The United States has formally cautioned the European Union against including European preference provisions in its next long-term budget, threatening retaliatory measures if the bloc proceeds. In a non-paper circulated to EU legislators and seen by Euronews, Washington argues that a proposed competitiveness fund would undermine transatlantic cooperation by favouring goods produced within the EU.
The EU's multiannual financial framework for 2028-2034 is currently under negotiation among member states. A central element is a €402 billion fund designed to bolster the bloc's industrial competitiveness, with a focus on producing critical goods—including defence equipment—inside the EU. Such a scheme would effectively bar foreign companies from accessing EU financing, a move intended to protect strategic and economic security interests.
The US document explicitly warns of consequences if these measures are not dropped. “With further expansion of European preference measures in EU defence funds, the United States will review all potential response measures, including a rollback of the existing 'Buy American' blanket waivers and exceptions associated with the RDPAs [Reciprocal Defence Procurement Agreements] with 19 of the 27 member states,” it states.
The Buy American Act requires the US government, including the Department of Defence, to prioritise American-made products in public procurement. However, waivers have been granted to several EU countries in defence-related contracts. Washington's threat suggests these could be withdrawn if the EU pursues its own protectionist path.
The non-paper further contends that European preference would “impede” partnership and collaboration with the US. Instead, it urges the EU to adopt a “made with Europe” approach, or in the defence sector, a “made in NATO” standard—a formulation that would keep US firms inside the tent.
Escalating trade tensions
This latest warning follows the creation of the Security Action for Europe (SAFE) programme in 2025, which already sparked friction between Washington and Brussels over its European preference for joint arms purchases. The “made in Europe” doctrine has been championed by France and the European Commission in several legislative initiatives over the past year aimed at strengthening EU industry. Foreign governments, particularly the US, have lobbied intensely against being locked out of the EU market.
The dispute is part of a broader transatlantic rift that has widened since the start of the second Trump administration. Tariff threats, environmental regulations, and digital rules have all become flashpoints, with the White House viewing many EU measures as non-tariff barriers. The budget negotiations are now another front in this ongoing trade war.
EU member states are also grappling with internal disagreements over the budget's size and priorities. Some capitals, wary of Brussels bureaucracy, are pushing for a leaner framework, while others advocate for new bloc-wide taxes to fund ambitious projects. The debate over Brussels' role is intensifying as the deadline for a deal approaches.
For the EU, the challenge is to balance strategic autonomy with maintaining strong ties to its most important ally. The US warning adds pressure to an already complex negotiation, forcing member states to weigh the benefits of self-reliance against the risks of alienating Washington. The outcome will shape not only the EU's industrial policy but also the future of transatlantic relations.
