Brussels threatens to block US from bidding for public contracts

Telegraph

07-04-2025

Brussels has threatened to bar American companies from bidding for taxpayer-funded contracts as Europe seeks to retaliate against Donald Trump's tariffs.
Stéphane Séjourné, executive vice president of the European Commission, said the EU has 'the cards' to hit back at Mr Trump's new levies of 20pc on goods and 25pc on cars.
'We could decide to withdraw all American companies from European public procurement,' Mr Séjourné, who is also commissioner for industrial strategy, told Radio France.
It represents a fresh threat to the US defence industry as European capitals are considering how much of the spending in their rearmament drive should go to American manufacturers compared to domestic suppliers.
American dominance in the tech industry may make it difficult for the EU to eject all US companies from public sector contracts, but other industries with major European operators could be booted out of bidding for work.
'It's an economic bazooka because for certain services we have no other option but to choose the Americans, particularly digital services,' said Mr Séjourné.
'So this has implications for European companies, and we need to look at the sectors in which and for what we can do this, but it's one of the topics on the table and under discussion with the American administration.
'This also has major impacts for American companies, and, to use Donald Trump's vocabulary, we also have the cards and the tools to make the Americans give in.'
His comments come amid fears that America's trade war risks tipping the anaemic European economies into recession, despite plans from Germany to boost defence and infrastructure spending.
European governments are major customers of the US defence industry, and have been prompted to spend more by Mr Trump's complaints that Nato allies spend too little, effectively free riding on America's expenditure.
However, Mr Trump's seeming ambivalence towards Ukraine and to Nato, as well as the apparent softening of the White House's stance on Russia, has sparked fears that US supplies may prove unreliable in the event of any row between the transatlantic partners.
As a result, European politicians are increasingly keen to build up domestic supply chains as a more trustworthy alternative to making purchases from the US.
Robert Habeck, Germany's economy minister, said the EU had the upper hand in negotiations with Mr Trump.
He added: 'The stock markets are already collapsing and the damage could become even greater. America is in a position of weakness.'
Mr Habeck indicated that there was widespread support for Mr Séjourné's proposals: 'We have to take a close look at the anti-coercion instrument, which are measures that go far beyond tariff policy,' he said.
Sentiment among European investors slumped this month, according to the Sentix survey.
Melanie Debono, at Pantheon Macroeconomics, said: 'The higher-than-expected US trade tariff hikes announced at last week's 'liberation day' are weighing heavily on investor sentiment.
'The plunge in global financial markets all but wiped away investors' joy surrounding greater defence and infrastructure spending in Germany and the EU.
'Sentiment will continue to melt away amid signs of retaliation from other countries around the world – nothing good can come from an escalating trade war.'