Vulcan View: The latest EU developments 31 March – 4 April

President Trump slaps 20% tariffs on EU, sparking European backlash

On 2 April 2025, U.S. President Donald Trump announced the implementation of new 20% tariffs targeting imports from the European Union from 9 April – as well as higher reciprocal tariffs for other specific nations. Further tariff announcements targeting specific sectors, such as pharmaceuticals, are anticipated in the coming weeks and months.

President Trump justified these tariffs as necessary to address trade imbalances and to promote domestic manufacturing. He referred to this initiative as a “Declaration of Economic Independence,” aiming to counteract what he perceives as unfair trade practices by U.S. trading partners. ​

The EU has expressed strong opposition to these tariffs, with European Commission President Ursula von der Leyen announcing that Europe “needs to brace for the impact that this will inevitably have” and that “Europe has everything it needs to make it through this storm.” Von der Leyen further highlighted plans to “convene Strategic Dialogues with the Steel, Automotive and Pharmaceutical industries.”

At a press conference on Thursday, 2 April, Bernd Lange (S&D, DE), Chair of the EP Committee on International Trade, addressed the implications of the newly announced U.S. tariffs. He emphasised the need “to reflect what consequences this will have,” referring to the day as “Inflation Day.”

Lange also clarified that the average tariff between the U.S. and EU is 5%, contradicting President Trump’s claim of 39%. Lange highlighted the EU’s challenges in initiating discussions with the Trump Administration’s Trade Department, despite multiple efforts, including two visits by Trade Commissioner Maroš Šefčovič to the U.S. and numerous video conferences.

He reiterated that the EU remains committed to pursuing negotiations to avoid escalating trade tensions further. Lange further shared that the EU has a toolbox that it is willing to use, e.g. the anti-cohercion instrument (ACI).

President Trump’s tariffs reflect a broader trend towards economic nationalism, which may lead many countries to reconsider free trade agreements. With Western unity weakened, there is potential for new partnerships to form. The European Commission has indicated that diversifying partnerships and supply chains align with its future strategies. Additionally, recent cooperation discussions between China, Japan, and South Korea highlight further shifting global trade alignments.

EU agrees to delay and simplify corporate sustainability rules

The European Commission proposed in February a number of simplifications to the obligations on business regarding corporate sustainability reporting. On Thursday, 3 April, members of the European Parliament voted in favour of the European Commission’s proposal to delay the implementation of corporate sustainability reporting and due diligence rules while negotiations on their content are ongoing. Last week, EU country representatives in the Council of the EU also backed the proposal, which means all three co-legislators are aligned.

Under the new proposal, the Commission will remove approximately 80 per cent of companies within the framework of the Corporate Sustainability Reporting Directive (CSRD). Under the current law, companies with 250 employees or more, are required to engage in sustainability reporting. The proposal aims to streamline regulations for businesses in the EU by raising the threshold to companies with over 1,000 employees, reducing bureaucratic hurdles. The Directive will exclusively apply to large firms which have a higher likelihood of affecting people and the environment.

The CSRD, in its current form, affects the value chains of smaller firms in several ways, even if they are not directly obligated to report under the Directive. This stems from Articles 19(a)(3) and 29(a)(3) of the CSRD, which require companies to supply information, not just about their own activities, but also about their “upstream and downstream value chain”. Consequently, firms obligated by the Directive may demand Environmental, Social, and Governance data from their smaller suppliers, contractors, or business partners. The proposed changes to the CSRD will eliminate this undue bureaucratic strain on SMEs within their value chains.

Furthermore, the omnibus proposal introduced a “Stop the Clock” concept. This would delay the reporting requirements by two years for companies subject to the CSRD, which are scheduled to report for the first time in 2026 or 2027. The proposed amendments to the Corporate Sustainability Due Diligence Directive (CSDDD), originally set to take effect by July 2026, will be delayed by 12 months. This will substantially ease compliance requirements for affected businesses. The aim of the delay is to relieve companies from having to comply with the laws while negotiations over how to simplify them are ongoing.

Peter Burke, Minister for Enterprise, welcomed the Commission’s proposal, stating that the extent of the administrative burden arising from the CSRD was “excessive”. Minister Burke expressed his strong support for President von der Leyen’s simplification agenda, which is geared towards enhancing the competitiveness of businesses in the EU. In due course, Minister Burke will amend the existing Irish legislation governing the CSRD to provide clarity and reduce the scope of companies affected by the Directive. He committed to accelerating the implementation of the “Stop the Clock” mechanism, as well as the proposals within the wider Omnibus.

European Commission revises Cohesion Policy to align it with strategic priorities

On Monday, 1 April, the European Commission announced a revision of the EU’s cohesion policy to better align regional development funding with the bloc’s strategic priorities. These include defence and security, housing, innovation, and sustainability. The updated policy aims to enhance European competitiveness while reducing economic, social, and territorial disparities among Member States. The revised policy seeks to enhance European competitiveness while reducing economic, social, and territorial disparities across Member States.

Supporting the defence industry

A key aspect of the modernised cohesion policy is its enhanced support for the European defence sector. The European Regional Development Fund (ERDF) will now fund small and large enterprises involved in defence and strategic technologies.

Moreover, investments in defence will contribute to the broader goal of technological sovereignty. With funding directed towards research, innovation, and the transfer of strategic knowledge, European companies will be better positioned to develop advanced military capabilities and technologies that align with the EU’s security objectives.

Boosting affordable housing 

In addition to defence, the modernised cohesion policy places a strong emphasis on addressing housing challenges across the EU. In response to growing concerns about affordability, the Commission has proposed doubling the cohesion policy funding allocated to affordable housing. This measure aligns with the political priorities set by the Commission and aims to improve living conditions for citizens in urban and rural areas.

To enhance financing options, Member States could leverage private and public investments through a new financial instrument developed in collaboration with the European Investment Bank (EIB). This mechanism will combine cohesion funding with contributions from international financial institutions, national promotional banks, and commercial lenders, ensuring a more sustainable and impactful housing strategy across Europe.

Conclusions

The EU’s decision to integrate defence into cohesion policy marks a strategic shift in its approach to regional development. By aligning economic investment with security imperatives, the bloc is strengthening its commitment to safeguarding stability and sovereignty. Simultaneously, increased investments in housing, infrastructure, and energy transition will contribute to a more resilient and competitive European economy.

The European Parliament and the Council will discuss the revision, with a possible deal to be finalised by 2025. This will ensure that new strategic initiatives, including defence and social infrastructure projects, can begin implementation in early 2026.

Compliments of Vulcan Consulting – a member of the EACCNY