European Banks Weather Stress Test That Simulates Trade Shock
On aggregate, the 64 lenders in the stress test saw their main capital ratio slide by 3.7 percentage points to 12.1% under an adverse scenario, the European Banking Authority said in a statement on Friday. That's less than the 4.59 percentage-point hit in the last exam two years ago, which featured more banks.
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The Hill
3 minutes ago
- The Hill
The numbers in Trump's EU trade deal are a joke
President Trump announced a trade deal with the European Union last month, proclaiming a 'generational modernization of the transatlantic alliance' that will 'provide Americans with unprecedented levels of market access' and is 'yet another agreement that positions the United States as the world's preeminent destination for investment, innovation, and advanced manufacturing.' The EU has been criticized heavily for folding to Trump. However, after many years of studying, practicing and teaching negotiations, I am not nearly so critical of the European strategy. Negotiating with Trump inevitably leads to three possible tactics: ignoring, retaliating or capitulating. Everyone goes for one or more of these tactics. But most have ended up at the last one, capitulating. The U.K. (like Columbia University, and perhaps soon Harvard) was much derided when it pioneered the capitulation strategy in May. But it is not necessarily a bad strategy when confronted by Trump. Alan Beattie of the Financial Times perceptively notes that 'Trump likes deals that aren't worth the handshake they're written on.' 'Roll with the punch,' he suggests, 'get the lowest baseline tariff you can, offer him some concessions with good optics but low impact, talk up the importance of the deal for the benefit of his ego and hope he moves on.' And so the EU has done. The U.S.-EU trade 'agreement' is apocryphal. Others have called it delusional. It is both — and thus important to understand. First, some context. In 2015, roughly the end of the Bretton Woods era for trade, the average weighted U.S. tariff against all goods was about 1.7 percent. Against EU goods it was 1.47 percent, versus 1.35 percent on U.S. goods into the EU. America currently imports more than $605 billion a year in goods from the EU. Trump's 'biggest deal ever made,' with a few exceptions, 'reduces' tariffs to 15 percent (steel and aluminum remain at 50 percent). However, it is not technically a deal. It is filled with numerous ' commitments ' such as 'work to address' and 'intend to work together,' or 'intend to address' and, curiously, 'take complementary actions to address.' This is the type of language used in a preliminary phase of a framework agreement, which would be the precursor to a serious trade negotiation. The White House is claiming that, first, that the EU will invest $600 billion directly in the U.S. during Trump's term (three times the rate it has invested in the past). This is, if not delusional, at least fantastical. The second concrete claim by the White House is that 'the EU will double down on America as the Energy Superpower by purchasing $750 billion of U.S. energy exports through 2028.' As Clyde Russell shows clearly in Reuters, these numbers simply do not make sense. But then, they need not. They serve their performative purpose well enough. Chalk up a specious victory and move on. Consider that in 2024, the EU imported 573 million barrels of crude oil from the U.S., which is valued currently at about $40.1 billion. The EU imported U.S. liquified natural gas in 2024 worth about $21.78 billion and bought about $2.67 billion in U.S. coal. So EU energy imports (at $64.55 billion) are about 26 percent of the $250 billion the EU is supposed to spend on American energy each year under the framework agreement. If the EU reaches the $250 billion a year goal, U.S. imports would account for 85 percent of its total spending on those energy commodities. While this appears to be a plus for U.S. producers, it would massively disrupt global energy markets (not to mention violate many long-term supply contracts). But more startling, it would exceed total current U.S. exports. Putting together the value of U.S. exports for all three energy commodities totals $165.8 billion, Russell calculates, 'meaning that even if the EU bought the entire volume it would still fall well short of the $250 billion.' Including nuclear adds a few billion dollars at best. Expanding to refined products, such as diesel? Perhaps another $10 billion. So the EU's commitment to buy $250 billion worth of American energy is entirely unrealistic and unachievable. 'The smart people in the room must know this,' Russell writes, so 'why agree to what is obviously a ridiculous number?' The only answer is the obvious one, and the most troubling. Substance doesn't matter, only performance. Where businesses must operate on substance and factual reality, politicians operate increasingly on attention-gaining performance. This may explain why Trump has done so poorly in business and so well in politics (and in the businesses he is generating based on politics). So, despite substantive criticisms of the EU team, they in fact made a perfectly understandable agreement. Specifically, when only attention matters and the substance of the deal is a mere side story of the performance, one can agree to almost anything. In this case, the more fantastical the better. Why didn't EU Commission President Ursula von der Leyen promise $900 billion? Trump would be even happier and Europe even less likely to uphold the 'agreement.' Smile, suck-up, sign, shrug and move on. The real negotiation is somewhere down the road; perhaps tomorrow afternoon. Well, maybe. Trump's authority even to make such a deal is still being litigated. The one unavoidable fact is that America has abandoned the rules-based trading system it carefully built over three-quarters of a century. It is a brave new world of U.S. trade 'agreements' based on rapid-fire, plainly meaningless commitments — but what a performance! Robert A. Rogowsky is professor of trade and diplomacy at the Middlebury Institute of International Studies and adjunct professor at Georgetown University's School of Foreign Service. He is a former chief economist and director of operations at the U.S. International Trade Commission.
Business Insider
4 minutes ago
- Business Insider
I raised $25 million at 23. Here's my advice to other Gen Z entrepreneurs.
This as-told-to essay is based on a conversation with Jaspar Carmichael-Jack, the 23-year-old CEO of Artisan. It's been edited for length and clarity. When I was 7, I had a candy shop in my bedroom. It wasn't really a company, but we technically made revenue. When I was 13, I started buying and reselling domains. I didn't even apply to any universities. I knew in high school I wasn't going to go. I started an app for booking cleaners after finishing high school in London. It turned out to be a terrible, tarpit idea, but I learned a lot about how to build a company and how not to build a company. I founded Artisan when I was 21 At the beginning of 2023, I came up with Artisan. In January 2023, I spent a couple of months trying to find a cofounder and building the company. It was like a failed engine. I interviewed 100 cofounders, and didn't find anyone particularly good. In August 2023, I got another wave of motivation. It moved pretty fast then, and I got very lucky early on. Within the first month, we had a very basic prototype. We managed to raise $1.75 million just from a LinkedIn message. People are always like, "How did you raise money so early on?" That's complete luck. We got into Y Combinator a week after that. We launched V0 of Artisan in 2024, but the product barely worked. In June of last year, we launched V0.1, and that's when we started to see some growth. Our $12 million seed round was wrapped up in August, when I was 22. We raised a Series A that we closed in Q1 of this year at $25 million, which has enabled us to build out the team and hire a lot of really great talent and to double down on product again. We now have $6 million in annual recurring revenue. My advice for Gen Z tech entrepreneurs There's a relatively built-out playbook you can follow. First of all, educate yourself on the space and understand the type of company that you're building, how to build it, but then more broadly, what the startup ecosystem looks like. Do everything you can to be in the Silicon Valley startup ecosystem, rather than whatever town or city you're from. If I tried to raise that first round of funding in London, I probably would've gotten $100,000 or $200,000, a terrible valuation. We were able to raise a $15 million valuation with no products and just an idea because we went down the SF route, rather than the European route. You really need to have a strong founding team. I don't have a degree, and I've never had a job. Finding someone who can help with whatever you're weak at is super important. Reading high-quality books and watching Y Combinator videos helped me early on. "Zero to One" by Peter Thiel — he has some questionable opinions beyond the book, but that's a really good one. "Principles" by Ray Dalio and "The Lean Startup" by Eric Ries are really strong. People also don't go all in. They'll dip their toe in. Especially when you're early on, you need to make the company your life. You should be working 80+ hours a week and moving to San Francisco. That's what I didn't do in January 2023, and it's the reason I had the false start. I was doing it for 30-40 hours a week, and it never got the momentum it needed. I did it differently in August. Raising funding is really difficult if you don't have experience. You have to put yourself in positions to get lucky. Meet the right people, network. Build a credible story and look like you're going to succeed. The most important thing is building a product that people want. If you do that, you don't even need to fundraise or have a great team. Here's how Gen Z founders are different from their predecessors There's more of an approach of doing whatever you need to do to get attention with younger founders. We were part of it with our controversial billboard campaign. Times Square billboard for AI company sparks backlash for calling for human workers to be replaced by AI. 'Stop Hiring Humans. AI employees are here.' — Oli London (@OliLondonTV) June 22, 2025 Young people are just more willing to do what they need to get eyeballs. The biggest AI companies now are foundation models. You couldn't really do that well as a Gen Zer, because you don't have the experience. I think we're going to see that shift pretty dramatically over the years, as product layer becomes more relevant and the foundation models mature. You've already seen it with Cursor. They're above $500 million ARR now. There's a bunch of other stories like that emerging. This is where younger founders will start to shine more, when the app layer pushes through.
New York Times
4 minutes ago
- New York Times
Does Japan Want American Cars? Trump's Push to Open Foreign Markets Faces Test.
Last month's pledge by Japan to open its markets to more American cars allowed President Trump to declare victory in a goal he had chased for decades. For Mr. Trump, the ubiquity of Japanese car brands in the United States is aggravating, when Japan buys virtually no American cars. The disparity has long fed his conviction that the openness of the U.S. economy is not fairly reciprocated, contributing to a persistent trade deficit. Now, in his second term, Mr. Trump is raising tariffs steeply and pressuring other countries into dismantling barriers that range from taxes on American beef and soybeans to car-safety and local-content requirements in Japan and Indonesia. Some trade experts question this strategy's efficacy. They say that countries have in some cases agreed to address specific grievances of Mr. Trump's, like sales of cars in Japan, that are unlikely to result in a flood of new American exports. Automotive experts and industry veterans who have worked for U.S. carmakers in Japan said the pledge to remove trade barriers might do little to boost sales. But in the view of supporters of Mr. Trump's policies, dismantling foreign obstacles to American trade — a longtime goal shared by both Republican and Democratic administrations — is overdue for a more forceful approach. 'Big trade partners have long had rules and regulations in place that lock us out of the market,' said Wilbur Ross, the Secretary of Commerce during the first Trump administration. 'The president knows he can go a lot farther than we went last time to rectify those,' he said. Since World War II, American car companies have never managed to gain a significant foothold in Japan, which hasn't put tariffs on imported vehicles since the late 1970s. Ford Motor pulled out of Japan in 2016, citing no path to profitability. Last year, American brands like General Motors made up less than 1 percent of sales. Mr. Trump blames unfair regulations in Japan for making it 'impossible' for American companies to sell cars in the market. These include Japan's unwillingness to accept vehicles that pass U.S. safety standards, which are different than international ones. Mr. Trump sought to change this in his first term. Late last month, he succeeded. In exchange for a 15 percent across-the-board U.S. tariff on its goods — lower than the previously threatened 25 percent — Japan agreed to invest hundreds of billions of dollars in the United States. Mr. Trump was keen on another concession. 'Perhaps most importantly,' Mr. Trump wrote in a social media post, 'Japan will open their Country to Trade including Cars and Trucks.' That means Japan would allow the import of American-made cars without the unique safety standards and testing it usually requires, the country's chief trade negotiator said at a recent news conference. Mr. Trump made a similar declaration last week when announcing a trade deal with South Korea. He said that, in exchange for the same 15 percent tariff rate as Japan, South Korea would begin accepting more American cars and trucks into its market without imposing duties on them. In South Korea, similar to Japan, American brands make up a very small percentage of sales. In Japan's case, industry analysts say that safety and testing requirements can add up to tens of thousands of dollars to the cost of American cars imported into the country. However, some industry experts said they doubt that changes to the standards and testing requirements will boost sales. In Japan, where streets are narrow and often congested, most consumers prefer small, fuel-efficient vehicles, typically with steering wheels on the right. Domestic brands like Toyota, Honda and Nissan offer a wide array of such options. For American carmakers in Japan, 'trade barriers have never been the problem,' said Tsuyoshi Kimura, a professor at Chuo University in Tokyo, who used to work at General Motors from the late 1990s through the early 2000s. Japan is a relatively small and already saturated car market, he said, so most American automakers have not put effort into designing models for the country. The lineups of American manufacturers are packed with bulky sports-utility vehicles and trucks in part because they struggle to make smaller cars profitably. 'Thinking about the basic needs of the market, their cars just don't fit,' Mr. Kimura said. 'Even if it's been declared that Japan's opening its car market, it's unlikely that American cars will sell.' Mr. Trump's fixation on American car sales in Japan echoes his past trade negotiation tactics such as his emphasis on U.S. dairy exports during his first-term formulation of the United States-Mexico-Canada Agreement, according to Alan Wolff, a senior fellow at the Peterson Institute for International Economics. 'What could have been negotiated could have been far-reaching, and perhaps more important,' Mr. Wolff said. For example, addressing topics such exchange rates, he said. However, he added, securing agreements to open specific export sectors have 'political salience' for Mr. Trump. 'They matter to him, and therefore they matter to the United States,' he said. Mr. Ross, the former commerce secretary, agreed with this sentiment. He spent years as chairman of the Japan Society, a nonprofit dedicated to strengthening U.S.-Japan relations. He said he doubted that regulatory changes would sell customers on American cars. Still, for Mr. Ross, removing trade barriers in countries like Japan was a matter of principle. He likened the situation to a negotiation he had with a European Union official during Mr. Trump's first term about the trade bloc's ban on U.S. chicken sterilized with chlorinated wash. 'I asked, why do you have these trade barriers, and she said 'Oh, Europeans will never eat those foods,'' Mr. Ross recalled. 'I said, well, let's put them on grocery shelves and clearly mark them and if you're right, then Europeans won't eat them, we'll stop selling them, and we won't have to argue about it.' The current Trump administration has continued to pressure the European Union to buy American chickens. As part of its recent trade deal, the European Union agreed to work to address 'barriers affecting trade in food and agricultural products,' without detailing further. For others in Japan, these latest trade negotiations feel somewhat like a rerun of the 1980s and 1990s, when the United States and Japan seemed on the brink of a trade war, in part over the issue of American versus Japanese car sales. In 1995, Japan agreed to several measures, including encouraging greater dealership access for foreign cars. American sales in Japan ultimately didn't budge. But Japanese automakers at the time were investing heavily in producing vehicles in the United States and discussions about autos largely faded from U.S.-Japan trade talks. Around that time, Glen S. Fukushima, then an executive at AT&T and a vice president of the American Chamber of Commerce in Japan, was leaving a meeting with Walter Mondale, the U.S. Ambassador to Japan, when the diplomat noticed that Mr. Fukushima's company car in Tokyo was a Nissan. Given the recently concluded agreement aimed at securing more market access for American automakers in Japan, the ambassador suggested to Mr. Fukushima that his driver really should be driving an American car. Mr. Fukushima took the suggestion and tried out a Cadillac Fleetwood. However, it proved much too large for the turns near his Tokyo residence. He ultimately went back to his Nissan Cima and returned to Mr. Mondale to explain the situation. 'He was a reasonable man,' Mr. Fukushima said. 'He understood.' Hisako Ueno contributed reporting.
