2 billion from tobacco excise duties, and €6.8 billion from the ‘Corporate Resource for Europe’ (CORE)—a contribution levied on large enterprises’ turnover. Together, these five sources are projected to yield approximately €44 billion annually. None of these five proposals is purely technical. Tobacco excise duties and electronic waste levies combined amount to €26.2 billion—60% of the new own resources—and both directly impinge upon national tax bases. CORE, a turnover-based contribution imposed on large enterprises, has already been interpreted by some member states as tantamount to an ‘EU-level corporate tax’. The Own Resources Decision requires unanimous approval by all 27 member states, followed by individual domestic ratification processes—a step historically taking years to complete. The Commission has specified the intended uses, the amounts, and the legal pathways. What it has not specified is which of these five measures has already secured majority support in the parliament of any single member state. Even the six founding countries’ fiscal accounts are far from pristine.

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