Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

The European Union is aiming to clinch a preliminary trade deal with the US this week, a move that would allow it to lock in a 10% tariff rate beyond an Aug. 1 deadline as the two sides negotiate a permanent agreement. There’s a range of products that the EU would like to see exempted from the rate, such as aircraft, aircraft parts as well as wine and spirits, we’re told. Some form of relief is expected as part of the agreement in principle. The universal US tariffs that were due to kick in on July 9 would be delayed until at least the beginning of August, the White House announced on Monday. For the EU, tariffs on nearly all its exports to the US will jump to 50% on that date if it doesn’t strike a deal beforehand.

— Saim Saeed, Jorge Valero and Alberto Nardelli
 

What’s Happening

Euro Leader | Ireland’s Paschal Donohoe was reelected as president of the euro area’s group of finance ministers. He retains his role in leading the Eurogroup’s work to enhance the profile of its common currency after rival candidates from Spain and Lithuania withdrew. He’ll press ahead in seeking to unify capital markets and set up a digital euro.

Bulgaria In | Bulgaria is set to clear the final hurdle to becoming the 21st member of the euro zone next year as European Union finance ministers meet today to sign off on its bid. Adopting the European single currency will be the culmination of nearly two decades of work toward accession, an ambition since Bulgaria joined the EU in 2007. 

Austerity Drive | Romania's government is pushing through a fiscal austerity package, including tax increases and spending cuts, to reduce the country's budget deficit to below 6% of economic output next year. The move has sparked protests and a potential no-confidence motion, but the measure is likely to be approved and supported by the Commission. 

Incoming Probe | The commission will likely launch an in-depth investigation of Abu Dhabi National Oil Company’s €11.7 billion takeover of Covestro, a German company that provides materials for phone and car makers, we hear. EU regulators, concerned the company’s heavy state backing could allow it to distort EU markets and hamper fair competition, are preparing the probe under its Foreign Subsidies Regulation.

Defense Loans | The EU will propose bilateral agreements with the UK and Canada as soon as the end of July, which would give them access to the bloc’s new €150 billion ($176 billion) loan fund for defense production, we’re told. Separately, the EU is seeking to conclude a defense partnership with Iceland by the fall.

Around Europe

Car Trouble | Stellantis, which makes Fiat and Alfra Romeo cars, produced 34% fewer passenger cars this year, in a setback for CEO Antonio Filosa, who took over in June. Sales in the US, the company’s most important market, fell 10% in the first half, while European registrations have also been declining. 

Planes Grounded | Thousands of flights from Russia faced delays and cancellations due to the threat from Ukrainian drones. Airports in Moscow and St. Petersburg were among the most impacted. Russian airports have suspended operations multiple times this year due to drone attacks, with the latest disruptions potentially costing airlines more than €200 million.

Apple Appeal | Apple said it will appeal a €500 million fine from the EU, calling the penalty “unprecedented” and the regulator’s required changes to its App Store as “unlawful.” The iPhone maker is appealing an April fine under the bloc’s digital competition rules, which found that the company ran afoul of regulations related to allowing developers to steer users to make purchases outside of its store.

Wind Warning | The CEO of Vestas, one of the world’s largest wind turbine makers, told us that Europe needs to adopt bolder industrial policy or risk companies leaving the bloc. Henrik Andersen criticized the EU for its longstanding preference for policies that limit industrial consolidation, saying they’ve weakened Europe’s ability to compete.

Chart of the Day

A German church pension fund, KZVK, has invested $50 million with Fullgoal Asset Management to invest in Chinese equities listed in Hong Kong, the mainland, and the US. The move is rare among global allocators, who have been cautious about investing in Chinese equities due to regulatory crackdowns, economic slowdown, and geopolitical tensions, even as European imports of Chinese goods continue to increase.

Today’s Agenda

All times CET

• 12 p.m. Danish Prime Minister Mette Frederiksen presents her country’s presidency program in Strasbourg
• 3 p.m.  Press conference following the Economic and Financial Affairs Council in Brussels
• 3:30 p.m. EU justice chief Michael McGrath and digital chief Henna Virkkunen present 2025 Rule of Law report
• 4:30 p.m. EU industry and environment chiefs Stephane Sejourne and Jessika Roswall present the Chemicals Package

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