EU gears up for tariffs and Ukraine peace plans on Trump’s first day

Good morning. You’ll get the newsletter from me this week while Henry is away.

Donald Trump will be inaugurated as US president today, and is expected to immediately unleash some of his policy initiatives. Below, I look at what EU officials will be watching out for today.

And our legal correspondent and I hear from the chief of Europol about how drug traffickers are adapting to the fight against smuggling.

T-Day

Europe will carefully watch Donald Trump’s second inauguration as US president today for signs of how its own future is going to unfold.

Context: In the run-up to the event, which will take place at around 12pm ET (6pm CET) in Washington, Trump has threatened to raise tariffs on his allies, take over Greenland and roll back climate commitments. He is expected to sign about 100 executive orders starting today, which are likely to make good on some of those promises.

The EU has remained largely quiet in the face of Trump’s announcements, with officials preparing for different scenarios and biding their time until the inauguration. “Trump is effective because he’s unpredictable — we can guess what he will do but we can’t know,” said one EU official.

The moment of truth has now come.

“The EU now really needs to show that it’s a real club, and stop its inaction,” said a senior diplomat from a country outside the EU.

Another European official said that the EU needed to figure out its own agenda rather than reacting to Trump’s. “What are we putting on the table?”

Trump’s threat to impose blanket trade tariffs is among the most worrying prospects for the bloc. The US is its biggest trade and investment partner.

“Our first intention with the incoming administration is to engage in a constructive, positive way to find mutually beneficial outcomes,” European Commission spokesperson Olof Gill said last week, stressing that the commission was prepared “for all possible outcomes”.

“If necessary, we will defend our legitimate interests, our companies and our member states,” Gill said.

Commission president Ursula von der Leyen has already extended a pre-emptive olive branch, proposing to buy more American LNG to avoid a trade war. But the EU does not have the power to direct purchases.

The EU is also reassessing investigations into US tech companies, awaiting a steer from across the Atlantic.

Officials will be closely watching for any details of Trump’s plans for Ukraine, and whether he sticks to his pledge to end the war within six months.

Internal divisions will make it harder for the EU to present a united front, with governing parties in Hungary, Italy and the Netherlands sympathetic to Trump.

In a foretaste of what is to come, he has invited right-wing figures including Italy’s Prime Minister Giorgia Meloni and Belgian far-right leader Tom Van Grieken to the inauguration — which usually isn’t attended by foreign leaders — but a meeting with von der Leyen has not been scheduled yet.

Chart du jour: Concentration

Billionaires keep getting richer while the number of people in poverty remains the same, according to a new report by Oxfam.

Rerouting

The fight against drug trafficking in Europe is bearing fruit. Smugglers are increasingly forced to adapt as authorities crack down on Belgium’s port of Antwerp, the head of Europol Catherine De Bolle tells Suzi Ring and me.

Context: Cocaine seizures in Europe’s second-largest port dropped dramatically last year to 44 tonnes, compared with a record 116 tonnes seized in 2023, after Belgian authorities vowed to halt the illicit trade.

De Bolle said the decrease did not necessarily mean that fewer drugs were entering Europe. “I don’t think that at the moment we can say that we have less trafficking” she said in an interview, in which she also called for greater access to encrypted messages to pursue criminals.

She said that the port of Antwerp was now better protected due to joint efforts by the authorities and the private sector. “You destabilise in fact the routes for the criminal groups, and then they try to find other ways,” De Bolle said.

She added that criminals moved to “less protected” ports in the so-called waterbed effect, with rising seizures in smaller ports like Livorno in Italy or Le Havre in France.

Drugs were also increasingly shipped to African countries, with which Europol lacks co-operation agreements, De Bolle said.

“We see also that more drugs are found in the sea,” De Bolle said, explaining that smugglers use divers to retrieve the sunken caches.

She also said that imports of raw materials to produce drugs had risen. “We have more labs in the EU to make the final product.”

What to watch today

1. Eurogroup meets.

2. European parliament plenary session opens in Strasbourg.

3. The World Economic Forum kicks off in Davos.

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