United States threatens EU retaliation over budget preference provisions

The United States has threatened the European Union with retaliatory measures if Brussels does not remove provisions in its multiannual budget that favor European-made products. The dispute centers on a proposed €402 billion competitiveness fund for the 2028-2034 period, which aims to protect strategic and economic security by favoring production within the EU, particularly in the defense sector.

In a document sent to EU legislators, Washington warned that expanding these preference measures could lead to a rollback of existing 'Buy American' Act waivers and exceptions currently granted to 19 of the 27 EU member states under Reciprocal Defence Procurement Agreements. The U.S. argues that such policies impede partnership and collaboration, suggesting instead a 'made with Europe' or 'made in NATO' approach.

These tensions follow previous disputes regarding the 2025 Security Action for Europe programme. The 'made in Europe' strategy has been supported by the European Commission and France to boost domestic industry, while foreign firms have lobbied against being excluded from the EU market.