EU waits on Trump letter as markets digest latest tariff salvo

Economic

Summary:

The EU braces for a Trump letter detailing new tariffs, amid stalled trade talks and rising tensions. While Germany urges a quick deal, divisions persist within the bloc. Markets remain cautious.

The European Union braced on Friday to receive a letter from U.S. President Donald Trump, outlining planned duties on his largest trade and investment partner after a broadening of his tariff war in recent days.

The EU initially hoped to strike a comprehensive trade agreement, including zero-for-zero tariffs on industrial goods, but months of difficult talks have led to the realisation it will probably have to settle for an interim agreement and hope something better can still be negotiated.

The 27-country bloc is under conflicting pressures as powerhouse Germany urged a quick deal to safeguard its industry, while other EU members such as France have said EU negotiators should not cave into a one-sided deal on U.S. terms.

After keeping much of the world guessing on his intentions, Trump has outlined new tariffs for a number of countries, including allies Japan and South Korea, along with a 50% tariff on copper, and a hike to 35% on Canada.

"We would need a crystal ball to detect what the U.S. intentions are," an EU diplomat said on condition of anonymity.

Another source with knowledge of the U.S.-EU negotiations said an agreement was close, but that it was hard to predict if the EU might still get a letter announcing more tariffs or when any agreement might be finalised.

One European industry lobbyist said it was nearly impossible to anticipate Trump’s thinking. “It’s policy by Truth Social,” the lobbyist said, referring to Trump's social media platform.

European shares dipped on Friday as investors awaited word on tariffs for the EU.

"The EU has been negotiating with the U.S. about the sector tariffs and also about the reciprocal tariffs...everybody was expecting that there would be a better trade deal coming, but now it looks like it will be a worse outcome," said Jochen Stanzl, chief market analyst at CMC Markets.

Stanzl added a rally on Germany's DAX reflected hopes of a better trade deal with the United States, but that the tariffs on Canada, despite weeks of talks, had cast some doubt on whether it could be achieved.

Elsewhere U.S. Secretary of State Marco Rubio met with Chinese Foreign Minister Wang Yi in Kuala Lumpur on Friday, as the two powers vied to push their agendas in Asia as tension simmers over Trump's tariffs.

Rubio said the meeting was "very constructive," while adding the two sides had issues to resolve.

China this week warned the United States against reinstating hefty levies on its goods next month and Beijing has also threatened to retaliate against nations that strike deals with the United States to cut China out of supply chains.

EU trump versus the EU

Trump has periodically railed against the EU, saying in February that it was "formed to screw the United States" and asking why Europe exports so many cars but buys so few from the U.S. in return.

His biggest grievance is the U.S. merchandise trade deficit with the EU, which in 2024 amounted to $235 billion, according to U.S. Census Bureau data. The EU has repeatedly pointed to the U.S. surplus in services that in part redresses the balance.

The potential escalation between the EU and the U.S. is a big deal for financial markets, said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia. "If you get something similar to (the U.S.-China trade war in April), that's going to be very destabilising."

In an interview with NBC News published on Thursday, Trump said other trading partners that had not yet received such letters would likely face blanket tariffs.

"Not everybody has to get a letter. You know that. We’re just setting our tariffs," Trump said in the interview.

“We're just going to say all of the remaining countries are going to pay, whether it’s 20% or 15%. We’ll work that out now,” Trump was quoted as saying by the network.

source : Reuters

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Warren Takunda

Economic

Cryptocurrency

Bitcoin has reached a new all-time high, trading at more than $118,000 (€100,000) on Friday. It followed an enthusiastic trading day on the US stock markets on Thursday, where the main index for tech companies, the Nasdaq, hit a record value.

Interest in Bitcoin was fuelled by a bullish, optimistic trading outlook across risk assets and an appetite for investment in tech companies, such as Nvidia, which recently surged to a $4 trillion valuation.

Bitcoin’s all-time high also comes days before what the US House of Representatives, one of Congress’ two chambers, has labelled as “Crypto Week”, starting on 14 July. This is when lawmakers are expected to debate a series of bills that could define the regulatory framework for the industry in the United States.

Bitcoin gained more than 20% this year against the US dollar.

Bloomberg’s data shows that investors poured around $1.2 billion (€1bn) into Bitcoin ETFs (exchange-traded funds) on Thursday, pushing the price to a new high beyond $116,000 before the rally continued on Friday.

Much of the investments pouring into crypto came through ETFs. Cryptocurrency-based ETFs make it easier for investors to gain exposure to cryptocurrencies without having to buy them directly. These funds have exploded in popularity since bitcoin ETFs began trading in US markets last year.

The strong interest in crypto boosted the price of the second-biggest crypto asset, too. Ethereum gained more than 6%, and traded at around $3,000 (€2,600) on Friday.

Meanwhile, the US President continues to expand his crypto-related offerings. Trump was once a bitcoin sceptic but has since warmly embraced the cryptocurrency industry.

On Tuesday, his family business Trump Media filed paperwork at the Securities and Exchange Commission for approval to launch the "Crypto Blue Chip ETF" later this year.

This is a new exchange-traded fund tied to the prices of five popular cryptocurrencies. The proposed ETF would have 70% of its holdings in bitcoin, 15% in Ethereum, and 8% in Solana, a cryptocurrency popular in the meme coin community.

The Trump administration has pushed for crypto-friendly regulations and laws, in line with the president’s ambitions to make the US the world capital for crypto.

"If we didn't have it, China would," Trump said.

Source: Euronews

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Glendon

Economic

Forex

Vietnam’s leadership was caught off guard by US President Donald Trump’s announcement last week that it agreed to a 20% tariff, and the Southeast Asian nation is still seeking to lower the rate, according to people familiar with the matter.

Straight after last Wednesday’s call with Trump, Vietnam’s party chief To Lam told his negotiating team to keep working to bring the tariff rate down, the people said, asking not to be identified as the talks are confidential. The 20% figure came as a surprise as Vietnam believed it had secured a more favorable tariff range, the people said.

Before the call, Vietnam had been pushing for a tariff in the 10%-15% range.

There’s been little mention of the 20% tariff in Vietnam’s state media. In a government memo seen by Bloomberg News, which was sent to local press, it gives instructions not to post content that is unclear or speculative in nature and without consensus between Vietnam and the US.

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Vietnam’s Ministry of Foreign Affairs didn’t immediately respond to a request for comment.

The Southeast Asian nation, an export powerhouse that last year had the world’s third-biggest trade surplus with the US, was only the second country after the UK that Trump has announced a trade agreement with. Trump has been issuing tariff letters to dozens of trading partners since then, slapping duties as high as 50% ahead of an Aug. 1 deadline.

The day after Trump’s Truth Social post on Vietnam, in which he called Lam “an absolute pleasure” to deal with, the country’s Ministry of Foreign Affairs said trade negotiators were still coordinating with their US counterparts to finalize the details of the agreement.

Since then, Vietnam’s leaders have skirted the issue in official comments. Prime Minister Pham Minh Chinh instead focused on Vietnam’s efforts to diversify export markets and supply chains to adapt to the new tariff policy and his comments were echoed a few days later by a deputy trade minister.

Trump’s announced rate of 20% would replace the current 10% baseline, but still add on to some other pre-existing levies such as ‘Most Favored Nation’ tariffs, according to a US official who requested anonymity to discuss the matter. That would push the typical total average effective rate above 20%. US sectoral tariffs, such as on automobiles and steel, are separate from the 20% rate but not cumulative — importers pay one or the other.

Source: Yahoo Finance

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Adam

Commodity

Oil Prices Steady Below Resistance as Market Eyes Tariffs and Sanctions

Daily Light Crude Oil Futures

Light crude oil futures held near flat on Friday, trading below the long-term pivot at $67.44, which now acts as near-term resistance for traders gauging momentum. A break above this level and this week’s high at $68.94 could trigger a move toward the short-term pivot at $71.20, marking the 50% retracement from $78.40 down to $64.00.

On the downside, the 200-day moving average at $65.29 remains key support, with potential buyer interest on the first test. If this level fails, deeper selling could extend toward the 50-day moving average at $63.20, keeping downside risk in focus for crude traders seeking entry and protective stop levels.

IEA and OPEC Diverge on Oil Prices Forecast

Crude oil news today is centered on the International Energy Agency’s latest report, which increased its supply growth forecast while trimming demand growth expectations for this year. However, peak summer refinery runs to meet travel and power demand are maintaining near-term market tightness, offering a floor under prices despite the broader demand concerns.

Brent futures traded with a front-month September premium of $1.11 over October, reflecting a tight prompt market structure. Meanwhile, OPEC’s latest World Oil Outlook revised lower its global oil demand projections for 2026 to 2029, citing slowing Chinese demand, a longer-term bearish signal traders will monitor for positioning adjustments.

Tariff Risks and Russia Sanctions Weigh on Oil Sentiment

Both Brent and WTI contracts were little changed on the week, with Brent up 0.8% while WTI edged 0.3% lower, reflecting the market’s caution amid tariff uncertainties tied to President Trump’s evolving policies. Both benchmarks fell over 2% on Thursday as concerns grew over the potential drag on global growth and oil demand from new tariff measures.

Prices recovered slightly after President Trump signaled plans for a “major” statement on Russia, raising the risk of further sanctions. ING analysts noted this development could leave markets nervous, increasing volatility as traders await clarity.

Saudi Crude Exports to China Highlight Robust Prompt Demand

Traders also noted signs of solid prompt demand, including expectations that Saudi Arabia will ship around 51 million barrels of crude to China in August, the highest in over two years. This reinforces a floor under the market, counterbalancing weaker longer-term demand projections and maintaining a firm structure for front-month contracts.

Crude Oil Market Outlook: Cautiously Bullish While Below Pivot

In conclusion, the crude oil market retains a cautiously bullish undertone, underpinned by tight summer demand and strong prompt structures, while broader headwinds from tariffs, potential Russian sanctions, and revised demand projections temper upside potential.

A sustained move above $67.44 and $68.94 could attract fresh buyers aiming for $71.20, while failure to hold $65.29 may expose crude to deeper corrective moves toward $63.20.

Traders should remain alert for policy updates from President Trump and the European Commission’s floating Russian oil price cap proposal, both of which could significantly influence near-term crude oil price projections.

source : fxempire

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Michelle

Economic

Forex

There’s a common notion that since Trump’s initial round of China tariffs in his first administration, the US has become drastically less reliant on the Asian nation. Headline data certainly suggests that, with the US share of imports from China falling in just a few years to about 13% in 2024 from nearly 22% in 2017.

But the reality is far less clear-cut. In a new paper from researchers including those at the World Bank and International Monetary Fund, that figure should actually be higher, closer to 16%.

Analysts computed the headline trade figures in addition to estimates of transshipments, when an item goes to the US from China through a third country, and de minimis shipments, or those packages that were exempt from duties if under $800. In other words, China is not being replaced to the degree we all think.

Another reason for companies being unable to leave China is playing out now globally for thousands of businesses — it’s just too good at making stuff. Haley Pavone, the founder and chief executive officer of Pashion Footwear, faced an $80,000 tariff bill in April because all her products are imported from China. Despite that steep fee, she’s sticking with her Chinese supplier.

She ran through the numbers one evening via Zoom from her office in California: a $50,000 up-front cost for moving production to Vietnam. A higher minimum order in places including Brazil. And nowhere are workers skilled enough to make her shoes, which convert from heels to flats and require some engineering know-how.

“No one is as optimized as China,” the 29 year-old former Shark Tank contestant said.

It underscores how Trump’s tariff policy may not end up kicking the world’s reliance on China — even the US — and how in some cases they may even backfire. The current reciprocal tariff rates threatened on much of Southeast Asia are currently higher than China’s, which makes it even less appealing for companies like Pavone’s to leave.

With European Union officials still in talks with the US, a paper published this week by the Kiel Institute for the World Economy highlights how services shouldn’t be ignored in the ongoing negotiations, considering how its size is similar to trade in goods, and grows much faster.

The US had a services trade surplus of €148 billion ($173 billion) with the EU last year — about three quarters of its goods trade deficit, researchers Frank Bickenbach, Holger Görg and Wan-Hsin Liu wrote, citing figures from Eurostat, the bloc’s statistics agency.

“The EU can go for a carrot-and-stick approach with respect to services trade,” they argue. That could involve offering to remove barriers and make market access easier for US digital services providers, while threatening to tighten competition, data protection and privacy rules or even introduce an EU digital services tax.

Aside from Trump ignoring services in his reasoning on tariffs, the researchers highlight another big caveat: US data don’t match up with the EU’s. Compared with numbers from Eurostat, the Bureau of Economic Analysis reported a services trade surplus with the bloc of less than half, and a goods deficit more than 10% larger.

Source: Bloomberg Europe

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Adam

Forex

The Canadian dollar has posted losses in the European session. USD is trading at 1.3702, up 0.34% on the day. Earlier, the Canadian dollar weakened to 1.3731, its lowest level since June 27.

Canada's job growth has stalled

Canada releases the June employment report later today. Job growth has stalled since January and the economy created just 8800 jobs in May. The markets are braced for worse news in June with a consensus of no growth. The unemployment rate has been steadily increasing and is expected to rise to 7.1% from 7.0%, compared to 6.2% a year ago.

The labor market may have stalled but there is some relief that the US tariffs haven't resulted in worse employment numbers. US President Trump threatened on Thursday to impose a punishing 35% tariff rate on Canadian goods, a dramatic escalation in the trade war between the two countries. Canada and the US have been engaged in trade talks but the new round of tariffs are scheduled to take effect on August 1. The tariffs would be damaging for Canada's economy, chilling growth and boosting inflation.

Fed split over interest rate cuts

Will the Federal Reserve lower interest rates at the July 30 meeting? The money markets don't think so, with a 93% probability of a hold, according to the FedWatch CME tool. Still, this week's FOMC minutes from the June meeting indicated that some members are in favor of a July rate cut and the Fed is expected to cut at least once before the end of the year.

Inflation is running at 2.4%, high than the Fed's target of 2%. A key question is how tariffs will impact on inflation - so far, tariffs have not had much effect on inflation but that could change in upcoming inflation reports. The US releases June inflation next week and inflation is expected to tick higher to 2.5%.

USDCAD Technical

USD/CAD has pushed above resistance at 1.3672 and is testing resistance at 1.3691. Above, there is resistance at 1.3726

1.3637 and 1.3718 are the next support levels

Canada's job market expected to flatline, Canadian dollar under pressure_1

USDCAD 1-Day Chart, July 11, 2025

Source: marketpulse

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Warren Takunda

Economic

China–U.S. Trade War

President Donald Trump said in a letter that he will raise taxes on many imported goods from Canada to 35%, deepening a rift between two North American countries that have suffered a debilitating blow to their decades-old alliance.

The Thursday letter to Canadian Prime Minister Mark Carney is an aggressive increase to the top 25% tariff rates that Trump first imposed in March after months of threats. Trump’s tariffs were allegedly in an effort to get Canada to crack down on fentanyl smuggling despite the relatively modest trafficking in the drug from that country. Trump has also expressed frustration with a trade deficit with Canada that largely reflects oil purchases by America.

“I must mention that the flow of Fentanyl is hardly the only challenge we have with Canada, which has many Tariff, and Non-Tariff, Policies and Trade Barriers,” Trump wrote in the letter.

The higher rates would go into effect Aug. 1, creating a tense series of weeks ahead for the global economy as recent gains in the S&P 500 stock index suggest many investors think Trump will ultimately back down on the increases. But stock market futures were down early Friday in a sign that Trump’s wave of tariff letters may be starting to generate concern among investors.

In a social media post, Carney said Canada would continue to work toward a new trade framework with the U.S. and has made “vital progress to stop the scourge of fentanyl.”

“Through the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and business,” Carney said.

While multiple countries have received tariff letters this week, Canada — America’s second largest trading partner after Mexico — has become something of a foil to Trump. It has imposed retaliatory tariffs on U.S. goods and pushed back on the president’s taunts of making Canada the 51st state. Mexico has also faced 25% tariffs because of fentanyl, yet it has not faced the same public pressure from the Republican U.S. president.

Carney was elected prime minister in April on the argument that Canadians should keep their “elbows up.” He has responded by distancing Canada from its intertwined relationship with the U.S., seeking to strengthen its links with the European Union and the United Kingdom.

Hours before Trump’s letter, Carney posted on X a picture of himself with British Prime Minister Keir Starmer, saying, “In the face of global trade challenges, the world is turning to reliable economic partners like Canada.” Implied in his statement was that the U.S. has become unreliable because of Trump’s haphazard tariff regime, which has gone through aggressive threats and reversals.

When Carney went to the White House in May, the public portion of their meeting was cordial. But Trump said there was nothing the Canadian leader could tell him to remove the tariffs, saying, “Just the way it is.”

Daniel Beland, a political science professor at McGill University in Montreal, said Trump’s latest move will make it more difficult for Canada and the U.S. to reach a trade deal, Beland said.

“It doesn’t mean a new trade deal between Canada and the United States is impossible, but it shows how hard it is for the Canadian government to negotiate with a U.S. president who regularly utters threats and doesn’t appear to be a reliable and truthful interlocutor,” he said.

Trump has sent a series of tariff letters to 23 countries. Those form letters became increasingly personal with Canada as well as a Wednesday note that put a 50% tariff on Brazil for the ongoing trial of its former President Jair Bolsonaro for trying to stay in office after his 2022 election loss. Trump was similarly indicted for his efforts to overturn his 2020 election loss to Democrat Joe Biden.

Trump administration officials have said that Trump was seeking to isolate its geopolitical rival China with the tariffs, but the latest tariffs have undermined that message. Brazil’s largest trading partner is China, not the U.S., and Chinese government officials have framed his import taxes as a form of bullying.

“Sovereign equality and non-interference in internal affairs are important principles of the U.N. Charter and basic norms governing international relations,” said Mao Ning, the Chinese Foreign Ministry spokesman. “Tariffs should not be used as a tool for coercion, bullying and interference in the internal affairs of other countries.”

The letters reflect the inability of Trump to finalize the dozens of trade frameworks that he claimed would be easy to negotiate. Shortly after unveiling his April 2 “Liberation Day” tariffs, a financial market selloff caused Trump to announce a 90-day negotiating period during which a 10% baseline tariff would be charged on most imported goods.

But Trump has indicated that the 10% tariff rates are largely disappearing as he resets the rates with his letters.

“We’re just going to say all of the remaining countries are going to pay, whether it’s 20% or 15%,” Trump said in a phone interview with NBC News.

Trump has announced trade frameworks with the U.K. and Vietnam, as well as a separate deal with China to enable continued trade talks. Trump jacked up import taxes on Chinese goods to as much as 145%, but after talks he has said China faces total tariffs of 55%.

In June, Trump said he was suspending trade talks with Canada over its plans to continue its digital services tax, which would hit U.S. technology companies. A few days later, talks resumed when Carney rescinded the tax.

Under the current tariff structure, the 2020 United States Mexico Canada Agreement has protected eligible goods from Trump’s tariffs. But a review of the pact is scheduled for 2026.