EU’s von der Leyen has ‘good exchange’ with Trump
Lisa O’Carroll
European Commission president Ursula von der Leyen and Donald Trump had a “good exchange” on Sunday, raising hopes of a deal by Wednesday, the US president’s self-imposed deadline for trade deals.
Olof Gill, the EU trade spokesperson, told reporters during a daily press briefing that:
“We want to reach a deal with the U.S. We want to avoid tariffs. We believe they cause pain. We want to achieve win-win outcomes, not lose-lose outcomes”.
As covered in our introduction, the Trump administration has said letters would go out from today notifying trading partners who don’t have a deal by 9 July of the higher tariffs that would take effect on August 1.
The EU is demanding immediate relief from tariffs on cars, which currently stand at 29.5% and reduction of tariffs in steel, as part of a UK-style framework deal that is being negotiated.
Both sides were locked in talks over the weekend after a high level delegation led by trade commission Maros Šefčovič to Washington last week.
Among those he met were treasury secretary Scott Bessent who remarked over the weekend that “good progress” had been made with the EU after and initial impasse.
Incidentally, our Europe Blog has all the main developments from across the continent:
Key events
Lisa O’Carroll
European Commission president Ursula von der Leyen is expected to phone EU leaders today to take soundings on a draft framework deal with the US on tariffs, details of which have not been disclosed.
“We’re fully geared up to get an agreement in principle by Wednesday, and we’re firing on all cylinders to that effect,” Olof Goll, the EU trade spokesperson, added.
The deal is expected to include an agreement on reducing the current 27.5% tariff on car exports, something Germany badly wants, but also a potential standstill clause on tariffs on sectors including pharma and semi-conductors, while negotiations on a wider deal take place.
Dow to shut basics siloxanes plant in Barry, and two plants in Germany
Chemicals producer Dow has announced plans to shut three upstream plants in Europe, including one in the UK, and cut around 800 jobs.
Dow blamed the closures on structural challenges in the region, and said it planned to remove higher-cost, energy-intensive portions of its European portfolio, Reuters reports.
Under the plan, a Basics siloxanes plant in Barry, UK is set to close by the middle of 2026.
Two plants in Germany – an Ethylene cracker in Böhlen, and a Chlor-alkali & vinyl (CAV) assets in Schkopau – are to close by the fourth quarter of 2027.
CEO Jim Fitterling said:
“Our industry in Europe continues to face difficult market dynamics, as well as an ongoing challenging cost and demand landscape.”
The 800 roles affect are on top of the 1,500 job cuts announced in January, through a $1bn cost-cutting programme.
Back in April, the Unite union warned that almost three hundred jobs were at risk at the Basics area of Dow’s plant in Barry, Vale of Glamorgan.
The goal posts are shifting again on the trade and tariff issue, reports Brad Bechtel,
global head of FX at Jefferies.
Bechtel explains:
President Trump has indicated countries will have until Aug 1 before new tariffs kick-in as they rush to complete trade deals with countries around the world.
July 9 had been the working deadline and the administration is indicating that a slew of deals is in the hopper for this week, but the new quasi-extension was thrown out there this past weekend. Trump also indicated that trade deals will be announced today at 12pm. The EU and Japan are two of the larger deals to be resolved and EU officials claimed they were still working towards the Wednesday deadline to come to a conclusion.
Trump indicating he will ‘have a deal or letter with most nations done by July 9’ but will start announcing deals today. He also threw in an extra 10% tariff for anyone ‘aligning’ with BRICS, whatever that means.
Bangladesh’s interim government is anticipating a favorable resolution in trade negotiations with the US.
“We’ve had at least seven rounds of negotiations, both virtual and in-person, and we expect a positive outcome,” commerce secretary Mahbubur Rahman said in an interview on Monday, Bloomberg reports.
Rahman also said the US has hinted at creating two separate trade bands — one for least developed countries or LDCs, a group that includes Bangladesh, and the other for the remaining trading partners.
Bangladesh was one of the countries hardest hit by Donald Trump’s trade war announcement of early April; it faced a new tariff of 37% on its imports to the US.
EU’s von der Leyen has ‘good exchange’ with Trump
Lisa O’Carroll
European Commission president Ursula von der Leyen and Donald Trump had a “good exchange” on Sunday, raising hopes of a deal by Wednesday, the US president’s self-imposed deadline for trade deals.
Olof Gill, the EU trade spokesperson, told reporters during a daily press briefing that:
“We want to reach a deal with the U.S. We want to avoid tariffs. We believe they cause pain. We want to achieve win-win outcomes, not lose-lose outcomes”.
As covered in our introduction, the Trump administration has said letters would go out from today notifying trading partners who don’t have a deal by 9 July of the higher tariffs that would take effect on August 1.
The EU is demanding immediate relief from tariffs on cars, which currently stand at 29.5% and reduction of tariffs in steel, as part of a UK-style framework deal that is being negotiated.
Both sides were locked in talks over the weekend after a high level delegation led by trade commission Maros Šefčovič to Washington last week.
Among those he met were treasury secretary Scott Bessent who remarked over the weekend that “good progress” had been made with the EU after and initial impasse.
Incidentally, our Europe Blog has all the main developments from across the continent:
“Time is money” when it comes to tariff negotiations between the European Union and the United States, a German government spokesperson has said.
The spokesperson says:
“Time is money in the truest sense of the word.”
They added that German Chancellor Friedrich Merz had discussed the matter with EU Commission President Ursula von der Leyen and the leaders of France and Italy at the weekend, explaining:
“In this respect, we should give ourselves another 24 or 48 hours to come to a decision.”
Kremlin denies BRICS works against other countries
The Kremlin has insisted that the BRICS group of nations had never been working to undermine other countries.
Kremlin spokesman Dmitry Peskov said the Kremlin had taken note of Donald Trump’s threat to impose a 10% tariff on those aligning themselves with its “anti-American policies”.
Peskov added:
“We have indeed seen such statements by President Trump, but it is very important to note here that the uniqueness of a group like BRICS is that it is a group of countries that share common approaches and a common world view on how to cooperate based on their own interests.
“And this cooperation within BRICS has never been and will never be directed against any third countries”.
The US-Vietnam trade deal announced last week “raises hopes” for agreements with other emerging markets (EMs), says Jon Harrison of City firm TS Lombard.
Harrison told clients:
The US administration has indicated that deals are close to completion for 10 major trading partners. Most larger and mid-sized EM are among the major trading partners, but are aiming for a tariff of less than the 20% agreed with Vietnam, while few will be prepared to allow the zero tariff access to all US products granted by Vietnam.
At the same time, however, most EM have more to offer in terms of delivering investment and jobs to the US as well as being potentially larger markets for US exports. Our base case remains that for most EM there will either be phase one deals, or sufficient progress made to justify a delay in threatened tariffs.
There are nonetheless risks to this scenario as the deadline approaches, with lack of progress and potential sticking points in a number of countries, including India, South Korea and Taiwan, meaning that one or more countries could face punitive tariffs, even if only temporarily.
South Korea, for example, has asked to delay the deadline, although Trump has previously said that in general there would be no delays
The indications that new US tariffs could kick in on 1 August, rather than this week, could bring some relief to markets.
But that’s probably countered by Donald Trump’s threat of a new 10% tariff on imports from BRICS-aligned countries.
This has left the Stoxx 600 up 0.16% in early trading, with Germany’s DAX index gaining 0.6%.
Joshua Mahony, chief market analyst at Rostro, explains:
A mixed affair for European equities this morning, with traders weighing up the implications of Donald Trump’s decision to delay the reciprocal tariffs (against) set against the threat of a 10% BRICS tax. Whether it is a case of him chickening out, he clearly does not want to implement the reciprocal tariffs in their original format, and thus what started as April, pushed to July, and now turns to August.
There will be many that see this as weakening his hand as nations note his unwillingness to follow through on his threats. Nonetheless, this once again provides markets with a breather, bringing over three-weeks longer until tariffs kick in.
After last week’s gyrations, the UK bond market is looking calmer this morning.
The prices on UK short and long-term government bonds have risen slightly, which has pulled down yields (the effective interest rate on the debt) a little.
The yield on 10-year gilts is hovering around 4.538%, down two basis points from Friday night’s close of 4.552%.
That’s lower than the 4.633% hit last Wednesday, when uncertainty over chancellor Rachel Reeves’s future hit the bond market. But it’s still higher than the 4.498% set at the end of June, before worries about change at the top of the Treasury pushed up borrowing costs.
Dean Turner, economist at UBS, suggests gilts could be attractive at current levels, telling clients:
We learned last week that any attempt to curb spending is going to prove almost impossible for this government, even with such a large majority. This inevitably means taxes are going up. The sooner the government is honest with the public and gets the deed done, the better.
For investors in the gilt market, the volatility is likely here to stay for the time being. But this does not mean gilts do not look attractive, especially relative to cash, as interest rates will be much lower by the time the government’s second anniversary comes around.
Despite the uncertainty over tariffs, investor sentiment in the eurozone has hit its highest level in over three years.
The Sentix index, which tracks euro area investor morale, has risen to 4.5 points this month, a rise of 4.4 points, its highest reading since February 2022.
#sentix Economic Index: Upswing gains breadth – third increase in a row
In the eurozone, the overall index rose by 4.4 points to reach +4.5 points, its highest level since February 2022. Current situation values in particular are now picking up. A plus of +5.8 points means the… pic.twitter.com/nmjZ65jsdt— sentix (@sentixsurvey) July 7, 2025
A measure of the current economic situation rose, but remained in negative territory, while a gauge of economic expectations also increased.
Sentix says:
Overall, the global upturn is gaining in breadth. The US economy in particular is making up ground. After the weak previous months, the US economy showed the greatest growth in July. The regions of Japan and Asia ex Japan are also providing growth impetus.
