Closing summary: Is US-EU trade deal a relief, or 'submission'?
France’s prime minister, François Bayrou, said the EU had capitulated to Donald Trump, and the euro fell against the US dollar. But there has also been some relief that the US-EU trade deal may at least end the “will they, won’t they” speculation that has dominated the spring and summer.
The dollar’s strength may be short-lived, according to Javier Corominas, director of global macro strategy at Oxford Economics, a consultancy. He said:
FX markets have punished the greenback this year on two negative US-specific developments: heightened policy uncertainty and the negative real income shock for US consumers following the tariff announcements.
On a relative basis, the latter is expected to be worse for US growth than the global demand shock experienced by exporters to the US, where some diversification to other markets might take place, much like the strategy China effectively pursued during the US President Trump’s first term.
The uneven terms of the deal suggest that the EU has prioritised its short-term economic health over the longer-term arm wrestle with the US.
Jan-Paul van de Kerke, a senior economist at Dutch investment bank ABN Amro, said:
The unequal trade deal seems to be largely caused by Europe’s bad hand. Subpar economic performance and the recent bout of inflation meant national governments, especially in Berlin and France were unwilling to suffer economic pain to risk a better outcome. Furthermore, navigating member states’ deviating interests may have proved hard for negotiators. Finally, the EU remains dependent on the US for its security, both in terms of military support as for military imports and remains a net importer of energy.
The EU commitment to $750bn of energy imports from the US over the next three years is “unfeasible”, as it would imply a doubling of European gas imports, he added.
In other business and economics news today:
The Russian airline Aeroflot was forced to cancel dozens of flights on Monday after a shadowy pro-Ukraine hacking group claimed responsibility for what it said was a crippling cyber-attack.
Samsung has agreed a $16.5bn (£12.3bn) deal to manufacture artificial intelligence chips for Tesla, in a move hailed by Elon Musk.
One of the world’s most prominent hedge fund investors, Ray Dalio, has warned that the UK is stuck in a “doom loop” as it faces a worrying mix of higher taxes, rising debts and slower growth.
Britain is at risk of a worsening “climateflation” crisis amid the fallout from increasingly extreme weather that could drive up food prices by more than a third by 2050.
Gambling lobbyists are staging a summer charm offensive designed to stop ministers from raising taxes on the sector, the Guardian has learned, including meeting with Treasury insiders and hosting a darts evening with Labour special advisers and MPs’ staff.
You can continue to follow our live coverage from around the world:
Thank you for reading today, and please do join me bright and early tomorrow for more of the same. JJ
Key event
Donald Trump is answering questions from British media in Scotland. Amid comments on Gaza and immigration, Trump also suggested that US tariffs on pharmaceuticals are imminent.
He said the US will be announcing pharma tariffs in the very near future, according to Reuters.
It came after some confusion over whether pharmaceuticals will be included in the US-EU trade deal. Trump has claimed that medicines were not included, but European Commission president Ursula von der Leyen has said that the 15% baseline tariff agreed with Trump will apply. A senior US official later also said that they were in fact covered by the 15% tariff.
Yet the confusion highlights the difficulty that many companies still face in working out what will happen if they export to the world’s largest market, despite a “deal” being agreed.
(See also: UK steel imports are meant to attract zero US tariffs, but there has been no sign of that deal being honoured.)
US stock market indices have risen on Monday at the opening bell on Wall Street – but it is not quite the jump that we saw at the open in Europe.
Here are the opening snaps from Reuters:
S&P 500 UP 8.37 POINTS, OR 0.13%, AT 6,397.01
NASDAQ UP 62.17 POINTS, OR 0.30%, AT 21,170.49
DOW JONES UP 38.02 POINTS, OR 0.08%, AT 44,939.94
US dollar strengthens against euro in wake of trade deal
The US dollar has strengthened against the euro in the wake of the trans-Atlantic trade deal, as investors appeared to welcome an easing in Donald Trump’s trade war.
The euro dropped by 0.7% on Monday, with one euro buying $1.1648. That was a much bigger decline than other currencies relative to the dollar. The pound was down by less than 0.1%, with a pound buying £1.34.
The euro’s decline came after an initial jump (just before halfway along in the below chart) as trading restarted after the weekend break, when Trump and European Commission president Ursula von der Leyen agreed the framework deal. However, investor sentiment quickly shifted to a stronger dollar.
The question for investors will be whether that dollar strength will continue: many economists have said that tariffs – essentially taxes on US companies and consumers – will slow economic growth in the world’s largest economy. That would weaken demand for the greenback.
The dollar has weakened notably over the course of 2025, with a euro buying 13 cents more than it did on 1 January.
Dean Turner, chief eurozone and UK economist at UBS Global Wealth Management, said:
From an investment perspective, news of the trade agreement is likely to initially play out in foreign exchange markets. This could provide some support to the US dollar in the short term as trade uncertainty fades.
However, we would view any near-term rallies in the USD as opportunities to fade any strength, preferring to continue reducing or hedging USD exposures. Given the broader backdrop of easing trade tensions, our expectation remains that the dollar will gradually weaken into year-end.
At lunchtime across Western Europe, stock markets appear to have settled down after the initial excitement of the reaction to the US-EU trade deal.
The Stoxx 600, tracking the biggest European companies, is up 0.5%. Germany’s Dax index is flat, while France’s Cac 40 is up 0.3%.
Interestingly, the Italian FTSE MIB in Milan is performing more strongly. The lead riser is STMicroelectronics, up 3% amid a broad move up by computer chip companies. Otherwise, Italian banks appear to be performing well, wikth Banco BPM, BPER Banca, Unicredit and Intesa Sanpaolo all up between 1% and 3%.
The FTSE 100 is the worst performer of the big European stock markets (perhaps because it is not directly impacted by the trade deal – and has performed relatively well in recent weeks): it is down 0.2%.
US futures also suggest that Wall Street indices will rise at the open in about 90 minutes. S&P 500 futures suggest a 0.2% increase, while the tech-focused Nasdaq is set to rise 0.4%.
Heineken has said it could brew more beer in the US in order to try to avoid 15% tariffs on EU exports.
The world’s second largest beer brewer, behind only AB Inbev, said that it the end of uncertainty around the tariff rate – with a threat of levies of up to 30% – was welcome. However, chief executive Dolf van den Brink said the Dutch company would look at the possibility of shifting some production.
Reuters reports that he told journalists on Monday:
We look at all options from... continuing with our current setup, a more hybrid version, or otherwise. If and when we deem them financially to be more attractive in the mid- to long-term, we would for sure explore them.
Investing in breweries in the US would be costly, and would lock the company into producing with higher American labour costs. However, it could be attractive if if believes that the 15% tariffs will be in place for the long term.
FTSE 100 hits new record high before falling back
The FTSE 100 hit a new record in the opening trades this morning at 9,169.01 points – continuing the recovery from Donald Trump’s trade turmoil in April.
London’s blue-chip companies have recovered and then some from the pummeling they and businesses around the world received from the trade war uncertainty.
However, the index has lost its momentum in the late morning, and is now marginally down for the day. BT Group is the biggest faller, down 3.6%.
UK retailers report falling sales for 10th month in a row - CBI
UK retail sales slumped for the 10th consecutive month in July, according to a survey of the biggest shops that underlined the weakness of Britain’s consumer spending.
A third of retailers said that sales declined in July, according to a survey weighted by the size of the business, according to the Confederation of British Industry, a lobby group – although that was an improvement from the 46% balance who said sales had declined in June.
The retailers also reported worse expectations for next month.
The last time retailers in the survey reported sales growth was September. Since then the UK economy has struggled, with the economy not helped by the huge uncertainty caused by US tariffs. Data from the Office for National Statistics, this month showed that Britain’s official unemployment rate rose to 4.7% in the three months to May, up 0.1% from April to reach the highest level since June 2021.
Martin Sartorius, principal economist at the CBI, said:
Retail annual sales volumes continued to fall in July, although the pace of decline moderated from June’s sharp drop. Firms reported that elevated price pressures – driven by rising labour costs – and economic uncertainty continue to weigh on household demand, which has contributed to sales volumes falling since October 2024.
These trends of weak demand and uncertainty were mirrored across the wider distribution sector, with wholesale and motor trades also seeing declining sales.
UK economy to grow faster after tariff investment rush says EY Item Club
The UK economy will grow faster than previously thought after a stronger-than-expected start to the year, according to forecasters at EY – although some of the faster growth might have come from companies bracing for Donald Trump’s tariffs.
The EY Item Club, which tries to mimic government modelling, has upgraded its forecast for UK GDP growth in 2025 from 0.8% to 1%.
It said that came from a “significant increase in business investment, which rose by 3.9% in Q1”.
However, this is thought to partly reflect the acceleration of business investment and purchase decisions by some companies in March, ahead of the implementation of US tariffs in April.
That increase in business investment may not be sustainable in the second half of 2025, the forecasters said – and they do not expect any growth in business investment during 2026.
Anna Anthony, a regional managing partner at EY,said:
After a strong start to the year, uncertainty in the global economy and international trade policy has continued to slow momentum. While the agreement struck with the US offers welcome relief to certain sectors and boosts the trading outlook, the UK’s access to a key export market is still reduced from where it was at the start of 2025, which is likely to weigh on growth.
Business investment is expected to remain modest until 2027 and while interest rate cuts should reduce debt service costs and make financing cheaper, this will take time to materialise. Until then, businesses face a period of international uncertainty, alongside elevated labour and energy costs.
France's prime minister criticises EU 'submission' to US on trade
France’s prime minister, François Bayrou, has described the EU’s trade deal with the US as a “submission”.
Writing on the X social network, Bayrou, who leads France’s government and is second only to President Emmanuel Macron, said:
It is a dark day when an alliance of free peoples, united to affirm their values and defend their interests, resolves to submission.
It is not, then, a rousing reception for the trade deal from EU leaders. However, the leaders are unlikely to try to derail the deal; indeed, complaining about EU policies while quietly accepting them is a well trodden path for leaders of individual countries.
Russian airline cancels flights as online group claims 'hack'
Russian airline Aeroflot has said it cancelled more than 40 flights on Monday “due to a failure in our information systems”, with an unverified online statement claiming it was the result of a hack.
The state-owned airline announced the cancellations on the Telegram social network. It did not give a reason for the failures.
However, an online statement purporting to be from a hacking group called Silent Crow claimed responsibility on Monday for an attack, Reuters reported.
Aeroflot told passengers of cancelled flights at Moscow’s Sheremetyevo Airport to collect their previously checked baggage, and to leave the airport. Reuters again:
News outlet Baza reported scenes of chaos at the airport, with logjams forming as passengers queued just to get out.
Aeroflot has been limited mainly to internal flights since Russia’s full-scale invasion of Ukraine in 2022, as well as cities in allied countries like Minsk in Belarus. Yet it remains a crucial part of transport infrastructure across the world’s biggest country by geographical area.
Updated
Also on the automotive chip front, the share price of South Korea’s Samsung Electronics jumped 6.8% on Monday after it agreed a semiconductor supply deal with Elon Musk’s Tesla.
Musk said the companies signed a $16.5bn supply deal. Samsung agreed to allow Tesla and Musk access to the fab to “maximise manufacturing efficiency” for its newest chip, labelled A16.
The deal will be seen as a major fillip for Samsung, which has struggled to keep up particularly with Taiwan’s TSMC when it comes to manufacturing the most advanced chips.
Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency.
— Elon Musk (@elonmusk) July 28, 2025
This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house 😃
It has also been a positive start for European semiconductor companies. A 15% tariff is bad news, but it is not a disaster for the sector – which is crucial to US ambitions to be the world leader in artificial intelligence.
No European company is more crucial than ASML, the maker of the advanced lithography machines that use extreme ultraviolet light to etch transistors at the nanometre scale. Its machines are the only ones capable of making the world’s most advanced chips. Its share price gained 4% on Monday.
STMicroelectronics, which supplies Apple and Tesla, rises 3.1% in Milan, Germany’s Infineon, which mainly serves the global automotive market, gained 2.2%.
Germany’s car industry lobby group has expressed relief that the EU and US could reach a deal – but they are hardly overjoyed.
Hildegard Müller, president of the German Association of the Automotive Industry (VDA), said it was “fundamentally positive” that the two sides had prevented further escalation of the dispute started by Donald Trump. However, she added:
It is also clear that the US tariff of 15% on automotive products will cost German automotive companies billions annually and place a burden on them in the midst of their transformation.
The hit to Germany’s carmakers is expected to come through lost sales if they pass the tariffs on to American buyers, or through a hit to their margins if they absorb the cost themselves.
Either way though, the tariffs will function effectively as a tax on US consumers, who must either pay a higher price, or else see protected US manufacturers able to raise prices themselves.
European carmakers' share price rise on US-EU trade deal
The relief for European carmakers is clear.
The 15% deal averted a 30% tariff on 1 August. Mercedes-Benz’s share price rose 1.8% to its highest since late March, and Porsche gained 1.7%.
Volkswagen gained 0.8%, although its gained were limited by a cut in guidance from its premium brand, Audi, which cut its sales forecasts by a further €2.5bn because of the tariffs. Reuters reported:
Audi now expects revenue between €65bn and €70bn, down from a previous range of €67.5bn to €72.5bn, and an operating margin between 5 and 7%, down from a previous range of 7 to 9%.
Stellantis, a group forged from a mixture of brands spanning from Detroit, to Italy and France, gained 1.2%.
Investors might be cheered, but the reaction this morning from European leaders to the EU’s trade deal with the US is decidedly mixed.
Hungary’s prime minister, Viktor Orbán, has long been one of the most divisive voices within the EU, and he wasted no time in criticising European Commission President Ursula von der Leyen for what he described as a worse deal than the UK managed to secure. According to Reuters, Orbán told a podcast:
This is not an agreement ... Donald Trump ate Von der Leyen for breakfast, this is what happened and we suspected this would happen as the US President is a heavyweight when it comes to negotiations while Madame President is featherweight.
Belgium’s prime minister, Bart de Wever, struck a different tone – firmly placing the blame for tariffs on Donald Trump. He posted on the social network X:
This is a moment of relief but not of celebration.
I sincerely hope the United States will, in due course, turn away again from the delusion of protectionism and once again embrace the value of free trade – a cornerstone of shared prosperity. In the meantime, Europe must continue to deepen its internal market, cut unnecessary regulation, and forge new partnerships to diversify our global trade network. May Europe become the beacon of open, fair, and reliable trade the world so urgently needs.
Global stock markets rise after trade deal averts spiralling EU-US tariffs
Good morning, and welcome to our live coverage of business, economics and financial markets.
Global stock markets have rallied after the US and EU agreed a trade deal, removing a major source of uncertainty for companies around the world even as it promised a permanent cost to trans-Atlantic goods trade.
European stock markets surged on the opening bell on Monday, a day after US President Donald Trump and European Commission President Ursula von der Leyen, shook hands on a deal in Turnberry, Scotland, on Sunday. Germany’s Dax rose 0.8% in early trading, France’s Cac 40 gained 1%, while Spain’s Ibex gained 0.8%. The FTSE 100 in London gained 0.5%.
Asian stock markets also mostly rallied. Australia’s ASX200 rose by 0.4%, Hong Kong’s Hang Seng rose 0.4%, Korea’s Kospi index gained 0.6%, while Shanghai’s CSI300 gained 0.1%. However, Japan’s Nikkei 225 fell by 1% amid doubts over the details of its own trade deal with the US.
The US-EU deal will put a 15% US tariff on most imports from the EU, including cars and computer chips. Steel and aluminium still face 50% tariffs – but only above certain quotas.
There are zero tariffs on aerospace parts, some chemicals and raw materials. The EU will also agree to buy $750bn in US energy, and more military equipment – both of which fit with moves since Russia’s invasion of Ukraine in 2022.
There is good news and bad news in the deal, said Holger Schmieding, chief economist at Berenberg, an investment bank:
The crippling uncertainty seems to be largely over. The trade deal which the US and the EU struck in Scotland on Sunday with a 15% tariff on most US goods imports from the EU is bearable for the EU, much more so than the 30% tariff would have been which US president Donald Trump had threatened before.
However, the outcome remains much worse than the situation before Trump started his new round of trade wars early this year. The extra US tariffs will hurt both the US and the EU. […] The trade tensions with the US will subtract a cumulative 0.3 percentage points from European and 0.5 percentage points from German growth in 2025 and 2026 taken together.
The deal is asymmetric. The US gets away with a substantial increase in its tariffs on imports from the EU and has secured further EU concessions to boot.
The agenda
11am BST: UK Confederation of British Industry distributive trades (retail) survey (July; previous: -46%; consensus: -26%)
12:30pm BST: Donald Trump press conference in Scotland
