- cases rerouting supply chains around the United States — is not always possible, but in some cases plans to do so are proceeding. While officials recognize Europe should have invested more in defense earlier, uncertainty about U.S. security guarantees has created more political impetus to act.
- China Questions: Officials recognize they need to do more to respond to China’s industrial overcapacity and other non-market challenges, but concerns about U.S. reliability are seen as limiting Europe’s freedom of maneuver.
- Business Commitment: Most Europeans understand that the American business community remains committed to Europe and wants the EU to become more competitive, and they also recognize that more is needed on regulatory simplification, energy costs, and the fragmented single market.
- CS3D Casts a Pall: On CS3D, the political temperature remains high, with sharp disagreements in the Council and among Parliamentary groups. While co-legislators continue to debate tabled amendments under the omnibus, the Commission was clear that further changes to CS3D will be possible only through a strong intervention from Member States. Despite political statements calling for repeal of CS3D, that negotiating mandate has not been transferred to the working levels in Brussels. Debate on CS3D is expected to continue through the fall, including in the context of the U.S.-EU dialogue.
- Digital Sovereignty: The EU continues its push for digital sovereignty, with initiatives in AI, cloud, and cybersecurity, but institutional fragmentation continues to slow progress. It is unclear what measures will be part of the digital omnibus simplification package, due in November, though officials insisted that DMA/DSA would not be included. Businesses are skeptical about prospects for simplification in this domain: Regulation continues to outpace innovation, and the November package could add complexity rather than reduce it. Transatlantic digital cooperation is stalled, trust is low, and alignment remains elusive.
In Berlin, the new government is still finding its footing, but a few messages came through loud and clear:
- Trump-Merz Meeting: The Chamber delegation to Berlin coincided with Chancellor Merz’s first meeting with President Trump on June 5, and there was a palpable sense of relief that the meeting went well. Officials emphasized that Berlin remains committed to the transatlantic relationship, even as their trust in the alliance has been shaken by recent developments.
- Economic Boost: Boosting Germany’s stalled economy is the top priority for all agencies. They are laser-focused on bringing down energy prices, cutting red tape, offering incentives to attract more foreign investment, and boosting their security posture. The inclusion of former business executives in his cabinet suggest that Merz is eager to pursue more business-friendly policies. That said, a slim 12-vote majority in the Bundestag, as well as frictions within Merz’s own party (CDU/CSU) and with their coalition partners (SPD), suggest that quick action on big initiatives will be challenging.
- Ambitions to Lead in BXL: Germany’s ambition to re-assert a leading role at the EU decision-making table will also be challenging. Merz wants Berlin to be the pro-business voice that has been missing in Brussels since Brexit, but that ambition may be stifled by disagreements within the coalition on issues including EU spending, joint debt, and deficit rules. Germany’s posture on CS3D reflects this challenge: While Merz has called for repeal of the measure, officials in Berlin have yet to reach a unified position, meaning that Berlin is not as vocal is it should be in the Council dialogues.
For further information, please contact Senior Vice President for Europe Marjorie Chorlins (mchorlins@uschamber.com).
