Investors eye US-Europe deal before deadline
Investors are hopeful a potential trade deal between the US and European Union could bring more certainty to markets ahead of next Friday's tariffs deadline.
European Commission President Ursula von der Leyen was set to meet US President Donald Trump on Sunday in Scotland after EU officials and diplomats said they expected to reach a framework deal this weekend. Trump on Friday said there was a 50-50 chance or perhaps less that the US would reach a trade agreement with the EU.
Trade tensions between the US and Europe may have provided some investors with a rationale to be cautious, said Sameer Samana, Head of Global Equities and Real Assets at Wells Fargo Investment Institute. "It's one of our largest trading relationships... So if that last piece falls into place, then you've probably got at the margin more people that have to get back in the markets," Samana said. "It's been a source of uncertainty that will go away."
A deal would likely include a 15% baseline tariff on all EU goods entering the US and probably a 50% tariff on European steel and aluminum, the officials and diplomats said. Optimism over easing trade tensions broadly has helped push US stocks to record highs. Trump's April 2 "Liberation Day" announcement of sweeping global tariffs sent stocks plunging in the immediate aftermath, due to spiking fears about a recession that have since faded.
Still, investors have been bracing for increased volatility heading into August 1, which the US has set as a deadline for raising levies on a broad swath of trading partners.
The EU is facing US tariffs on more than 70% of its exports – 50% on steel and aluminum, 25% on cars and car parts and a 10% levy on most other EU goods, which Trump has said he would hike to 30% on August 1. Hopes for a deal with Europe rose after Trump struck a trade agreement with Japan earlier in the week.
"The deal with Japan and the likely one soon with the EU are especially important given both are major US trading partners, together accounting for about a quarter of all goods' imports," analysts at Capital Economics said in a note on Friday.
In the agreement with Japan, the country's auto sector, which accounts for more than a quarter of its US exports, will see existing tariffs cut to 15% from levies totaling 27.5% previously.
An agreement that also lowers EU auto tariffs to 15% "would be no small deal" for the region as well, as about 10% of its shipments to the US are in the same category, Capital Economics said.
Investors over the weekend were also watching for developments on trade between the US and China. Officials from the two countries plan to meet in Stockholm next week to discuss extending an August 12 deadline for negotiating a deal.
Seoul seeks mutually agreeable package
Meanwhile, South Korea will prepare a trade package that is mutually agreeable with the US ahead of minister-level meetings planned for next week and a US tariff-pause deadline of August 1, the presidential office said on Saturday.
The package will include shipbuilding cooperation, a sector of high interest to US Commerce Secretary Howard Lutnick, who discussed the matter with South Korea Industry Minister Kim Jung-kwan on Friday, it said in a statement.
Friday's meeting was a follow-up to a meeting on Thursday, where Lutnick and Kim reaffirmed their commitment to reach a trade deal by August 1, after a joint meeting of finance ministers and top trade envoys that had been scheduled for Friday was postponed.
South Korea, facing 25% tariffs, is rushing to reach a trade deal with Washington, with National Security Adviser Wi Sung-lac visiting the US recently for high-level talks and Minister for Trade Yeo Han-koo also in the US for negotiations, as pressure grows on officials to clinch a deal that is no worse than Japan's that cut tariffs to 15%.
South Korea's trade negotiations with the US have included non-tariff barriers in the agricultural and digital service sectors, but foreign exchange has not been part of trade talks beyond usual consultations, according to South Korean officials.
South Korea Finance Minister Koo Yun-cheol and Foreign Minister Cho Hyun will also hold meetings with US Treasury Secretary Scott Bessent and State Secretary Marco Rubio, respectively, next week.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
33 minutes ago
- Express Tribune
India's double game with US
Listen to article At the turn of the century, it became abundantly clear that China was on its way to dethrone the US as the world's sole superpower. No superpower would let its adversary take its place easily. The US has long portrayed itself as a leader of the "free world" and considers the rise of China as a threat to the "rule based order". The US and its allies continue to advance this narrative that China, as a superpower, would be a disaster for the "free world". In order to contain China, the US decided to cozy up with India. For so long India maintained a non-aligned posture but leaned toward the Soviet Union. The US-India ties remained lukewarm. Relations between the two countries soured after India conducted nuclear tests in 1998, prompting US sanctions. However, in the early 2000s a strategic rethinking began in Washington. With China's rise looming large, the US saw India as a natural democratic counterweight in Asia. The big reset happened during President Bush's second term. His administration made a bold bet, integrating India into the global nuclear order despite its non-signatory status regarding NPT. The landmark US-India Civil Nuclear Deal in 2008 became the cornerstone of the new partnership. The US believed a strong India could help balance China's growing influence in the Indo-Pacific region. There was bipartisan consensus in the US about deepening ties with India. After the Bush administration, Democrat leader President Barack Obama continued to pursue strategic partnership. In fact, the relationship between the US and India was taken to the next level. A number of agreements, signed between the two sides over the next two decades, left no ambiguity that India had finally abandoned its non-aligned posture. Some of the agreements include 2016 Logistics Exchange Memorandum of Agreement (enabling mutual use of military bases for refueling and logistics); 2018 Communications Compatibility and Security Agreement (allowing India to access encrypted US military communication equipment); and 2020 Basic Exchange and Cooperation Agreement (allowing shared geospatial intelligence and satellite data for defense targeting). India, which for long procured military hardware from Russia, began to buy defence equipment from the US, like Apache helicopters, P-81 surveillance aircraft, C-130/C 17 transport planes and MH-60R naval choppers. The current US Secretary of State Marco Rubio a few years ago introduced a bill in the Congress, seeking a status for India similar to the one being enjoyed by Israel. The sole purpose of the US warming up to India was to make sure India's support of US endeavours to contain China. But despite the deepening ties, US policymakers and analysts are increasingly disillusioned with India on several fronts. While India continued to take advantage of its strategic partnership with the US, it also maintained close ties with Russia. But the return of President Trump to the White House changed everything. Trump is no longer ready to tolerate India's pursuit of strategic autonomy. Rubio admitted that Indian ties with Russia were a source of "irritation" in the relationship. India continues to buy discounted oil and military hardware from Russia. The Trump Administration insists that India is funding Russia's war against Ukraine through these purchases. India is part of Quad, but resists any formal military alliance or joint patrolling. No appetite to take a strong anti-China stance that would resemble US expectations. The four-day military conflict in May between Pakistan and India also changed the equation. Pakistan's response to the Indian missile strikes shook the western world and the US. There were murmurs in Washington and other western capitals about the Indian military capabilities after its defeat at the hands of Pakistan. But above all, there is a growing realisation in Washington that India is playing a double game — taking full advantage from the US but not ready to align its strategic goals with Washington. India may remain an important player for the US but the relationship may never be the same again.
Express Tribune
3 hours ago
- Express Tribune
Trump aide accuses India of funding Russia's war through oil purchases
Russian President Vladimir Putin and Indian Prime Minister Narendra Modi attend a concert before an informal dinner on the sidelines of the BRICS Summit in Kazan, Russia October 22, 2024. PHOTO: REUTERS Listen to article A top aide to President Donald Trump on Sunday accused India of effectively financing Russia's war in Ukraine by purchasing oil from Moscow, after the US leader escalated pressure on New Delhi to stop buying Russian oil. 'What he (Trump) said very clearly is that it is not acceptable for India to continue financing this war by purchasing the oil from Russia,' said Stephen Miller, deputy chief of staff at the White House and one of Trump's most influential aides. US White House Deputy Chief of Staff Stephen Miller speaks to reporters at the White House in Washington, DC, US, April 18, 2025. Photo: Reuters Miller's criticism was some of the strongest yet by the Trump administration about one of the United States' major partners in the Indo-Pacific. Read More: India will continue to buy Russian oil, govt sources say 'People will be shocked to learn that India is basically tied with China in purchasing Russian oil. That's an astonishing fact,' Miller said on Fox News' 'Sunday Morning Futures.' The Indian Embassy in Washington did not immediately respond to a request for comment. Indian government sources told Reuters on Saturday that New Delhi will keep purchasing oil from Moscow despite US threats. A 25% tariff on Indian products went into effect on Friday as a result of its purchase of military equipment and energy from Russia. Trump has also threatened 100% tariffs on US imports from countries that buy Russian oil unless Moscow reaches a major peace deal with Ukraine. Miller tempered his criticism by noting Trump's relationship with Indian Prime Minister Narendra Modi, which he described as 'tremendous.'
Business Recorder
4 hours ago
- Business Recorder
US trade advisor says Trump tariff rates unlikely to change
WASHINGTON: New US tariff rates are 'pretty much set' with little immediate room for negotiation, Donald Trump's trade advisor said in remarks aired Sunday, also defending the president's politically driven levies against Brazil. Trump, who has wielded tariffs as a tool of American economic might, has set tariff rates for dozens of economies including the European Union at between 10 and 41 percent come August 7, his new hard deadline for the duties. In a pre-taped interview broadcast Sunday on CBS's 'Face the Nation,' US Trade Representative Jamieson Greer said 'the coming days' are not likely to see changes in the tariff rates. 'A lot of these are set rates pursuant to deals. Some of these deals are announced, some are not, others depend on the level of the trade deficit or surplus we may have with the country,' Greer said. Trump stakes reputation as dealmaker with tariff policy 'These tariff rates are pretty much set.' Undoubtedly some trade ministers 'want to talk more and see how they can work in a different way with the United States,' he added. But 'we're seeing truly the contours of the president's tariff plan right now with these rates.' Last Thursday, the former real estate developer announced hiked tariff rates on dozens of US trade partners. They will kick in on August 7 instead of August 1, which had previously been touted as a hard deadline. Among the countries facing steep new levies is Brazil. South America's largest economy is being hit with 50 percent tariffs on exports to the United States – albeit with significant exemptions for key products such as aircraft and orange juice. Trump has openly admitted he is punishing Brazil for prosecuting his political ally Jair Bolsonaro, the ex-president accused of plotting a coup in a bid to cling to power. The US president has described the case as a 'witch hunt.' Greer said it was not unusual for Trump to use tariff tools for geopolitical purposes. 'The president has seen in Brazil, like he's seen in other countries, a misuse of law, a misuse of democracy,' Greer told CBS. 'It is normal to use these tools for geopolitical issues.' Trump was 'elected to assess the foreign affairs situation… and take appropriate action,' he added. Meanwhile White House economic advisor Kevin Hassett said that while talks are expected to continue over the next week with some US trade partners, he concurred with Greer's tariffs assessment in that the bulk of the rates 'are more or less locked in.' Asked by the host of NBC's Sunday talk show 'Meet the Press with Kristen Welker' if Trump could change tariff rates should financial markets react negatively, Hassett said: 'I would rule it out, because these are the final deals.' Legal challenges have been filed against some of Trump's tariffs arguing he overstepped his authority. An appeals court panel on Thursday appeared skeptical of the government's arguments, though the case may be ultimately decided at the Supreme Court.
