Closing summary: Is US-EU trade deal a relief, or 'submission'?
France’s prime minister, François Bayrou, said the EU had capitulated to Donald Trump, and the euro fell against the US dollar. But there has also been some relief that the US-EU trade deal may at least end the “will they, won’t they” speculation that has dominated the spring and summer.
The dollar’s strength may be short-lived, according to Javier Corominas, director of global macro strategy at Oxford Economics, a consultancy. He said:
FX markets have punished the greenback this year on two negative US-specific developments: heightened policy uncertainty and the negative real income shock for US consumers following the tariff announcements.
On a relative basis, the latter is expected to be worse for US growth than the global demand shock experienced by exporters to the US, where some diversification to other markets might take place, much like the strategy China effectively pursued during the US President Trump’s first term.
The uneven terms of the deal suggest that the EU has prioritised its short-term economic health over the longer-term arm wrestle with the US.
Jan-Paul van de Kerke, a senior economist at Dutch investment bank ABN Amro, said:
The unequal trade deal seems to be largely caused by Europe’s bad hand. Subpar economic performance and the recent bout of inflation meant national governments, especially in Berlin and France were unwilling to suffer economic pain to risk a better outcome. Furthermore, navigating member states’ deviating interests may have proved hard for negotiators. Finally, the EU remains dependent on the US for its security, both in terms of military support as for military imports and remains a net importer of energy.
The EU commitment to $750bn of energy imports from the US over the next three years is “unfeasible”, as it would imply a doubling of European gas imports, he added.
In other business and economics news today:
The Russian airline Aeroflot was forced to cancel dozens of flights on Monday after a shadowy pro-Ukraine hacking group claimed responsibility for what it said was a crippling cyber-attack.
Samsung has agreed a $16.5bn (£12.3bn) deal to manufacture artificial intelligence chips for Tesla, in a move hailed by Elon Musk.
One of the world’s most prominent hedge fund investors, Ray Dalio, has warned that the UK is stuck in a “doom loop” as it faces a worrying mix of higher taxes, rising debts and slower growth.
Britain is at risk of a worsening “climateflation” crisis amid the fallout from increasingly extreme weather that could drive up food prices by more than a third by 2050.
Gambling lobbyists are staging a summer charm offensive designed to stop ministers from raising taxes on the sector, the Guardian has learned, including meeting with Treasury insiders and hosting a darts evening with Labour special advisers and MPs’ staff.
You can continue to follow our live coverage from around the world:
Thank you for reading today, and please do join me bright and early tomorrow for more of the same. JJ
Key event
Donald Trump is answering questions from British media in Scotland. Amid comments on Gaza and immigration, Trump also suggested that US tariffs on pharmaceuticals are imminent.
He said the US will be announcing pharma tariffs in the very near future, according to Reuters.
It came after some confusion over whether pharmaceuticals will be included in the US-EU trade deal. Trump has claimed that medicines were not included, but European Commission president Ursula von der Leyen has said that the 15% baseline tariff agreed with Trump will apply. A senior US official later also said that they were in fact covered by the 15% tariff.
Yet the confusion highlights the difficulty that many companies still face in working out what will happen if they export to the world’s largest market, despite a “deal” being agreed.
(See also: UK steel imports are meant to attract zero US tariffs, but there has been no sign of that deal being honoured.)
