Could an EU-US deal be struck to avoid a full-blown trade war?

Good morning. A scoop to start: Brussels is weighing new powers to temporarily cap EU gas prices, which recently hit record levels compared with the US, to shield European industry from high energy costs.

Last night, Russia released an American teacher from prison in a move Donald Trump’s White House described as a show of “good faith” that would help talks to end the war in Ukraine.

Today, our tech and trade correspondents report on yesterday’s meeting between Ursula von der Leyen and JD Vance in Paris. And our financial correspondent previews today’s first step in Brussels’ long-threatened war on red tape.

Face/Off

European Commission president Ursula von der Leyen has signalled that Washington is open for deals to avoid all-out trade war after meeting US vice-president JD Vance yesterday, write Barbara Moens and Andy Bounds.

Context: So far, Europe’s strategy with Donald Trump has favoured engagement over confrontation. But on Monday, the US president confirmed he wants to impose 25 per cent tariffs on all steel and aluminium imports on March 12. The European Commission said it would retaliate against US tariffs with “firm and proportionate countermeasures”.

The meeting in Paris, together with chief EU diplomat Kaja Kallas, was the first face-to-face conversation between von der Leyen and a senior member of the new US administration. A person briefed on the talks said they were very constructive and focused on areas where interests aligned.

After the meeting, von der Leyen thanked Vance for a “good discussion on our shared challenges as allies”.

In a separate statement published after the meeting, she “reaffirmed the EU’s commitment to a fair trade relationship [with the US], while both parties expressed their intention to prioritise economic areas of mutual interest, including energy”.

Von der Leyen has previously said the bloc is willing to buy more US liquefied natural gas, suggesting where a potential deal could land.

EU trade ministers will meet for a video call this afternoon to discuss the situation, but are not expected to go into any details of a potential retaliation. The main purpose is to “display unity,” one EU diplomat said.

Another topic discussed by von der Leyen and Vance was artificial intelligence. The US president did not pull his punches on AI, using a speech earlier in the day to lash out against EU tech regulation, for instance calling Brussels’ content moderation rules for online platforms “authoritarian censorship”.

He also said that the US “is the leader in AI, and . . . plans to keep it that way.” This comes just as the EU announced it would mobilise €200bn “to make Europe an AI continent”.

They also talked about the transatlantic approach towards Ukraine and China. Both Vance and von der Leyen will later this week also attend the Munich Security Conference, where the future of Ukraine will be the main topic.

Chart du jour: Strained relationship

Most Europeans view the US as a “necessary partner”, rather than an “ally”, according to a new survey by the European Council on Foreign Relations published today.

Road trip

The rubber on Ursula von der Leyen’s simplification drive hits the road today, as the European Commission presents plans on which areas it wants to trim, writes Paola Tamma.

Context: Commission president von der Leyen has vowed to slash red tape to make life easier for businesses. The commission is due to propose a so-called “omnibus” law later this month streamlining four different pieces of legislation — the first of several such laws. Next up: improving access to investment, paperless bureaucracy, simpler chemical laws.

“The accumulation of rules over time at different levels, their increased complexity and implementation challenges are having a significant impact on Europe’s competitiveness,” the commission writes in a draft of a communication to be presented today.

It pledges to “review and adapt our regulatory framework to make it more responsive to the needs of people and businesses,” according to the draft seen by the Financial Times.

“Companies are fed up. We have to show them that something works,” said one senior EU official briefed on the effort.

Lobbying on the first omnibus law is rife, with letters from countries including Germany, France and industry lobbies circulating in Brussels. One by Italy, seen by the FT, asks for reduced reporting requirements for companies and to push back the implementation of sustainability rules “until all outstanding issues have been properly addressed”.

Brussels is keen to stress this isn’t a push for deregulation, but to “make the Green Deal workable,” the official said. But environmental campaigners are worried.

“If you delay something, that’s deregulation. If you remove some meaningful part of the legislation, that’s deregulation,” said Sebastien Godinot from WWF Europe’s office.

What to watch today

1. Canadian Prime Minister Justin Trudeau meets European Commission president Ursula von der Leyen, EU Council president António Costa and Nato secretary-general Mark Rutte in Brussels.

2. EU trade ministers meet online to discuss US tariffs.

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