European Markets Conclude Session with Losses After Initial Positive Trends
The US and EU have reached a landmark trade agreement, as announced by President Donald Trump and European Commission President Ursula von der Leyen on late July 2025. This deal, aimed at averting a planned 30% tariff, will instead impose a 15% tariff on US goods, with the EU committing to purchasing $750 billion worth of energy-related goods over three years and an additional $600 billion investment in the US economy 15.
Tariff Adjustments and Economic Impact
The EU has successfully reduced the proposed 30% tariffs to 15%, lowering the risk of severe price hikes and market disruptions in Europe 1. The deal's energy component is expected to increase EU dependency on US energy, potentially altering European energy security strategies, but also bringing diversification benefits amidst volatility in other energy sources 1.
While the tariff reduction benefits US exporters, the European economy may face mixed effects. Lower tariffs could benefit European consumers and companies relying on US inputs. However, higher US tariffs on EU exports could constrain some European manufacturers' competitiveness in the US market 1.
Strategic and Political Implications
This deal may reset US-EU trade relations, which had faced strains due to tariff threats and trade tensions in previous years. It strengthens political and economic ties, potentially influencing global trade dynamics, as the US and EU are the world's two largest economies 15.
Criticism and Uncertainties
Some analysts caution that details remain incomplete, especially regarding the exact structure of tariffs and regulatory alignments. Long-term impacts on supply chains and inflation remain uncertain as the deal settles in. Political critics from both sides may debate the deal’s fairness, with questions about impact on farmers, manufacturers, and consumers in each bloc 3.
Market Performance
Amidst this major diplomatic achievement, European and US markets showed mixed results. The pan-European Stoxx 600 ended down 0.22%, while the Czech Republic, Iceland, Norway, and Netherlands ended higher. However, several European markets, including Belgium, Denmark, Finland, Greece, Poland, Portugal, Russia, Spain, Sweden, and Turkiye closed weak 1.
In the UK market, BT Group tumbled more than 5%, Babcock International closed 2.7% down. Meanwhile, in the German market, Porsche closed more than 4% down. On the positive side, BP climbed 2.2%, and Land Securities, RightMove, Shell, Reckitt Benckiser, and St. James's Place gained 0.7 to 1.1% 1.
The FTSE 100, France's CAC 40, and Germany's DAX closed down 0.43%, 1.02% respectively. Airtel Africa ended 1.7% up 1.
Additional Investments and Share Buybacks
In other news, Tesco launched the second tranche of its 1.45 billion pounds share buyback programme, committing up to 500 million pounds for additional repurchases 1.
However, the deal has faced criticism from top officials who warn that it could undermine the EU's economic stability and job security 1.
The US-EU trade deal, with an emphasis on investing $600 billion in the US economy, will likely attract more foreign investments in the American business sector and finance landscape 15.
The reduced tariffs and increased purchasing of energy-related goods could spur further investments in the industry, potentially leading to economic growth and job creation, simultaneously boosting the financing sector through increased investments 1.
