
This month marks the one-year anniversary of Ursula von der Leyen’s re-election as European Commission (EC) president, ending her sixth year overall as the effective leader of the EU.
With her election by no means guaranteed, she promised a different vision for the EU in her second term.
The Daily Update spoke to trade policy experts about the first year of the ‘new’ von der Leyen presidency and how she’s managed the increasingly fragmented political and economic world order.
New future?
In her campaign, she promised three central planks for a new “economic foreign policy”: economic security, trade and investment partnerships.
She also said that she would build a more competitive Europe, describing expansion as a “political, moral and strategic imperative”.
Von der Leyen, a former German minister of defence and of labour, also talked of the need to change the nature of the EU budget. She promised a more focused, simpler and more impactful approach, that would help mould the EU into a new and more competitive model.
The old challenges
Many of the “challenges haven’t changed”, says Fergus McReynolds, the Chartered Institute of Export & International Trade’s EU and international director.
“There is a need for Europe to invest in its future. This requirement is balanced by the difficult economic times in many European nations.”
One year after her election, the new Europe is looking a lot like the old Europe. Various national leaders are in some kind of crisis, far-right populists are gaining strength and the broader European economy is flagging.
Many of the parties that backed her re-election bid – mostly hailing from the political centre – look to be in trouble. The no-confidence vote in her presidency, while a failure, reflects a lack of strong support for her leadership.
National struggles
In Spain, PM Pedro Sanchez has faced a slow-rolling series of corruption scandals that threaten his government.
The socialist leader has been one of the great survivors of the last few years. After initially resigning as Socialist Party leader in 2016, he rebounded to win a leadership election then a confidence motion in the Spanish parliament.
Having won three elections and navigated the tricky politics of coalition governments in a fractured Spanish parliament, a series of scandals looks to have weakened him.
The leaders of both Germany and France are also struggling. French president Emmanuel Macron faces plummeting approval numbers, with his PM François Bayrou risking a no-confidence motion by cutting two public holidays. If replaced, he would be the fourth French PM in a year.
New German chancellor, Friedrich Merz, has been described as in “crisis mode” by Deutsche Welle, only two months into his government. A series of public disputes with allies has plagued his early term.
The picture is not especially rosy elsewhere. Poland’s pro-EU PM, Donald Tusk, has confirmed a reshuffle after the opposition held onto the presidency, while governments in Estonia, Romania, and Czechia remain unpopular.
In many cases, far-right, Eurosceptic parties are looking to replace their moderate, pro-European counterparts as opposition or in government.
Parties like Chega in Portugal, Vox in Spain, the Freedom Party in Austria and the National Front in France are all in prime position to enter coalition governments, some possibly winning outright.
Italian PM Georgia Meloni remains relatively stable in Italy with her Eurosceptic Brothers of Italy, and has openly been pushing back against some of von der Leyen’s environmental policies.
Trump
On trade, the EU’s greatest challenge is US president Donald Trump’s tariffs, which have dominated the conversation in European capitals, eclipsing other almost all other issues.
The reality is that most of the decision-making rests with a mercurial and unpredictable president, leaving everyone else scrambling to react to decisions as they come in.
In Brussels “the only story is the US”, says McReynolds. Trump’s plan to impose tariffs as high as 30% on all European imports into the US has eaten up a significant amount of oxygen in trade circles, deprioritising other issues like the roll-back on the Green New Deal or the push for European competitiveness.
Tariffs on key sectors could cause significant economic damage, at a time when the global economy remains fragile. Von der Leyen’s administration has spent significant time negotiating with Washington, while also preparing countermeasures and attempting to secure EU supply chains.
While the UK secured a deal months ago, the EU remains in Trump’s crosshairs. A deal was expected weeks ago, but so far appears to elude both sides.
Olaf Gill, the EU’s trade spokesman, insisted that “our focus is on the negotiation and this is the big priority at the moment”.
The only question is: “is the EU going to retaliate?”, says McReynolds.
Budget
Political dissatisfaction and issues with the US have occurred as von der Leyen’s ‘new-style’ budget appears to have met with a decidedly negative reaction from European capitals.
Pitched as a fundamental redesign of the budget, the EC has pushed for more flexibility and new methods of raising money, while stressing the need to boost European competitiveness.
At the launch of the budget, von der Leyen stated:
“Our new long-term budget will help protect European citizens, strengthen Europe's social model and make our European industry thrive. In a time of geopolitical instability, the budget will allow Europe to shape its own destiny, in line with its vision and ideals.
“A budget that supports peace and prosperity and promotes our values is the best tool we can have during these uncertain times.”
The plan also increased support for Erasmus+, the European Competitiveness Fund and Global Europe. Overall, it advocated for considerably more spending, with limited new taxation on electric waste, tobacco and high-turnover companies.
Reaction
However, the budget has been received poorly.
Spain’s agriculture and fishing minister, Luis Planas, expressed “surprise and rejection” to Spanish newswire EFE, adding that he hoped to “change as much as possible” in the budget.
Merz’s spokesman was also critical:
“A comprehensive increase in the EU budget is unacceptable at a time when all member states are making considerable efforts to consolidate their national budgets.”
The leaders of the Socialists & Democrats, Greens, European People’s Party (EPP) and Renew – the four cores parts of von der Leyen’s support bloc in the European Parliament – issued a critical statement on the way that the budget had been announced.
“The European Parliament will not accept any reduction of Parliamentary oversight and the legitimate democratic control and scrutiny over the EU spending or, worse, renationalise flagship Union policies.”
Siegfried Mureșan, one of the rapporteurs for the MFF in Parliament, from the EPP, said during a press conference.
“The attempt of the Commission to convince us that this budget is a significant increase is misleading. The increase is coming only for the adjustment to the inflation rate and it is only coming because we have to pay back the Next Generation EU fund,”
Other capitals appear wary over debt and spending priorities. The European Parliament and all member states need to sign off on the budget by 2027, leaving von der Leyen with some wiggle room to negotiate.
However, her first attempt at recasting the budget also appears not to have gone well.
Foreign affairs
On trade, von der Leyen and her trade commissioner – the veteran Maroš Šefčovič – have made a number of moves, none more so than taking the lead on negotiations.
“She’s been shown incredible willingness in trade, advocating for the EU to lead in trade from some pretty strong resistance in European capitals”, says McReynolds.
Even before the re-election of Donald Trump as US president, Brussels was looking to expand its network to Asia, the Middle East and Latin America.
The EU has inked a trade deal with Mexico and a memorandum of understanding with the Latin American Energy Organisation, but the big one remains the EU-Mercosur agreement.
“The deal is not as dramatic as it seems to be in some sectors in terms of trade reduction from the EU”, warns Arantza Gomez Arana, a trade professor at Northumbria University.
However, other criteria, like critical minerals, green policies and deforestation, can be used to judge the effectiveness of the deal.
Arana added: “[A]t the same time, the agreement is not the one that will decide what happens in Mercosur countries, because they have other trade partners such as China. In other words, the EU policies have limited effect, once they manage to fully implement them.”
After decades spent in stasis, the deal was finally pushed over the line at the end of 2024. At a summit in Uruguay, von der Leyen and the presidents of the four member states – Argentina, Brazil, Paraguay and Uruguay – announced that an agreement had finally been reached.
Despite the initial positive news, Brussels has had to spend precious political capital getting the deal approved by members in both the European Council and Parliament.
Paris has been resistant, as has Warsaw. Concerns swirl around the future of the trade deal and whether concessions are needed.
Asia
Asia has also been a point of focus. Von der Leyen and António Costa, president of the European Council, are visiting Japan and China for high-level talks this week.
The meeting between Brussels and Beijing commemorates the 50th anniversary of diplomatic relations between the two. It also follows sparring over China’s relationship with Russia and the EU’s somewhat confrontational stance towards Chinese trade practices.
“Some favourable conditions, such as Trump’s tariffs, could bring both sides closer, but other unfavourable conditions, like their differences on the Ukraine issue, are preventing better China-Europe relations”, Cui Hongjian, a former Chinese diplomat who teaches at Beijing Foreign Studies University, told Bloomberg’s Supply Lines newsletter.
Reports indicate that von der Leyen will not be seeking a deal with China on trade or any other topic at the meeting. Brad Setster, a senior fellow at the US think tank Council for Foreign Affairs, said that this was “real progress” if confirmed.”
“The Commission has (I hope) recognised that it can no longer make do with pretend deals that offer the illusion of progress without resolving the very real underlying problem.”
Despite “persistent” differences between both capitals, the irony is that the US tariff plan appears to “opened the door to a possible détente”, according to the Real Institute Elcano, as China attempts to present themselves as a “reliable friend” to Europe and the world.
Public statements from the EU appear to confirm this approach is being mirrored. Kaja Kallas, EU high representative for foreign and security policy, told the FT that the EU is pitching itself as a “reliable partner” compared to the US.
“We are concerned about our supply chains and trade routes... it’s also our security and that’s why I’m saying that these are increasingly interlinked, you can’t separate one from the other.”
Mandate
Von der Leyen’s successes and failures can’t be judged on the basis of one year alone. Even her critics admit this is the first of a five-year mandate, at a time when most first-year governments around the world also appear to be struggling.
Some decisions have been welcomed by business, such as the changes to its Carbon Border Adjustment Mechanism (CBAM) and the Deforestation regulation, and the recognition of European competitiveness is a welcome one for many.
The EU-UK summit is another area of success, says McReynolds.
However, as this year closes, many observers are still waiting to see whether von der Leyen can deliver the competitive, trading Europe she promised in her election campaign or whether she will prove unable to overcome mounting challenges.