Analysts warn of fallout over new Trump tariff threats
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The Guardian
13 minutes ago
- The Guardian
The Guardian view on Europe's Trump challenge: Brussels must hold its nerve and think big
As the world has grown used to Donald Trump delivering aggressive ultimatums that are then revised or watered down, the shock-and-awe effect of a presidential edict on Truth Social has somewhat diminished. On Saturday, Mr Trump unexpectedly announced that the United States would hit the European Union with swingeing tariffs on goods of 30% from 1 August. That certainly prompted urgent weekend discussions in Brussels, Paris and Berlin. But for now, the European Commission president, Ursula von der Leyen, is placing all countermeasures on hold, in the hope that what the German chancellor, Friedrich Merz, described as 'reasonable solutions' can be found. Given the stakes, betting on the success of a softly, softly approach to trade negotiations remains sensible. Mr Trump's previous imposition of 25% tariffs on European carmakers (on top of the pre-existing 2.5% rate) has already panicked German manufacturers in particular. But the president's attempts to further batter Europe into economic submission, risking a trade war with an ally and threatening an annual €1.7tn worth of commercial activity, would be likely to trigger another market backlash if taken to the brink. The last time that happened, following 'liberation day' in April, Mr Trump blinked. As the ante is upped once more, it is also – rightly – a European concern that outright confrontation over trade could sour talks with the White House in relation to Ukraine. Mr Trump's pledge on Monday to send Patriot missiles to Ukraine, along with a broader weapons deal to be financed by Europe, appeared to confirm the wisdom of the EU's cautious approach as the president's unedifying bromance with Vladimir Putin sours. Nevertheless, in an era when business as usual is highly unlikely to return, the latest salvo on tariffs has again underlined the need for the EU to deepen its economic resilience and independence. Sadly, on that score a sufficient sense of urgency is still missing. In September, it will be a year since the publication of Mario Draghi's report on EU competitiveness, in which the former president of the European Central Bank called for a level of annual investment equivalent to three times that delivered by the postwar Marshall plan. Since then, the second coming of Mr Trump has added to an already formidable cocktail of challenges, including the need to revive stalling economies, fund the green transition and increase spending on defence and security. Yet Ms von der Leyen, who commissioned Mr Draghi's report, has failed to follow it up with anything like the fiscal ambition called for by its author. Instead, by rowing back on some green measures, and courting the populist right on issues such as migration, she has antagonised progressives in the centrist coalition that re-elected her for a second term. The EU needs to think bigger and more boldly. On Wednesday, the European Commission will unveil its proposed EU budget for 2028-34. Echoing Mr Draghi's vision, Spain unsuccessfully lobbied for it to be doubled to more than €2tn, with much of the increase to be financed through common borrowing. Such a step-change would have allowed the kind of spending that could safeguard the European social model at a time of transition, and of economic and environmental instability. The commission, heavily influenced by more fiscally conservative member states, will offer something far more cautious. With more turbulence undoubtedly to come, it is unlikely to be enough. Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here.
BBC News
14 minutes ago
- BBC News
Musk's Grok signs $200m deal with Pentagon just days after antisemitism row
The Pentagon has signed a multi-million dollar deal to begin using Elon Musk's artificial intelligence chatbot, Grok, as part of a wider rollout of AI tools for government use, the Department of Defence on Monday by Musk's company xAI, the $200m (£149m) contract is part of its "Grok for Government" programme, and aligns with the Trump administration's push for more aggressive adoption of artificial comes just days after Grok sparked backlash for spouting antisemitic posts, including praise for Adolf Hitler on X, the social media platform owned by Musk. Musk said the bot was "too compliant" and "too eager to please". He said the issue was being addressed. Musk's xAI says the new deal will give US government departments access to Grok 4, the latest version of the chatbot, and offer custom tools for national security use. The company also plans to provide technical support for classified Pentagon also announced awarding similar contracts to Anthropic, Google and OpenAI - each with a $200m ceiling."The adoption of AI is transforming the Department's ability to support our warfighters and maintain strategic advantage over our adversaries," said the administration's Chief Digital and AI Officer Doug Matty. Musk says Grok chatbot was 'manipulated' into praising HitlerWhat is AI and how does it work? Musk's expanding government partnerships come amid a deteriorating relationship with President Donald Tesla and SpaceX boss had spent a quarter of a billion dollars on Trump's re-election effort in 2024, and actively campaigned for him. He was later appointed to run the Department of Government Efficiency (Doge) - a federal cost-cutting initiative tasked with reducing the size of the US government. But in recent months, Musk began openly criticising what Trump had dubbed the "Big Beautiful Bill", a sprawling spending and tax cuts legislation that the Tesla boss said was too costly for Americans. Musk resigned from his post at Doge in May, though the department has not been officially disbanded. Since then, Trump had suggested Doge could be deployed to harm Musk's also suggested he might deport Musk, who is an American citizen and was born in South Africa. He also holds Canadian citizenship. While at the helm of Doge, the White House was criticised for allowing Musk to have unfettered access to troves of government data on American the fall-out, Musk's xAI has continued to expand its government work. Its newly-announced contract may also create an avenue for that data collection to was introduced in late 2023 as a more unfiltered alternative to other AI chatbots like ChatGPT. It is already integrated into Musk's social media platform X, formerly known as Twitter.
Reuters
23 minutes ago
- Reuters
Brazil still waiting for US reply to May trade proposal, vice president says
BRASILIA, July 14 (Reuters) - Brazil has yet to hear a response from Washington about an offer it made in trade talks two months ago, Vice President Geraldo Alckmin said on Monday, after U.S. President Donald Trump slapped much higher tariffs on Brazil last week. Speaking to reporters at the presidential palace, Alckmin said President Luiz Inacio Lula da Silva had set up a task force to start discussing a response with business leaders on Tuesday. Last week, Trump imposed what he called a reciprocal tariff targeting Latin America's largest economy, rising to 50% from 10% starting in August, and demanded an end to the trial of former President Jair Bolsonaro for allegedly plotting a coup. Alckmin added on Monday that the Brazilian government would also seek talks with U.S. companies affected by the measure. He said the government had not yet asked for a delay or reduction in the new tariffs after Trump's announcement, but was instead engaging with the most-affected industries to ensure the private sector mobilizes and coordinates with U.S. counterparts to help reverse Trump's measure. Lula will sign on Monday a decree setting criteria for his government's response to foreign trade measures hurting the Brazilian economy, his chief of staff Rui Costa told journalists earlier in the day. His decree regulating the trade reciprocity law, which Brazil's Congress passed in April, should be published in the official gazette on Tuesday, Costa added.
