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

The EU will try once again to engage in talks with the US after Brussels put its retaliatory trade tariffs on ice in response to the partial suspension of Donald Trump’s duties. EU trade chief Maros Sefcovic will meet his counterparts in Washington today, hoping that the partial truce can bring about some meaningful negotiations. The dialog could even serve to cut levies below the current 10%, after the Republican president suggested that there could be “exemptions.” The trip should provide a better sense of the US administration’s willingness to negotiate and what its priorities are, a senior government official told us. But in spite of repeated calls for European unity, there’s no consensus on how far the bloc should go with concessions, or how to retaliate if talks fail. ECB President Christine Lagarde told EU finance ministers over the weekend to refrain from excessive commentary and let the commission exercise its exclusive competence on trade.

— Jorge Valero

What’s Happening

Trade Deals | EU finance ministers committed to deepening “existing partnerships around the world as well as sealing new win-win deals with other partners,” according to Economy Commissioner Valdis Dombrovskis, who took part in the meeting of finance ministers in Warsaw on Saturday. Efforts to expand the EU’s web of agreements stalled in recent years mostly due to objections from member states such as France, which has a powerful agriculture lobby.

Different Strategies | Trump’s erratic tariff strategy is prompting European companies to quickly adapt their game plans. Some are rushing to secure supply lines, others boosting inventories in the US, or even seizing the moment to unveil or expand US investments. Swiss drugmaker Novartis announced plans to pour $23 billion into American operations over the next five years.

Defense Ideas | Spain proposed quickly setting up a new defense fund that could provide grants to countries on the eastern border and pay for military projects in Ukraine using frozen Russian central bank assets. The commission is “ready to explore” new options, Dombrovskis said in Warsaw.

Decision Week | Euro-area inflation will ease to 1.9% in 2026 and come in at 2% in 2027, slightly less than previously predicted, according to a Bloomberg survey that supports the case for the ECB to cut interest rates this week. While the survey doesn’t take into account Trump’s decision to pause higher tariffs, it does shed light on the potential fallout of his policy.

Around Europe

Russian Attacks | More than two dozen people were killed and scores injured after two ballistic Russian missiles struck the center of Sumy in northeastern Ukraine. Moscow’s attack took place days after US envoy Steve Witkoff met with Russian President Vladimir Putin to discuss ending the war.

Reality Check | Germany’s coalition agreement unveiled last week is unprecedented in its effort to bolster the country’s military. But the question is whether the myriad of proposals and torrent of funds can finally overcome the fragmentation of the security apparatus or successfully navigate its bureaucracy.

Swiss Lobbying | Trump promised Switzerland to look again at levies inflicted on the country hours before he suspended much of his tariff push, Swiss President Karin Keller-Sutter told us, in an example of the high-level diplomacy of recent days. She said she reminded him that her country is a top investor in the US, being No. 1 in R&D.

Polish Debate | Polish presidential candidates clashed over the EU and security in a televised debate late Friday, with front-runner Rafal Trzaskowski accusing his main rival Karol Nawrocki, supported by the former ruling nationalists, of spreading Russian propaganda and “anti-German phobias.” Meanwhile, the government sees a “small downside” risk to economic growth related to global trade tensions.

Chart of the Day

Italy’s rating was upgraded by S&P to BBB+, three notches above junk, from BBB, with the firm citing “gradual progress” in stabilizing public finances. S&P’s announcement is all the more significant given mounting headwinds for Italy, where government borrowing is already above 130% of output while it confronts a trade-inflicted hit to growth and faces pressure to raise defense spending.

Today’s Agenda

• EU trade chief Maros Sefcovic in Washington to meet Trump administration officials
• EU foreign ministers meet in Luxembourg
• European Council President Antonio Costa in Hamburg, visits port and Airbus factory
• EU-Palestinian Authority High-Level Dialogue in Luxembourg with Palestinian Authority Prime Minister Mohammad Mustafa
• EU tech chief Henna Virkkunen visits ASML headquarters in Veldhoven, Netherlands