UK Trade Minister To Meet USTR Greer To Discuss Implementing Tariff Deal

Economic

Political

Summary:

Britain's trade minister Jonathan Reynolds will meet U.S. Trade Representative Jamieson Greer on Tuesday to discuss the implementation of a trade deal that has been complicated by the announcement of fresh U.S. tariffs on steel.

Reynolds will review recently agreed deals with counterparts from the U.S. and EU, Britain's two biggest trading partners, during a three-day trip to Paris and Brussels this week.

The deals struck last month are both political pacts rather than formal trade agreements, and the details of their implementation have not been set out.

Starmer and U.S. President Donald Trump agreed to reduce tariffs on British imports of cars and steel to the United States, but its delayed implementation means tariffs may go up before they come down.

Last week, Trump said that tariffs on imported steel would rise to 50% from 25% from Wednesday. Industry body UK Steel said it understood that British producers would likely be impacted by the change, which would be a "body blow" to the sector.

A British government spokesperson said the UK was engaging with the United States on the implications of the announcement ahead of Reynolds' meeting with Greer to discuss implementation timelines of the bilateral agreement in Paris.

"We recognise our relationship with G7 allies and EU counterparts must continue to evolve and deliver a better trading environment for our businesses and exporters," Reynolds said in a statement ahead of the trip.

Reynolds will also meet Indian Minister of Commerce Piyush Goyal to discuss a recently negotiated Free Trade Agreement, which is still having its legal text finalised and is subject to ratification in both countries, which could take months.

After meetings with G7 and OECD counterparts in Paris, Reynolds will hold talks with EU trade commissioner Maros Sefcovic.

As part of efforts to reset ties without fundamentally reopening the Brexit deal, Britain and the EU have agreed to conclude talks to remove red tape on its food trade, but details of the plan have yet to be finalised.

In advance of that agreement coming into force, Britain on Monday said it would scrap border checks on fruit and vegetables imported from the European Union, that had been due to be effective beginning in July.

Source: Reuters

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Daniel Carter

Political

This contradicts the prior public statements of Mideast envoy Steve Witkoff and Secretary of State Marco Rubio, who have several times made clear that the full dismantlement of Iran's nuclear facilities is a Washington red line.

Tehran, for its part has remained firm on its own red line, saying its ability to enrich uranium for peaceful domestic energy purposes is a matter of national sovereignty. Is Trump meeting Iran in the middle? Rather, the hawks will of course accuse him of caving. According to more from Axios:

● But the proposal described to Axios by two sources with direct knowledge — one of whom provided a point-by-point breakdown — would seem to offer a clearer path to a deal.

● By making this offer, the Trump administration is risking backlash from its allies on the Hill and in Israel. Prime Minister Benjamin Netanyahu's government and dozens of Republican senators have pushed the administration to maintain red lines on zero nuclear enrichment and the full dismantlement of Iran's nuclear program.

Israel and its supporters in the US are going to be furious. But Trump has promised time and again peace and stability in the region through the art of the deal - a message conveyed especially strongly in his Gulf tour last month.

Oil prices dropped immediately on the headline.

As for Iran's stance, we detailed earlier in the day that amid ongoing nuclear negotiations, Iran has demanded that the United States clarify precisely how sanctions will be lifted and which ones. A statement said that any new agreement on Tehran’s nuclear program would be conditioned on significant and immediate sanctions relief.

Ministry of Foreign Affairs spokesman Esmail Baghaei made clear Monday that Tehran won't back off of this reasonable demand, coming days after the US submitted what it called an "acceptable" proposal.

Baghaei stressed the need for transparent and firm guarantees regarding the "real end of the sanctions" which would also feature details on "how and through what mechanism" they would be dismantled.

White House Press Secretary Karoline Leavitt has said in a statement. "Special Envoy Witkoff has sent a detailed and acceptable proposal to the Iranian regime, and it's in their best interest to accept it."

The latest Trump-proposed outline of a new deal has been in Iranian hands since Saturday. However, on Monday Reuters writes that Tehran has deemed aspects of it a 'non-starter': Iran is poised to reject a U.S. proposal to end a decades-long nuclear dispute, an Iranian diplomat said on Monday, slamming it as a "non-starter" that fails to address Tehran's interests and leaves Washington's stance on uranium enrichment unchanged.

"Iran is drafting a negative response to the U.S. proposal, which could be interpreted as a rejection of the U.S. offer," the senior diplomat, who is close to Iran's negotiating team, told Reuters.

The Islamic Republic is still maintaining that its program is only for peaceful nuclear energy purposes, but a red line for Washington is that Tehran commit to scrapping uranium enrichment - which however the Iranians say is a matter of their sovereign right.

An unidentified diplomat has meanwhile been quoted in Reuters as saying of the new US proposal, "In this proposal, the US stance on enrichment on Iranian soil remains unchanged, and there is no clear explanation regarding the lifting of sanctions."

The US administration has continued to emphasize that the "clock is ticking" on reaching a new deal.

Prior reports say that President Trump had talked the Israelis down from any kind of preemptive strike against Iran's nuclear facilities. Trump has said more time is needed to finding a peaceful solution.

Source: Zero Hedge

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Manuel

Economic

China–U.S. Trade War

The Trump administration wants countries to provide their best offer on trade negotiations by Wednesday as officials seek to accelerate talks with multiple partners ahead of a self-imposed deadline in just five weeks, according to a draft letter to negotiating partners seen by Reuters.

The draft, from the office of the United States Trade Representative, provides a window into how President Donald Trump plans to bring to a close unwieldy negotiations with dozens of countries that kicked off on April 9 when he paused his "Liberation Day" tariffs for 90 days until July 8 after stock, bond and currency markets revolted over the sweeping nature of the levies.

The document suggests an urgency within the administration to complete deals against its own tight deadline. While officials such as White House economic adviser Kevin Hassett have repeatedly promised that several agreements were nearing completion, so far only one agreement has been reached with a major U.S. trading partner: Britain. Even that limited pact was more akin to a framework for ongoing talks than a final deal.

In the draft, the U.S. is asking countries to list their best proposals in a number of key areas, including tariff and quota offers for purchase of U.S. industrial and agricultural products and plans to remedy any non-tariff barriers.

Other requested items include any commitments on digital trade and economic security, along with country-specific commitments, according to the letter.

The U.S. will evaluate the responses within days and offer "a possible landing zone" that could include a reciprocal tariff rate, according to the letter.

It was unclear which countries would receive the letter, but it was directed at those with active negotiations that included meetings and exchanges of documents. Washington has been engaged in such talks with the European Union, Japan, Vietnam and India, among others.

A USTR official said trade talks were ongoing. “Productive negotiations with many key trading partners continue at a rapid pace. It is in all parties’ interest to take stock of progress and assess any next steps.”

'REGARDLESS OF ONGOING LITIGATION'

Tiffany Smith, vice president of global trade policy at the National Foreign Trade Council, welcomed the USTR moves.

"We are encouraged that USTR is moving negotiations ahead as quickly as they can," she told Reuters, adding that trade deals that removed barriers for U.S. companies abroad and lowered U.S. tariffs would be "a win-win if they are done in a way that returns predictability and stability to trade relationships."

Trump's ambitious - and often frenetic - tariff policy is a pillar of his "America First" economic agenda as he seeks to reshape U.S. trade relationships, reduce trade deficits and protect American industries. Republican lawmakers are also banking on tariffs to add to federal revenue and offset the cost of the tax cut legislation now working its way through Congress.

Trump's tariff policies have taken investors on a rollercoaster ride. In May, U.S. stocks held their biggest rally of any month since November 2023, but that was after global indexes had cratered under the barrage of Trump's tariff announcements through February, March and early April.

Stocks were little changed on Monday afternoon after Trump announced a surprise doubling of tariffs on steel and aluminum imports on Friday at an event in Pittsburgh.

Meanwhile, the legality of the approach used for imposing the most sweeping of his tariffs has been cast into doubt.

Last Wednesday, the Court of International Trade ruled that Trump had overstepped his authority with tariffs devised under the International Emergency Economic Powers Act, including the "Liberation Day" levies and earlier ones imposed on goods from Canada, Mexico and China related to Trump's accusations that the three countries have facilitated the flow of fentanyl into the U.S. Less than 24 hours later, an appeals court temporarily paused that decision. The tariffs at the center of the legal dispute are expected to remain in effect as the case plays out.

The draft letter to trading partners warns them not to believe the tariffs will be sidelined if the court rules against Trump's use of the IEEPA.

"Regardless of ongoing litigation concerning the President’s reciprocal tariff action in U.S. courts, the President intends to continue this tariff program pursuant to other robust legal authorities if necessary, so it is important that we continue our discussions on these matters," the draft says.

Source: Reuters

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Manuel

Political

Economic

Significant changes are in store for President Donald Trump’s signature $3.9 trillion tax-cut bill as the Senate begins closed-door talks this week on legislation that squeaked through the House by a single vote.

Senate Republican leaders intend to make permanent many of the temporary tax cuts in the House bill, a move that would increase the bill’s more than $2.5 trillion deficit impact. But doing so risks alienating fiscal hawks already at war with party moderates over the bill’s safety-net cuts.

It amounts to a game of chess further complicated by the top Senate rules-keeper, who will decide whether some key provisions violate the chamber’s strict rules. Jettisoning those provisions — which include gun silencer regulations and artificial intelligence policy — could sink the bill in the House.

The House Republicans’ top tax writer, Representative Jason Smith, on Friday said that senators must leave most of the bill untouched in order to ensure it can pass the House in the end.

“I would encourage my counterparts, don’t be too drastic, be very balanced,” he said.

Trump worked the phone as Republican senators returned to work in Washington Monday after a one-week holiday break. Josh Hawley of Missouri said in a mid-afternoon social media post that he “just had a great talk” with the president on the legislation and they agreed no Medicaid benefits would be cut.

Hawley, who has been a vocal supporter of preserving Medicaid benefits, didn’t specify if he believes the House bill — projected to cut health care coverage coverage for about 7.7 million people by changing eligibility requirements — reduces benefits.

Trump also spoke with Senator Ron Johnson, a GOP holdout who has demanded $5.5 trillion to $6.5 trillion in cuts over the next decade, and pressed him to support the bill, the Wisconsin Republican told reporters.

Johnson said he’d sit down with Trump’s economic team to review the numbers and would be open to something similar to the House bill with assurances of legislation later that makes deeper cuts.

“I want to work with the president,” Johnson said.

Trump also met Monday with Senate Majority Leader John Thune.

GOP wrangling imperils Republicans’ goal of sending the “Big, Beautiful Bill” to Trump’s desk by July 4. But the real deadline is sometime in August or September, when the Treasury Department estimates the US will run out of borrowing authority.

The House bill would raise the government’s legal debt ceiling by $4 trillion, which the Senate wants to increase to $5 trillion in order to push off the next fiscal cliff until after the 2026 congressional elections.

That’s just one of the major changes the Senate will weigh in the coming weeks. Here are others:

Permanent Business Breaks

Senate Finance Chairman Mike Crapo’s top priority is making permanent the temporary business tax cuts that the House bill sunsets after 2029. These are the research and development tax deduction, the ability to use depreciation and amortization (EBITDA) as the basis for interest expensing, and 100% bonus depreciation of certain property, including most machinery and factories.

Senate Republicans plan to use a budget gimmick that counts the extension of the individual provisions in the 2017 Trump tax bill as having no cost. That gives them room to make the additional business tax cuts and possibly extend some of the new four-year individual cuts in the House bill like those on tips and overtime.

Deficit hawks could demand new offsets, however, either in the form of spending cuts or ending tax breaks like one on carried interest used by private equity.

SALT

The House expanded the state and local tax deduction limit from $10,000 to $40,000 to get blue-state Republicans behind the bill. But SALT isn’t an issue in the Senate, where high-tax states like California, New York and New Jersey are represented by Democrats.

“I can’t think of any Senate Republicans who think more than $10,000 is needed and I can think of several who think the number should be zero,” said Rohit Kumar, a former top Senate staffer now with PWC.

That includes deficit hawks like Louisiana’s John Kennedy, who has balked at the House’s SALT boost.

Senators could propose keeping the current $10,000 SALT cap as a low-ball counter, forcing the House to settle from something in the ballpark of a $30,000 cap, Kumar said.

The Senate could also change new limits on the abilities of passthrough service businesses to claim SALT deductions.

Green Energy

Moderate Republicans in the Senate are objecting to provisions in the House bill that gut tax credits for solar, wind, battery makers and several other clean energy sectors.

Senator Lisa Murkowski of Alaska said she’s seeking to soften aggressive phaseouts of tax credits for clean electricity production and nuclear power. She has the backing of at least three other Republicans, giving her enough leverage to make demands in a chamber where opposition from four GOP senators would kill the bill.

Their demands will run headlong into ultraconservatives, who already think the House bill doesn’t get rid of tax benefits for clean energy fast enough.

Medicaid, Food Stamps

Senators Rand Paul of Kentucky, Rick Scott of Florida, Mike Lee of Utah and Johnson of Wisconsin say they’re willing to sink the bill if it doesn’t cut more spending.

“I think we have enough to stop the process until the president gets serious about reductions,” Johnson said recently on CNN.

They haven’t made specific demands yet, but they could start off where the House Freedom Caucus fell short — cutting the federal matching payment for Medicaid for those enrolled under Obamacare and further limiting federal reimbursement for Medicaid provider taxes charged by states.

Conservatives’ demands are in stark contrast to Republican senators already uncomfortable with the new Medicaid co-pays and state cost-sharing for Medicaid and food stamps in the House bill. Senators Susan Collins of Maine, Jim Justice and Shelley Moore Capito of West Virginia and Hawley join Murkowski in this camp.

Bolstering their case is Trump, who told the Freedom Caucus to stop “grandstanding” on more Medicaid cuts.

Regulatory Matters

There’s an extensive list of regulatory matters in the House bill that could be struck if they are found to break Senate rules for averting a filibuster and passing the legislation by a simple majority.

Provisions likely to be challenged for not being primarily budgetary in nature include a repeal of gun silencer regulations, preemption of state artificial intelligence regulations, staffing regulations for nursing homes and abolishing the Direct File program at the Internal Revenue Service.

The House bill’s provisions limiting the ability of federal judges to hold administration officials in contempt, ending funding for Planned Parenthood, requiring congressional review of new regulations and easing permitting of fossil fuel projects are also vulnerable.

The biggest Senate rules fight will be over using the “current policy” budget gimmick to lower the cost of the bill. Senate Republican leaders could explore bypassing rules keeper Elizabeth MacDonough if she finds the accounting move breaks the rules.

Battles over these provisions could take weeks.

“I think it would be very difficult to get it out of the Senate quickly,” said Bill Hoagland, a former top Republican Senate budget staffer now with the Bipartisan Policy Center.

Spectrum Sales

A major auction of the government radio spectrum that would generate an estimated $88 billion in revenue is another unresolved fight.

Ted Cruz of Texas, the Senate Commerce chair, backs the spectrum sale but Senator Mike Rounds of South Dakota has vowed to protect the Defense Department, which has warned auctioning off its spectrum would degrade its capabilities and cost hundreds of billions for retrofits.

The proposal would free up key spectrum for wireless broadband giants like Verizon and Elon Musk’s Starlink.

Estate Tax

Thune and 46 other Republican senators back a total repeal of the estate tax, which would likely cost several hundred billion dollars over a decade, benefiting the heirs of the richest 0.1%. That could make it too pricey for the Senate to include. The House bill permanently increases the estate tax exemption to $15 million for individuals and $30 million for married couples, with future increases tied to inflation.

Source: Bloomberg

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Manuel

Cryptocurrency

Tether and Bitfinex transferred 21,000 Bitcoins (BTC) to designated wallets on June 2, completing their agreed contributions to Twenty One Capital.

Tether CEO Paolo Ardoino wrote that Bitfinex sent 7,000 BTC, while Tether Group moved 14,000 BTC.

Furthermore, Tether moved 4,812.22 BTC as prefunding for Twenty One’s convertible-equity raise.

The holdings matched a May 13 8-K filing that disclosed Twenty One bought the coins at an average price of $95,319.83 each in connection with its business-combination agreement with Cantor Equity Partners.

Venture structure and broader deal

Reports on April 23 indicated that Cantor Fitzgerald planned to launch a $3 billion digital asset platform called Twenty One Capital, with a Bitcoin seeding from its founding partners.

An April 24 announcement confirmed Twenty One Capital as a Bitcoin vehicle for capital markets to access BTC. The firm’s lead is Jack Mallers, CEO of Strike, who will guide both companies.

The deal’s framework consisted of Tether supplying roughly $1.5 billion in BTC, SoftBank adding $900 million, and Bitfinex providing $600 million.

The venture also intends to raise an additional $550 million, divided into $350 million through convertible senior secured notes and $200 million in private equity, to finance further Bitcoin purchases. Copper and Anchorage Digital will handle custody and collateral.

June 2 transfers move the parties closer to closing the private-investment-in-public-equity financing tied to the Cantor special purpose acquisition company (SPAC) merger.

The private investment in public equity (PIPE) allocates $385 million in convertible notes and $200 million in common equity, with an option for an extra $100 million in notes within 30 days of the initial deal.

Net proceeds target further Bitcoin acquisitions and operating capital for Twenty One, which aims to offer bitcoin-backed financing products to institutional clients.

SoftBank has yet to publish wallet details for its planned contribution, and Twenty One still must finalize regulatory approvals for the business-combination transaction.

Source: Cryptoslate

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Manuel

Economic

China–U.S. Trade War

President Donald Trump and Chinese leader Xi Jinping will likely speak this week, White House press secretary Karoline Leavitt said on Monday, days after Trump accused China of violating an agreement to roll back tariffs and trade restrictions.

Leavitt is the third top Trump aide to forecast an imminent call between the two leaders to iron out differences on last month's tariff agreement in Geneva, among larger trade issues.

It was not immediately clear when the two leaders will speak.

U.S. Treasury Secretary Scott Bessent told CBS' "Face the Nation" on Sunday that Trump and Xi would speak "very soon" to iron out trade issues including a dispute over critical minerals and China's restrictions on exports of certain minerals.

Trump said on Friday he was sure that he would speak to Xi. China said in April that the two leaders had not had a conversation recently.

On Saturday, the U.S. Trade Representative's office announced it would continue to exclude certain solar manufacturing equipment and other products from existing tariffs on Chinese goods until August 31, opens new tab, offering a three-month extension while talks with Beijing continue.

Bessent led negotiations with China in Geneva last month that resulted in a temporary truce in the trade war between the world's two biggest economies, but progress since then has been slow, the U.S. Treasury chief told Fox News last week.

The U.S.-China agreement to dial back triple-digit tariffs for 90 days prompted a massive relief rally in global stocks. But it did nothing to address the underlying reasons for Trump's tariffs on Chinese goods, mainly longstanding U.S. complaints about China's state-dominated, export-driven economic model, leaving those issues for future talks.

A U.S. trade court on Wednesday ruled that Trump overstepped his authority in imposing the bulk of his tariffs on imports from China and other countries under an emergency powers act. But less than 24 hours later, a federal appeals court reinstated the tariffs, saying it was pausing the trade court ruling to consider the government's appeal. The appeals court ordered the plaintiffs to respond by June 5 and the administration to respond by June 9.

Source: Reuters

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Manuel

Bond

Forex

Treasuries began June on the back foot with 30-year bond yields testing the 5% level as concerns over President Donald Trump’s tariff policies resurfaced at the start of a data-heavy week for assessing the health of the world’s largest economy.

Benchmark yields were trading four to seven basis points higher across the curve and yields resumed climbing after a brief pullback in response to weaker-than-expected US ISM manufacturing data for May that was accompanied by higher prices paid. The ISM remains in contraction territory below 50.

Following their first monthly decline of 2025 in May as measured by a Bloomberg index, US Treasuries — particularly longer-dated maturities — continue to face pressure amid persistent concerns over the nation’s fiscal outlook.

Longer-dated bonds led Monday’s declines, driving yields on 10-year debt up more than 6 basis points to a session high near 4.47%, while the 30-year bond briefly poked above 5%. The spread between five- and 30-year yields climbed to within a whisker of 100 basis points, a level it last closed above in 2021. A gauge of the dollar approached its lowest level since 2023.

“There is a general view that the curve should steepen” ahead of US employment data due Friday that is followed by sales of 10- and 30-year Treasuries next week, said Tom di Galoma, managing director at Mischler Financial Group.

Even with the long-end back near 5% and around former cycle peaks of 2007, large bond investors generally remain underweight and favor owning shorter-dated areas of the market around the five-year sector.

“Our strongest conviction has been staying underweight long-term US Treasuries,” BlackRock Investment Institute said in its latest weekly note. Amid persistent deficits and sticky inflation, the asset manager is watching to see whether Congress passes a budget bill that could push the US deficit higher, and “impact foreign investors and drive term premium even higher.”

The weakness in longer-dated bonds saw the 20-year yield briefly drop below that of the 30-year, the most in almost four years. Since Treasury revived 20-year bond sales, nearly five years ago, the benchmark has been unpopular among investors and traded at a discount with its yield above the 30-year.

“We can certainly see why the long end of safe haven curves are unloved,” said Rabobank strategists including Richard McGuire, adding the US policy outlook is too cloudy to attract buyers for long-dated Treasuries.

That reflects the risk of further trade salvos from the US president, after Trump announced he would be increasing tariffs on steel and aluminum to 50% from 25% to help protect American workers. He also said China had violated its trade agreement with the US.

What Bloomberg strategists say...

“A buyers’ strike in bonds coupled with Monday’s inflation outlook means investors’ steepeners, a heavily subscribed trade since mid-April, has staying power.” — Alyce Andres, MLIV Rates Strategist, Chicago

A slate of labor market reports due this week could play a key role in shaping the next moves in Treasury yields and the Federal Reserve’s interest rate path. Traders now anticipate two quarter-point rate cuts in 2025, down from expectations of three earlier in May.

One of the Fed officials speaking on Monday, US Chair Jerome Powell didn’t comment on the outlook for interest rates. Elsewhere, Chicago Fed President Austan Goolsbee said the central bank can proceed with interest-rate cuts if uncertainty around trade policy is resolved.

Speaking earlier, Dallas Fed President Lorie Logan said the US central bank can remain patient as it assesses risks to both inflation and unemployment.