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Diplomacy

EU-US tariff deal on brink of collapse amid internal conflict and confusion

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As reactions from the continent rise against the tariff agreement reached by EU representatives with the US, the European Commission has claimed that the “agreement is not legally binding.”

According to a statement released by the Commission on Tuesday, the agreement is a “political understanding” that is “not legally binding.”

Indeed, Washington and Brussels have also published their own versions of the tariff agreement’s content, and these versions contain significant differences on important issues.

On the other hand, it is undisputed that the agreement stipulates a 15% tariff on most exports from the EU to the US, while the US will have tariff-free access to the EU market.

On Monday, French government officials stated that the agreement signifies the EU’s “submission” to the US. Paris argued that if the EU wants to maintain its claim as an “economic power,” the agreement should not be accepted without resistance.

The agreement was supported by the German government as it considered the interests of the German automotive industry. The industry is in a deep crisis and cannot afford to take risks in the crucial US market.

A “defensive” negotiation strategy was systematically supported by the German government. France, for example, had advocated for a more confrontational approach from the beginning, demanding the implementation of counter-tariffs and threatening harsh measures against US technology companies in Europe.

Germany, however, favored de-escalation. During a meeting with German business representatives in early June, Chancellor Friedrich Merz reportedly said that during his White House visit, he “explained the trade flows to Trump.”

Merz noted that the number of vehicles German car manufacturers export to the US is the same as the number of vehicles Germany imports from the US.

On the other hand, Merz only agreed to adopt a slightly tougher stance during his meeting with French President Emmanuel Macron in the middle of last week; however, it is said that at that point, he had “long known the content of the agreement.”

Contradictory statements from Brussels and Washington

Yesterday (Tuesday, July 29), concerns began to emerge that the agreement could genuinely collapse at the last minute.

Washington claimed that von der Leyen had made crucial concessions on issues like food standards and digital topics, while the EU categorically denied this.

Furthermore, the Commission announced that “the political agreement of July 27, 2025, is not legally binding” and that new negotiations would take place in the near future.

For example, the Commission stated that Washington had committed to establishing a “quota system” for steel and aluminum, under which a limited amount of metal would fall below Donald Trump’s 50% tariff.

However, the White House’s fact sheet denied this claim, stating, “Sectoral tariffs on steel, aluminum, and copper will not change… The EU will continue to pay 50%, and the parties will discuss securing the supply chains for these products.”

Under pressure over this contradiction, EU trade spokesperson Olof Gill directed journalists to the Commission’s press release. This statement, however, says the opposite: “The EU and the US will lower tariff rates on EU exports to historic levels, eliminating the current 50% tariffs.”

There is also confusion regarding pharmaceuticals. Gill said the EU believes its pharmaceutical exports will be subject to only a 15% tariff after the US completes its Section 232 investigation in the coming weeks. But the US statement made no mention of any delay in the investigation.

Gill said all issues would be clarified in a joint US-EU statement and that the bloc “hopes this statement will be published very soon.”

Still, Brussels appears to be preparing for the worst. The Commission announced it would not withdraw its €93 billion retaliation package against US goods until a joint statement is reached.

The measures, covering aircraft, automobiles, and food products, are set to take effect on August 7, giving negotiators a very short time to prevent a conflict.

Germany capitulated to the US due to the crisis in its automotive sector

According to German Foreign Policy, Germany’s stance was based on the interests of the German automotive industry, which is in a deep crisis. One of the most significant reasons for this crisis is the delay in transitioning to electric cars and the loss of its once-leading share in the important Chinese market.

For example, in the spring, Mercedes and BMW reported significant declines in sales and profits; in the first quarter, sales decreased by 7% and 7.8% respectively, while profits fell by 43% and 26.4% respectively.

Volkswagen announced last week that despite relatively stable sales, its profit for the first half of 2025 fell by more than 38%, marking the third consecutive half-year of decline.

Comprehensive layoffs have been planned for a long time. At VW, the main brand of the Volkswagen Group, nearly a quarter of the 130,000-strong workforce will be laid off by 2030.

Audi plans to reduce its workforce in Germany by approximately 7,500 by the end of 2029. According to reports, Mercedes is also considering laying off up to 20,000 people.

Automotive supplier ZF plans to lay off up to 14,000 people by the end of 2028.

The automotive sector is dependent on exports

In this situation, the German government has made stabilizing the German automotive industry a priority.

The sector is heavily dependent on exports: last year, 78.2% of all passenger cars produced in Germany (over 3.18 million vehicles) were sold abroad.

However, German manufacturers have faced some serious setbacks in recent years. For example, car exports to the United Kingdom, once the largest buyer of German vehicles, have decreased after Brexit due to the EU imposing retaliatory measures on the country.

While German manufacturers sold 593,000 cars to the United Kingdom in 2019, this figure dropped to just 390,000 in 2024.

Exports to China fell by about 17% last year; in the first five months of 2025, exports of cars and car parts to China decreased by approximately 36%.

The reason for this is the increasing purchase of domestic brand electric cars in China. The German industry cannot afford further declines in the US, its largest sales market, where 448,000 cars were sold from Germany in 2024.

In the first half of 2025, VW lost €1.3 billion to avoid passing on the 27.5% tariffs to its US customers and to not lose its market share in the US.

The German automotive lobby is still worried

Accordingly, the German automotive industry, in particular, had lobbied against imposing tariffs on the US.

On one hand, it was argued that Trump should not be encouraged to increase US tariffs under any circumstances, as this could have devastating consequences for the German industry.

On the other hand, Hildegard Müller, President of the German Association of the Automotive Industry (VDA), stated that tariffs against imports from the US would also affect cars produced in the US facilities of German automotive companies and exported from there to the EU.

These numbers are not insignificant: “About two-thirds of car exports from the US to the EU come from German manufacturers,” says Müller.

According to Müller, any counter-tariff imposed by the EU on automotive products from the US would have cost German manufacturers about €100 million per year for every 1% of the tariff.

Berlin-Paris tensions surface

When Merz took this pressure into account, serious disagreements with France began.

French Prime Minister François Bayrou said on Monday that the agreement, which was also “unsuccessfully” negotiated by the European Commission, meant the EU’s “submission” to the US.

Similar statements came from government and opposition members in Paris. Foreign Trade Minister Laurent Saint-Martin went a step further on Monday, stating that he was strongly opposed to leaving the outcome of the negotiations as it is, otherwise the EU could no longer be considered an “economic” power, and added, “The final word has not yet been spoken.”

The trend of German industry moving to the US could strengthen

Claims are becoming increasingly widespread that the tariff agreement, approved by Berlin on Sunday to support the German automotive industry, will encourage the relocation of car factories from Germany to the US.

According to automotive expert Ferdinand Dudenhöffer from the Center Automotive Research, if the agreement is implemented, it could be more profitable to produce high-volume models like the Mercedes E-Class or BMW 5 Series in the US rather than in Germany.

This is because, according to the rules agreed upon by von der Leyen and Trump, no tariffs will be paid on exports from the US to Europe.

If Mercedes and BMW centralize the production of these models in the US, they could supply both sides tariff-free from a single location, which would be logical and profitable for the companies.

Diplomacy

CSTO strips Armenia of voting rights over two-year budget debt

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Members of the Collective Security Treaty Organization (CSTO) have stripped Armenia of its voting rights and its ability to appoint representatives to official positions due to a two-year debt to the organization’s budget.

Kremlin Spokesman Dmitry Peskov said, “This decision was taken based on the organization’s charter due to Armenia’s failure to fulfil its obligations for several years.”

Prior to the CSTO leaders’ summit in Moscow, Peskov had stated that member states would “react” to the Caucasus country’s non-participation in the organization’s activities.

Ahead of the Moscow summit, Armenian Prime Minister Nikol Pashinyan said his country’s “interest has run out” regarding the CSTO. Through his press spokesperson, he announced that he would travel to Türkiye on 11 November to attend the United Nations Climate Change Conference (COP31) instead of going to Russia.

The CSTO leaders’ meeting was held with the participation of Russian President Vladimir Putin alongside the leaders of Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan.

The leaders jointly took the decision to revoke Armenia’s voting rights.

At the conclusion of the meeting, the participants also signed a joint declaration.

The declaration stated: “We confirm our unconditional commitment to the goals set out in the CSTO treaty and charter towards creating favourable and stable conditions for the comprehensive development of member states.”

Pashinyan had frozen Yerevan’s de facto participation in the CSTO in February 2024, citing the organization’s failure to aid the Armenian side during the armed clashes in Nagorno-Karabakh in September 2023.

Having referred to the CSTO as a “soap-bubble alliance” since that time, Pashinyan accused the organization’s members of “planning war” together with Baku. He stated that Armenia would not return to active work within the alliance at least “over the next five years”, adding that he would welcome it if the country were expelled from membership.

Relations between Armenia and Russia grew tense once again in the spring of 2026, after Yerevan moved closer to the European Union (EU) and the Kremlin responded with a trade war.

In May, Pashinyan refused to travel to Moscow to attend the Victory Day parade and declared that he did not support Russia on the Ukraine issue.

In response, Putin called on Yerevan to determine its foreign policy course through a referendum, advising Armenian authorities not to forget the fate of Ukraine.

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US urges Russia to draft proposals for new European security pact

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The US administration has reportedly called on Russia to submit proposals for a prospective security treaty with Europe that would include measures to ease tensions between European nations and Moscow.

According to a report by news site Axios citing sources familiar with the matter, the US side conveyed the request during trilateral negotiations held in Abu Dhabi.

During the talks, US Special Envoy Steve Witkoff and Donald Trump’s son-in-law Jared Kushner suggested that the Russian delegation prepare a fresh proposal outlining its security concerns and demands.

The US delegation reportedly asked that this proposal clarify what kind of “symmetrical steps” Moscow is prepared to take to de-escalate tensions and “provide non-aggression guarantees to Europe”.

Another source familiar with the White House’s approach said the Trump administration aims to run the processes for a new European security architecture and a peace agreement between Russia and Ukraine simultaneously.

Under this plan, the actual implementation of the security understandings would take effect only after the signing of an accord ending the conflict in Ukraine.

Assessing the approach to the process, the source said: “[Ukrainian President Volodymyr] Zelenskyy will not agree to any compromise without knowing what will happen next regarding security guarantees. Putin also wants to see the exact same picture clearly. This is precisely why the security portfolio is so decisive.”

The same official noted that the US will not reach a security agreement with Russia without the support of Europe and Ukraine, adding that Washington will not grant Moscow veto power over European security decisions.

Vladimir Medinsky, aide to the Russian president and head of the delegation in the Ukraine negotiations, previously stated that the fundamental objective was building a comprehensive new security system in Europe.

Medinsky noted that the structure in question must take on the character of “a fair, new, modern Yalta and Potsdam that carries the spirit of Helsinki 1975 and responds to contemporary realities”.

The Russian official argued that if such a system were established, peace lasting for decades, or even centuries, could be secured in Europe.

Russian Foreign Minister Sergey Lavrov also announced that Moscow possesses its own position paper on how a new security architecture in Eurasia should take shape.

Lavrov stated that Russia hopes the Washington administration will “maintain its determination to pursue dialogue aimed at achieving an honest balance of interests where nobody’s security is impaired”.

Russian authorities have repeatedly stated that the country has no intention of attacking Europe.

Pointing out that they have no reason to fight NATO countries, Russian President Vladimir Putin previously said: “We have no interest whatsoever, neither geopolitical nor economic, political nor military.”

In a statement in October, Putin said Russia has no plans to attack anyone “in 2029, in 2030, or in the year 2050”.

On the other hand, Putin claimed that “all NATO countries are fighting Russia” and stated that the Russian military is currently the most combat-ready armed force in the world.

Following the contacts in Abu Dhabi, Kushner announced that he and Witkoff would travel to Moscow.

Explaining that they plan to meet Putin during the visit to discuss European participation in negotiations aimed at resolving the conflict, Kushner argued that the parties could make “far greater progress” if the Russian leader consents to such involvement.

Yury Ushakov, aide to the Russian president, stated that the US special envoys will arrive in Moscow on 12 November, with the planned meeting with the Russian president scheduled for the first half of the day.

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Vance leads indirect push for US-Iran ceasefire and nuclear talks

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US Vice-President JD Vance has been personally involved over the past two weeks in indirect talks with Iran aimed at securing a fresh ceasefire and restarting nuclear negotiations.

According to Axios, Vance’s intense engagement indicates that he has taken it upon himself to extract the US from the conflict, which he views as responsible for the Republican Party’s shocking losses in this week’s elections.

This elevates the latest round of indirect talks to the highest echelons of the administration.

US officials and regional sources state that Trump is currently willing to let diplomatic efforts run their course to see whether any agreement is achievable.

Asked by reporters on Friday what his message was to Iran, Trump said, “We are talking to them.”

According to sources with direct knowledge of the matter, Vance speaks almost daily with Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani, Pakistan’s Chief of Army Staff Field Marshal Asim Munir, and other mediators regarding the negotiations with Iran.

White House envoy Steve Witkoff and Jared Kushner, President Trump’s adviser and son-in-law, are also involved in the process.

Sources say Vance and the Qatari and Pakistani mediators have been discussing the possibility of holding a working-level technical meeting between the US and Iran in the coming days, though this has not yet materialized.

Before the war began in late February, Vance was among the most sceptical voices in Trump’s inner circle on the issue, advocating instead for a diplomatic solution.

In April, he led the US negotiating delegation at the Iran summit held in Islamabad and was personally involved in the talks that yielded a memorandum of understanding (MOU) signed between the US and Iran in June.

Vance subsequently headed the US delegation during a series of direct talks with Iran in Switzerland.

Two weeks ago, Vance sent a letter to Mohsen Rezaei, Secretary of Iran’s Supreme National Security Council, proposing that direct negotiations resume.

Rezaei is one of the closest advisers to Iran’s Supreme Leader, Mojtaba Khamenei.

Iranian officials noted that Vance’s letter generated positive momentum toward restarting talks.

On Wednesday, Vance said the war was the primary reason for the Republicans’ repudiation at the polls.

Sources involved in mediation efforts report that while progress is being made, the process is moving very slowly.

On Friday evening, the prime minister of Qatar said, “Over the past few weeks, we worked with our colleagues in the US administration who have a sincere intention to contain the situation and de-escalate. Thanks to them and the voices of reason in Tehran, we prevented the situation from spinning out of control.”

The prime minister added that discussions with the Trump administration continued following the midterm elections, though they were not as active as in previous days “because there are other matters.”

Nevertheless, he noted that the US intention to find a diplomatic resolution “remains ongoing” and emphasized that an agreement is possible.

On Friday morning, Trump and the Emir of Qatar discussed Qatari efforts to bridge differences between the US and Iran as part of an accord.

According to a statement from his office, Sheikh Tamim emphasized the necessity of “pursuing dialogue and diplomatic channels to resolve differences, prevent the region from facing further escalation, and ensure freedom of maritime navigation as well as the security of energy supplies.”

Separately, Trump confirmed on Friday that the US military conducted a strike on an anti-aircraft missile launcher on Qeshm Island in the Strait of Hormuz after it fired a missile at a US fighter jet.

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