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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

US drafts Ukraine plan with Nord Stream restart and sanctions relief

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Draft proposals by the US administration to end the war in Ukraine envisage establishing a demilitarised line in the Donbass region, easing sanctions against Moscow, and offering a comprehensive investment package to Kyiv.

According to a report by the British magazine The Economist, citing Ukrainian officials, Washington is working on a broad framework comprising both economic and political points to persuade the parties to reach a settlement.

Under the draft plan reported by the publication, Russia is offered the opportunity to conclude trade agreements with the US, an easing of sanctions, and the normalisation of political relations.

Ukraine, in exchange for relinquishing its goal of NATO membership, is promised direct foreign investment and European Union accession.

The report notes that Ukrainian officials do not possess complete visibility over every detail of the final text on the table, but are closely familiar with its overarching framework.

Nord Stream pipeline and natural gas shipments on the table

The Economist reported that the package designed to persuade the leadership in Moscow also includes items such as the resumption of Russian natural gas sales to the European market and the reactivation of the Nord Stream pipeline.

The magazine also points out that decisions regarding the operation of a pipeline located on European territory do not fall directly under US jurisdiction.

Ukrainian negotiators, meanwhile, are concerned that the Washington delegation may lock in commercial agreements in line with its own economic interests before the fighting formally stops.

Speaking to the magazine, a Ukrainian official summed up the American side’s approach with the words: ‘Why wait and waste time? Time is money.’

Diplomatic contacts intensify at leadership level

Stating that it is ready for talks, the Russian government announced that an agreement had been reached in recent contacts with Washington to launch a trilateral negotiation process that would also include Ukraine.

Russian President Vladimir Putin said: ‘The objective of these negotiations will be to address the issue of ensuring the security of Ukraine and Russia once peace agreements are reached.’

As part of these diplomatic efforts, US President Donald Trump’s special envoy, Steve Witkoff, met Russian leader Putin on 21 October at the Konstantinovsky Palace in St. Petersburg.

Speaking during the portion of the meeting open to the media, Witkoff noted that he had brought documents outlining a pathway to peace and asked Putin to examine these texts.

Kremlin spokesperson Dmitry Peskov announced that the president would evaluate the American proposals.

Noting that concrete ground for a ceasefire had emerged during the St. Petersburg meeting, Witkoff expressed hope for the start of trilateral contacts between Russia, the US, and Ukraine to address technical matters.

Putin thanked Trump for his interest in peace efforts and recounted that the US president had specifically emphasized during their recent telephone calls that the war must end as soon as possible.

Framework prepared in Oslo carried to Moscow

Immediately before his visit to St. Petersburg, Witkoff had attended talks held on 20 October in Oslo, the capital of Norway.

Trump’s son-in-law Jared Kushner joined the meeting remotely due to illness, which was attended by Ukrainian President Volodymyr Zelenskyy, Finnish President Alexander Stubb, and Norwegian Prime Minister Jonas Gahr Store.

According to information provided by Stubb, the parties at the Oslo meeting clarified key security and economic elements that the American envoy would present to Moscow. Air defence systems, energy infrastructure, and partial ceasefire measures were also discussed.

Commenting after the talks in St. Petersburg, Russian presidential aide Yury Ushakov argued that the newly presented approaches did not contain many elements useful for a resolution.

Noting that Witkoff informed Putin about the contacts in Oslo and relayed fresh nuances in the positions of European leaders and the Kyiv government, Ushakov stated that the meeting was thorough and frank, adding that the conflict is ‘moving toward an end.’

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South Korea pulls part of embassy staff from Ukraine amid POW dispute

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The South Korean government has decided to withdraw part of its embassy staff from Ukraine.

According to the Yonhap news agency, Foreign Ministry spokesman Park Doo-sun cited the Kyiv administration’s failure to take “positive steps” in the dispute that began with the leak of information concerning the handover of North Korean prisoners of war as the justification for the move.

The spokesman also listed the ongoing threat of air strikes, which complicates the safety of diplomats, among the reasons.

Following the withdrawal of part of the personnel, essential diplomatic contacts will continue under the leadership of the charge d’affaires ad interim to Ukraine. All consular staff tasked with protecting South Korean citizens will remain in Ukraine.

Prior to this move, the Seoul administration decided on 8 October to withdraw its ambassador. The Foreign Ministry stated at the time that it was ready to continue consultations with Kyiv to resolve the emerging issues constructively.

Tensions between the two countries began with a speech delivered by Ukrainian President Volodymyr Zelenskyy at the United Nations General Assembly in September.

Zelenskyy announced that two captured soldiers from the North Korean army had been handed over to South Korea.

South Korean President Lee Jae-myung, meanwhile, accused Kyiv of breaching a confidentiality agreement.

Lee said the disclosure of this information endangered the prisoners’ families and stability on the Korean Peninsula.

Seoul expects a public apology

Dmytro Lytvyn, an adviser to the Ukrainian president, denied the existence of a confidentiality agreement.

The South Korean Foreign Ministry summoned Ukrainian Charge d’Affaires Andriy Veshkin on 28 September and issued a note of protest against Lytvyn’s remarks.

President Lee Jae-myung warned in a statement on 2 October that they would take additional measures against Kyiv if Ukrainian authorities did not acknowledge the agreement and make a public apology. Lee stated that Ukraine itself had initially requested that the transfer of the prisoners be kept confidential.

Ukrainian Foreign Ministry spokesman Heorhii Tykhyi said the dispute stemmed from differing interpretations of the confidentiality regime.

Tykhyi noted that Seoul, based on its constitution which recognises the entire Korean Peninsula as its own territory, requested that the prisoners be handed over “like its own citizens”.

Describing the handover as a “gesture of goodwill”, Tykhyi stated that they were conducting closed-door negotiations to resolve differences of opinion.

Ambassador Park Ki-chang returned to Seoul on 10 October. According to a report by The Korea Times newspaper citing the ministry, recalling the ambassador served as a diplomatic protest against the leak of information regarding the prisoners.

The newspaper wrote that South Korea had last taken a similar step in 2008 by withdrawing its ambassador to Japan.

Moscow warned foreign diplomats

On 3 October, the Russian Foreign Ministry reiterated its warning to foreign nationals, including diplomatic mission staff, against remaining in Ukraine.

The ministry recalled its advice to leave Kyiv, citing ongoing strikes against military targets.

The ministry noted that those who failed to heed the warnings would bear responsibility for the potential consequences.

Kremlin spokesman Dmitry Peskov said in a statement on 24 September that they had no information regarding Kyiv handing over two North Korean prisoners of war to Seoul.

Peskov, noting that prisoner matters fall under the authority of the Defence Ministry and intelligence services, said, “Contacts through the special services are continuing.”

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Ex-BND head Hanning tied to former Mossad chief amid spy inquiry

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August Hanning, who led Germany’s Federal Intelligence Service (BND) between 1998 and 2005, was arrested on 6 October on allegations that he obtained roughly 2,000 classified agency documents and used them during contacts with intelligence officers from a foreign state.

Accused of high treason and espionage on behalf of a foreign intelligence agency, the former spy chief is alleged to have procured the documents from former BND employee Manfred D.

Prosecutors stated that the leaked records included internal briefing notes presented to senior German officials, though the Berlin government has not yet publicly disclosed which country received the classified data.

According to an exclusive report by Jake Green for The Cradle, seized email exchanges revealed extensive ties between the arrested Hanning and former Mossad director Danny Yatom.

The correspondence shows that the two former intelligence directors built an ongoing network of contacts following their public service, combining commercial ventures, efforts to secure political influence, and intelligence links.

This dynamic has triggered debate that using personal connections and official access for private gain has left Germany’s intelligence apparatus vulnerable.

Intelligence notes for 10,000 euros and campaign proposals

According to the reviewed emails, Hanning told Yatom in a 2018 message that he could prepare an “overall assessment based on information obtained from senior German officials and intelligence agencies” concerning an unidentified candidate.

The former BND head committed to completing the report by 13 July in exchange for 10,000 euros.

Contacts between the two men subsequently expanded to cover domestic political processes in Germany. Ahead of the September 2021 federal election, Yatom asked Hanning to approach leading candidates.

Describing CIY Global as a “political campaign company”, the former Mossad chief noted that he aimed to introduce its capabilities to German politicians, and he mentioned his intention in the same exchange to transfer documents concerning a cybersecurity firm.

Cybersecurity partnership and surveillance operations across Europe

The partnership between Yatom and Hanning reached beyond political lobbying initiatives into the cybersecurity sector.

Hanning reportedly served as a consultant for World Health Energy Holdings, a cybersecurity company linked to Yatom.

Firms of this type, established or managed by former intelligence personnel, provide commercial platforms on the international market for Israeli-origin surveillance, cyber intelligence, and political influence capabilities.

The operational presence of private Israeli-based surveillance technologies across Europe has recently entered judicial records through scandals in Poland, Spain, and Greece.

Polish prosecutors announced on 12 October that data collected under the previous government via Pegasus spyware against political opponents had been transferred out of the country, adding that manufacturer NSO Group maintained access to the technical infrastructure.

In Spain, the 2022 CatalanGate investigation established that at least 65 people, including politicians, lawyers, and civil society representatives, were targeted using Pegasus or Candiru software, with Citizen Lab researchers publishing strong evidence linking the operation to Spanish authorities.

In Greece, the surveillance operation targeting journalist Thanasis Koukakis and Member of the European Parliament Nikos Androulakis was determined to have used Predator software, linked to Intellexa, a company founded by former Israeli intelligence officer Tal Dilian.

In the German espionage investigation, the traffic between Hanning and Yatom involving paid reporting, contacts with electoral candidates, and commercial partnerships does not yet provide conclusive legal evidence regarding the final destination of the roughly 2,000 classified documents.

Nevertheless, the disclosed correspondence gives German investigators a concrete line of inquiry to assess whether classified state secrets reached commercial networks tied to Israeli intelligence.

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