The US and EU avoid tariffs
See upcoming days in Gregor Stuart Hunter’s European and Global Markets
You may be hearing a lot about the art of trading this week.
It is the EU’s turn to announce a trade deal with the White House, despite being distorted by US favor as US tariff deadlines keep the global economy down at the end of this week.
The agreement reduced baseline tariffs on most European imports to 15% from the Trump administration’s previous 30% threat, and contracted the EU to invest around $600 billion in the US.
Governments around the world are competing to reach a trade agreement with the United States to avoid the imposition of tariffs on the release date, originally announced on April 2.
There could also be a report going on Monday, showing that talks were held between the US and China in Stockholm, with fee deadlines being extended for another 90 days.
Vasu Menon, managing director of OCBC’s investment strategy in Singapore, said, “The 15% tariff is a surprising surprise as it is half of what the US threatened to impose on the EU. We also hope that other major US trading partners will be able to quickly attack transactions of this nature.”
The transaction appears to reflect what was hit between the US and Japan last week, with a pattern of unilateral investments emerging in exchange for lower tariffs. It could indicate what to expect when talks with other large economies like China, South Korea and Taiwan get wired.
The EU’s new US tariff rate ranges to medicinal and pharmaceutical and automobiles, the bloc’s biggest export to the US last year. The next biggest segment, the aircraft and its components, will have zero tariffs of zero, but the US will maintain a 50% tariff on steel and aluminum.
Investors welcomed trade contracts that could avoid a trade war and bring clarity to businesses.
Pan-region futures rose 1%, Germany’s Dachshund futures rose 1%, while FTSE futures rose 0.5%. US stock futures rose 0.4% after trading, bringing the S&P 500 on track with six consecutive days of profit and potentially new peaks.
Revenues from Heineken will be headlined in the corporate diary on Monday as the world’s second-largest brewer counts tariff costs. However, the company’s stock could be boosted by a new comprehensive framework deal, along with automakers and drug makers in the region.
Important developments that could impact the market on Monday:
Revenue: Heineken NV, Wise PLC, Essilorluxottica SA
UK Data: CBI Distribution Transactions in July