Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

EU trade chief Maros Sefcovic is planning to sit down with his counterparts today in Washington as the bloc rushes to strike a deal before a July 9 deadline, after which tariffs on nearly all its exports to the US could jump to 50%. The bloc is confident the gathering with US Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will produce at least an interim deal to allow for talks to continue beyond the deadline. The EU is willing to accept a trade arrangement that includes a 10% universal tariff on many of its exports to the US, but it is also preparing to retaliate if talks fail. Separately, Ursula von der Leyen and EU commissioners are visiting Denmark to mark the start of its rotating presidency of the bloc.

— Lyubov Pronina

What’s Happening

Under Pressure | Von der Leyen will face a no-confidence vote in the European Parliament next Thursday, reflecting lingering concerns over her handling of text messages to Pfizer chief Albert Bourla at the height of the pandemic. The parliament collected 79 signatures – above the requisite number — for the motion, although the Commission chief is expected to survive the vote.

Climate Test | The EU proposed a binding target to cut emissions by 90% by 2040 yesterday as a step toward climate neutrality by mid-century. While it includes various “flexibilities” to help get member states on board, the plan faces a heated debate over the level of ambition and how quickly an accord needs to be reached.

Heat Damage | Record heat caused by a blast of Saharan air and amplified by unusually warm seas is meanwhile hurting businesses across Europe, increasing energy demand and threatening nuclear generation. Read the latest on the fallout from rising temperatures.

Euro Worry | ECB officials are starting to fret that a rapid appreciation of the euro could derail efforts to anchor inflation at 2%. With the single currency on the cusp of it longest winning streak against the dollar in more than two decades, the danger is the rally propels the euro to levels that will damage competitiveness. 

Pension Volatility | Volatility may hit European bond markets as some 11 million people in the Netherlands switch to a new retirement plan from next year. A key step in the reform of the €1.8 trillion pensions system, the largest in the euro-area, will see funds investing in riskier assets.

Around Europe

Gas Go-ahead |  Germany has given the green light for drilling as much as 13 billion cubic meters of natural gas at a protected marine site in the North Sea in a controversial energy-security step. An agreement on hydrocarbon deposits with the Netherlands will add to the mission of reducing dependency on piped gas from Russia.

Ukraine’s Woes | The Trump’s administration halted the transfer of artillery rounds and air defense after a review of stockpiles. In France, Emmanuel Macron wrong-footed other European leaders with a phone call to Vladimir Putin to mainly discuss Iran, signaling that other geopolitical priorities are denting a unified effort to isolate the Kremlin.

Path of Prudence |  Italy will persevere with the fiscal prudence that has allowed it to reduce borrowing costs, Finance Minister Giancarlo Giorgetti said yesterday. The deficit will continue to shrink and hit at 3.3% of economic output this year, he added.

Tax Plan | Romania will present a package of tax hikes and wage freezes in the public sector to bring the budget deficit to below 6% of GDP next year and avoid a rating downgrade to junk. Following months of political turmoil, the new pro-European government wants to increase VAT and excise duties among proposals.

Troops Pact |  Lithuania will weigh a visiting forces deal with the Philippines, as it builds security ties with the Southeast Asian nation. The agreements may be needed so that the Baltic state can join in the annual flagship military exercises between the Philippines and the US, according to Defense Minister Dovile Sakaliene.

Chart of the Day

Poland’s central bank unexpectedly cut interest rates after a one-month pause and said inflation is likely to ease within its target in the coming months, raising expectations that monetary easing is set to continue. The Monetary Policy Council reduced its benchmark by 25 basis points to 5% yesterday, in line with expectations from six of 30 economists surveyed by Bloomberg. The majority predicted that rates will stay unchanged as indicated by Governor Adam Glapinski and some of his allies in the council. 

Today’s Agenda

• Trade Commissioner Maros Sefcovic meets US Secretary of Commerce Howard Lutnick and Trade Representative Jamieson Greer in Washington
• College of commissioners visits Denmark for start of presidency

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