The UK’s long-awaited defence investment plan is thought to be close to publication, but officials remain locked in negotiations over the scale and timelines for the funding.
We also bring you updates on the latest EU sanctions on Russia and Trump’s tariff policy.
Negotiations ongoing for defence investment plan
Officials in the Cabinet Office, Treasury and Ministry of Defence are locked in negotiations over the details of the UK’s much anticipated 10-year defence investment plan.
Its publication has been delayed since last year due to a £28bn shortfall in funding – the aim is for the strategy to increase defence spending to 3% of UK GDP.
Treasury and defence officials have also been battling over the timeline for the increase, with the former keen for it to be achieved within the next Parliament (2029-2034) and defence minister John Healey pushing for a 2030 deadline, according to Bloomberg.
The plan’s delay has been criticised by several senior military figures in the UK and overseas, including former NATO secretary general George Robertson who accused the government of “corrosive complacency”. This has also led to funding for various key projects and contracts being pushed back.
The plan is expected to outline funding for largescale initiatives such as the AUKUS alliance, the Global Combat Air Programme (GCAP) with Italy and Japan, and the UK’s nuclear deterrent, as well as investment in hardware, munitions and drones.
The strategy comes amid increased US scrutiny of defence spending by fellow Nato members and following Russia’s invasion of Ukraine.
It also comes as European trust in the US’ commitment to security guarantees has plummeted – a survey by the European Council on Foreign Relations (ECFR), published today (10 June), found that only one in 10 people in 15 European countries currently have confidence in US allyship.
The UK has also been pushing to participate in the EU’s €150 Security Action for Europe (Safe) framework – a move being replicated by South Korea, which is holding top-level meetings with the bloc today.
New sanctions
The European Commission yesterday proposed a 21st EU package of sanctions against Russia, targeting its banks and crypto networks, drone production, oil traders and refiners, and including 170 sanctioned individuals and entities, according to Reuters.
"We intend to deal a heavy blow to Russia’s financial sector, imposing assets freezes on close to 90 banks and additional transactions bans on over 30 banks in Russia and other third countries," wrote European Commission vice-president Kaja Kallas on X.
The EU, with the UK and other allies, has also set out further sanctions against “networks enabling settler violence in the West Bank”.
“Today we are acting with our international partners to sanction those who support and sponsor violence against Palestinian communities in the West Bank,” said foreign secretary Yvette Cooper.
“Settler expansion and violence is illegal and a fundamental threat to the viability of a two-state solution, and to long-term peace and security for Palestinians and Israelis.”
Sanctioned individuals will face asset freezes, travel bans and director disqualifications, and the package aims to “disrupt the flows of finance that have allowed extremist settle groups to act with impunity”.
Trump tariffs latest
The Trump administration has processed more than half of the US$166bn of tariffs it was found to have collected illegally by the US Supreme Court earlier this year, but is now resisting refunding many of the remaining claims.
The court ruled that last year’s ‘reciprocal tariffs’, imposed under the 1977 International Emergency Economic Powers Act (IEEPA), were an illegitimate use of executive powers, and the US government has since had to establish a process for refunding importers that were charged under the legislation.
“We don’t have the authority to issue these refunds, and unless a court orders us to repay a specific company, we’re not going to do it,” a former White House official and trade lawyer told Politico.
“They’re ready to claw back what they know they legally can.”
The Trump administration has since pivoted its approach to imposing tariffs on partners around the world, with the US Trade Representative (USTR) most recently proposing 10-12.5% tariffs on the EU and 59 countries, including the UK, under an investigation into the use of forced labour in supply chains entering the US.
The investigation could allow the White House to impose tariffs under Section 301 of the 1974 Trade Act. However, the US has generally struggled to enforce forced labour rules, including for its own supply chains.
Desirée LeClerq, an assistant professor at the University of Georgia School of Law, is quoted in CNBC as saying that he feels “bad” for the USTR because of the difficulties involved in substantiating a Section 301 violation.
“First, it had to argue that forced labour goods are still making it into the US, because if it can’t say that, then it can’t say that our producers are [being] harmed.
“[Secondly] it had to argue that [Customs and Border Protection] CBP is doing a very effective job, in order to show that it’s the lack of effectiveness in other countries that places the United States at a disadvantage.”
The Trump administration has also this week amended some tariffs on aluminium, copper and steel, with commerce secretary Howard Lutnick admitting that “recent circumstances” were “affecting” domestic producers.
The amendments include a lowering of a 25% tariff on agricultural equipment and certain heating, air conditioning and ventilation systems derived from aluminium and steel to 15%.
Also in the trade news
· UK Finance is calling for the country’s leading banks and financial institutions to have a seat at the table in negotiations on the country’s ‘reset’ negotiations with the EU, Politico reports
· Britain is importing twice as much chicken as it did five years ago, by value, according to figures reported in the FT
Yesterday in trade
· The EU was becoming increasingly uncertain about the timing of this year’s leaders’ summit with the UK, due to political volatility in Westminster
· The bloc was also rethinking its trade ties with China
· Ontario mayor Doug Ford told the Trump administration to do a deal with Canada
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