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    How Trump muddles the stock market

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  • 138 Shares199 Views

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    The EU-U.S. trade deal could have one unexpected winner: The UK

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    The European Union-U.S. trade agreement has been met with scepticism as concerns over what it means for the bloc have emerged.
    Some experts however argue that it could benefit the U.K.
    While the EU is facing 15% tariffs, the U.K.’s baseline duties have been set at 10%.

    Keir Starmer, UK prime minister, left, and US President Donald Trump, ahead of their meeting at the Trump Turnberry golf course in Turnberry, Scotland, on Monday, July 28, 2025.
    Tolga Akmen/EPA/Bloomberg via Getty Images

    As world leaders and economists across Europe digest the news of the EU-U.S. trade agreement, some experts told CNBC that while it may be bad news for the bloc, the deal could serve as an unexpected boost to the U.K.
    The European Union is facing a higher 15% tariff rate on its goods imported to the U.S. compared to the 10% levy the U.K. has agreed to.

    “In theory, the UK benefits,” Philip Shaw, chief economist at Investec, told CNBC.
    “The new EU tariff of 15% means that UK exports to the US have become relatively cheaper, which could boost British trade with the US as American firms buy goods from Britain rather than the EU,” he explained.
    U.K. goods would also be cheaper for U.S. consumers due to the lower tariff rate, meaning they may favor British products over those manufactured in the EU, Alex Altmann, partner and head of Lubbock Fine LLP’s German desk, suggested in a note published shortly after the EU-U.S. deal was announced.

    Europe balks at ‘unbalanced’ U.S. trade deal

    “The UK’s lower US tariffs do offer a major incentive for EU companies to shift some of their manufacturing bases to the UK or to expand their existing UK facilities,” he added.
    EU-based manufacturers with low profit margins in particular could find the idea of moving to the U.K. attractive to avoid a further squeeze on those margins, Altmann explained, noting that the U.K. has spare manufacturing capacity due to Brexit.

    “The UK could be a big indirect winner of this agreement,” Altmann added.
    But the benefits to the U.K. are not only linked to the country’s lower tariff rate. Indeed, the EU managing to secure a 15% levy, which is far lower compared to the 30% the bloc was threatened with by U.S. President Donald Trump, could also be a positive for the U.K. according to Investec’s Shaw.
    “The EU has escaped from a possible major downturn from a more onerous (i.e. 30%) tariff regime and possibly a series of retaliatory measures between the two trading blocs. Here the UK benefits from its major trading partner averting a recession which could have resulted in a decline in UK exports to the EU,” he said in written comments.

    How likely is the boost to the U.K. to materialize?

    The EU-U.S. reaching an agreement has also hampered the potential impact, Beth McCall, an international trade lawyer at Dentons told CNBC.
    “If the US had proceeded with 30% tariffs against most EU goods, UK goods with a 10% tariff, which is paid by the US importer in most circumstances, could have appeared significantly more attractive,” she said.
    McCall noted that the expected difference in the baseline tariff rate, which amounts to just 5%, may still make some U.K. goods more attractive. However, she noted, “this will take time to be seen as existing contracts come to an end and US importers search for imports from countries carrying a lower tariff.”

    Trump’s Scotland visit opens door for UK to settle some unfinished business

    Questions have been raised about the timeframe for the impact of tariffs being felt around the world has been a frequently debated question. Companies have already flagged that tariffs are expected to weigh on their earnings, and there have been widespread warnings of how the duties could impact economic growth.
    But as many details of the trade agreements have yet to be ironed out, their precise exact impact is still unclear. Some of the effects may also take time to be felt, for example rising costs for consumers may only materialize after some time.
    Ultimately, both the U.K. and EU are now facing a more difficult environment, McCall said.
    “Whether the new rate is 10% or 15%, UK and EU businesses will still face far higher tariffs when exporting to the US than they did three months ago,” she said. More

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    The market is looking through the tariffs

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  • 225 Shares189 Views

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    Even with high tariffs, Trump’s trade war suddenly is starting to look not so scary on Wall Street

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    Tariffs appear to be settling only slightly less than what President Donald Trump had threatened in April, but the difference has been enough to ease some of Wall Street’s worst recession fears.
    Economists cite a strong global growth backdrop, a less-than-expected inflationary impact of the tariffs and a general easing in financial conditions as reasons for why the landscape looks less dire.

    U.S. President Donald Trump talks to the media as he meets with British Prime Minister Keir Starmer (not pictured) at Trump Turnberry golf club on July 28, 2025 in Turnberry, Scotland.
    Christopher Furlong | Getty Images

    U.S. tariffs on incoming goods look to be settling in only slightly less than what President Donald Trump had threatened in April, but the difference has been enough to ease some of Wall Street’s worst recession fears.
    With the U.S.-European Union trade deal over the weekend, it now appears that the effective tariff rate, or the net impact aside from the nominal level, will end up in the 15%-20% range. That’s well above the low single-digit rate in place at the beginning of the year, but well off the feared 25% rate or worse that could have happened as a result of the April 2 announcement.

    Economists had feared that aggressive tariffs Trump proposed in his April 2 “liberation day” announcement would spike inflation and lead to a pronounced slowdown or recession.
    But doomsday pronouncements around the tariffs have abated since then. Economists cite a strong global growth backdrop, a less-than-expected, long-term inflationary impact of the tariffs and a general easing in financial conditions as reasons for why the landscape looks less dire.
    JPMorgan Chase, for instance, has lowered its recession risk from a liberation-day level of 60% down to 40% — still higher than normal, but at least less pessimistic.
    “Tariffs are a tax hike on U.S. purchases of foreign goods, but this tax drag is not likely to be large enough to derail the U.S. expansion,” JPMorgan chief economist Bruce Kasman said in a note.
    Like others, the bank had expected the Trump tariffs to result in a damaging round of retaliation globally. “But an expected rise in global trade restrictions has turned into a modest step toward opening markets for the U.S.,” Kasman said.

    Tariffs still a danger
    Commentary around Wall Street following the U.S-EU deal for 15% tariffs echoed the belief that the recession risk had dimmed, even if tariffs still have the strong potential to exert a stifling impact on growth.
    “We still believe the most likely outcome is slow growth and firm inflation: Not a recession, but a backdrop where the adverse effects of trade and immigration controls on growth outweigh the boost from deregulation and fiscal largesse,” Morgan Stanley strategist Michael Zezas wrote.
    To be sure, the final outcome of the trade negotiations is far from clear.
    There are still a slew of other issues that need to be settled before Trump’s imposed Aug. 1 deadline, which could still result in significant levies affecting major U.S. trading partners, including Japan and others.
    Further aggression in the trade skirmishes “could easily tip the scales toward a mild recession,” Zezas added. “In sum, we see outcomes for the U.S. economy skewing toward a slowdown, but with more clarity on the fiscal situation and deficits now front-loaded, the risk of a substantial recession is easing.”
    The U.S.-Europe deal will give the Federal Reserve more to chew on this week when it discusses the impact that tariffs will have on inflation. Since Trump has taken office, the Fed has held its benchmark short-term interest rate steady, in large part because policymakers are cautious over the impact tariffs will have on inflation.
    Markets don’t expect any action at the meeting, which concludes Wednesday. But they will be watching for clues on the Fed’s further intentions, which will be influenced by where the final effective tariff rate lands.
    The Fed is expected to approve a rate cut in September, and the chances of that happening seemingly would increase if the economy weakens while inflation is held in check.
    “Effective tariff rates are significantly higher than they were at the start of the year,” Citigroup economist Andrew Hollenhorst wrote. “But with major trading partner tariffs stabilizing closer to 15% than the much higher rates proposed on April 2, markets and Fed officials will be increasingly confident that the drag on growth and upside risk to inflation will be modest.” More

  • 113 Shares189 Views

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    What have the US and EU agreed on trade?

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