Reaction to the US-EU trade agreement

Scotland’s Turnberry (Reuters) – US President Donald Trump said on Sunday that the US and the European Union agreed to a trade agreement that includes a 15% tariff on EU goods entering the US and a significant EU purchase of US energy and military equipment.

The deal also seeks $600 billion in US investment from the EU, he told reporters.

This follows a July 23 contract with the US to cut tariffs on automobile imports and other goods in exchange for a $550 billion package of US investments and loans.

Major financial markets were still closed. The euro ended last week at a three-week high of $1.1738, but the STOXX 600 <.Stoxx>reached its highest since early June last week as optimism built for EU-US trading transactions.

Below is the market response to comments and announcements from business leaders and companies.

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Holger Schmieding, Chief Economist, Berenberg Bank, London:

“The first good news: the crippling uncertainty is largely over. This transaction will be easier for the EU. Perhaps it’s modest news for the stock market, where most of it is pre-priceeded.

“Trump can argue that asymmetrical deals are “winning” for him. But of course, the outcome is still worse than the situation Trump won before he launched a trade war. ”

“The US will pay a significant price for Trump’s regression protectionism through higher consumer prices and lower trend growth rates. With the tightening of Trump’s immigration, his protectionism will reduce the growth of U.S. trends from 2% to 1.5%.”

Brian Jacobsen, Chief Economist, Annexwells Management, Brookfield, Wisconsin:

“President Trump said that trade contracts with the EU are the largest of all transactions. Whether imports or exports, Mexico, China and Canada are bigger deals than the EU. So this is the biggest deal until the next transaction.”

“Setting down to an average 20% tariff rate is better than the 25% tariff rate on the release date, but tariffs in 2024 are far higher than 2.5%.”

“Tax is a stick to make it more expensive to produce outside the US. One big beautiful bill is that it will be cheaper to produce within the US, and it is gambling to see if the stick-and-carrot approach to investment in the US works.

Hasnain Malik, Strategic Director, Dubai, Telimer, Equity Research:

“The 15% headline is a bailout for all investors, especially for European manufacturing assets investors. Like with Japan, like with other ‘trading’, the demons become detailed and metals are already a chaotic territory, but that should be worrying later. ”

Michael Brown, Senior Research Strategist, Pepperstone, London:

“The EU is hit by 15% tariffs, which is pretty punchy, but that’s good news as it’s half of the 30% that’s been threatened and 50% that Trump was throwing at the beginning of the month.”

“This is not a 15%-20% or not, but a risk that the transaction will not be deleted. At the very least, I’m not entirely sure whether it’s not that important, at least in terms of how the market trades when it runs for an hour or so.”

“The two obvious reactions you’re hoping for are above the euro and there are benefits in stock futures. I don’t think stocks in particular need a lot of excuses to rally together.

Eric Winograd, Chief Economist, Alliancebernstein, New York:

“This is very similar to the deal we reached with Japan.”

“We need to see how stubborn the side is to trade. From a market perspective, we feel at ease in the sense that trading is better than trading.”

Rick Meckler, Partner, Cherry Lane Investments, New Vernon, NJ:

“It really is in line with Japanese transactions. I think investors will be proactive when they see Japanese transactions. The reality is that there could be more tariffs depending on how much they are absorbed by the manufacturers and how much they are absorbed by the consumers.

From the administration’s perspective, I think they’ve probably started to address the balance of trade issues. The question remains whether using tariffs as a way to address these imbalances is positive for the global economy, or whether taxes that serve the US work here are positive. ”

(Reporting by Matt Tracy and Caroline Vallettkevich of New York, edited by Lucy Ratano and Karin Strohecker and Amanda Cooper of London, edited by Alexandra Hudson and Margherita Choi)

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