EU Insight 29 August 2025

During August, trade discussions continued between the EU and the US, culminating in the release of a joint statement outlining a new trade framework. Building on the July political deal, the arrangement foresees a comprehensive 15% cap on US tariffs for EU goods such as cars, pharmaceuticals, semiconductors and lumber. The EU also prepared its own tariff reduction proposals in a bid to implement such joint statement, seen as a precondition to secure the reduced US tariff on automotive exports, down from the current 27.5%. Unfortunately, this truce was short-lived, as President Trump has already threatened further tariffs against countries with digital rules he views as discriminatory towards US companies.

In August, Ukrainian President Zelenskyy accompanied by a delegation of EU leaders, including Commission President von der Leyen and NATO Secretary-General Rutte, attended a summit with US President Trump in the White House. The so-called coalition of the willing leaders gathered to discuss security guarantees for Kyiv, in preparation for a potential encounter between Ukraine and Russia. While the US Administration has not closed the door to security guarantees for Ukraine, the Pentagon later announced that Washington plans to play a minor role, leaving Europe more responsible for Kyiv’s security. In the meanwhile, European support for Ukraine remains steady, as the EU delivered €4 billion in financial aid to Ukraine ahead of its Independence Day.

French Prime Minister François Bayrou will face a confidence vote on 8 September, with both far left and far right parties vowing to topple his already fragile minority government. The vote was called by Bayrou himself, invoking the responsibility of his government on his proposed budgetary guidelines. A defeat would corner President Emmanuel Macron into appointing a compromise prime minister, calling snap elections or resigning, though the latter seems highly unlikely. The deadlock reflects deeper fractures in France’s political landscape, where no bloc commands a majority and coalitions often demand costly concessions. Beyond Bayrou’s fate, the showdown risks derailing budget talks, stalling reforms, and injecting uncertainty into Europe’s second-largest economy.

The Commission opened three consultations on the implementation of the Carbon Border Adjustment Mechanism (CBAM) Regulation. In line with the Commission’s simplification efforts, interested stakeholders are invited to provide their feedback on CBAM technical aspects, as well as potential social, economic, environmental and administrative impacts. In particular, the Commission consults on clarifying the calculation methodology of CBAM regarding emissions, free allocation and the conversion of carbon price paid in a third country. The Commission will build on the responses to provide further guidance and legal certainty for business and Member States in their implementation efforts, with the overarching goal of preventing carbon leakage.

The Commission’s Directorate for Energy has opened parallel calls for evidence on upcoming EU Electrification Action Plan and Heating and Cooling Strategy. Notably, the Commission is interested to gather stakeholders’ views on what measures should be implemented to foster a cost-effective and system-friendly electrification, as well as an energy-efficient decarbonisation of heating and cooling. Running until mid-November 2025, the results of the consultation are expected to feed into the drafting of the strategies, as part of the broader Clean Industrial Deal and decarbonisation efforts. Both initiatives aim to foster decarbonisation across buildings, transport and industry, building upon the recent Action for Affordable Energy.