10%-70% US Tariffs, China-EU Trade Strain, Golf's Uneven Game
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This is the Bloomberg Daybreak Europe podcast. Good morning. It's Friday the 4th of July. I'm Caroline Hepke in London. And I'm Stephen Carroll in Brussels. Coming up today, Donald Trump says the US will send letters to trading partners from today with new tariff rates as high as 70%.

as the EU remains confident of a deal. US Treasury Secretary Scott Besant dismisses concerns over the dollar's reserve status in an interview with Bloomberg. Plus, chipping away at tradition, Scotland's golf industry finds itself in the rough as elite courses eclipse local clubs.

Let's start with a roundup of our top stories. US President Donald Trump says new unilateral tariff rates will range from 10% to 70% as his 9th of July deadline for deals approaches. Speaking to reporters aboard Air Force One, the President said his administration would begin sending letters with the new rates to trading partners from today, with the levies taking effect on the 1st of August.

We're going to start sending letters out to various countries starting tomorrow. We'll probably have 10 or 12 go out tomorrow. And over the next few days, I think by the 9th, they'll be fully covered. And they'll range in value from maybe 60 or 70 percent tariffs to 10 and 20 percent tariffs.

However, the US president wouldn't be drawn on the rates each country would receive or which countries would be the first to receive letters. Well, you're going to see tomorrow. I'd rather give it tomorrow. But we have probably 12, 10 to 12 tomorrow. And then after that, we'll be sending 10 or 12 a day. And as we get along, as we get to the smaller countries, we're pretty much going to keep the tariffs the same.

President Trump's comments align with his previous threat that if countries fail to reach deals with the US before next week's deadline, he would simply impose rates on them. So far, the Trump administration has announced deals with the UK and Vietnam and agreed to a truce with China that saw the world's two largest economies ease tit-for-tat tariffs. While many major trading partners such as Japan, South Korea and the European Union are still working to finalise tariff deals,

EU Commission President Ursula von der Leyen told reporters yesterday that the bloc is aiming for an agreement in principle with the United States by July 9th, as an agreement in detail covering such a large trading relationship wouldn't be feasible. The comments came as Bloomberg learned that European companies, including Mercedes-Benz and LVMH, are pushing for a quick trade deal with the US to avoid tariffs and protect their interests.

Meanwhile, President Trump has expressed optimism about reaching an agreement with India, but has spoken harshly about the prospect of an accord with Japan. China intends to cancel part of a two-day summit with the European Union later this month in the latest sign of a strain between Beijing and Brussels.

The EU Commission President Ursula von der Leyen, European Council President Antonio Costa had planned to meet Xi Jinping in Beijing before travelling to central China the next day for a business summit. The meeting will now just be one day in Beijing.

The two sides have long-standing disagreements over the war in Ukraine, Chinese industrial policy and an unbalanced trading relationship. China's recent export controls on rare earth magnets have come at the detriment of European industries. Bloomberg reported last month that the two sides had also cancelled the flagship EU-China high-level economic and trade dialogue.

U.S. Treasury Secretary Scott Besant dismissed the idea that the dollar's recent declines raise concerns about its status as the world's reserve currency. The greenback had its worst first half of a year since 1973, with the dollar index seeing a slide of almost 11%. That's led Chinese and European policymakers to wonder if the global financial system could move away from dependence on the dollar. Scott Besant disagrees.

The price of the dollar has nothing to do with a strong dollar policy. Many times over since World War II, the demise of the dollar as a reserve currency has been predicted. And I think once again, the skeptic is going to be wrong.

Scott Besson there speaking to Bloomberg. The Treasury Secretary added that if the euro hits 120 against the dollar, Europeans are going to, quote, be squawking that it's too strong. President Trump secured final passage of his signature $3.4 trillion tax bill following a bruising campaign to win over Republicans in Congress yesterday.

The non-partisan Congressional Budget Office projects the legislation will add $3.4 trillion to US deficits over the next decade with tax cuts for wealthier Americans. It also cuts Medicaid health insurance for the poor and disabled people by nearly $1 trillion, as well as food stamps and college student loans. Here's the moment the bill passed by just four votes in the House. On this vote, the yeas are 218, the nays are 214. The motion is adopted.

The legislation now goes to the President, who says he plans to sign the bill in a ceremony at the White House at 4pm in Washington today. The fierce partisan battle to shape public perceptions of the measure is likely to intensify in the coming months.

Here in the UK, Chancellor Rachel Reeves stressed her commitment to fiscal discipline after a market sell-off sparked by fears her position was in danger. Reeves admits that she was clearly upset in the House of Commons earlier this week after cameras showed her crying on the front bench. The Chancellor has insisted that it was because of an issue in her personal life unrelated to politics.

I happened to be on the camera when I had a tough day, but today is a new day and I'm just getting on with the job. In the first quarter of this year, we had the fastest growing economy in the G7. Wages have risen by more in the first 10 months of this Labour government than they did in the first 10 years of the Conservative government. Is this job easy? Is it easy to turn around the economy? No, it's not. It is tough.

Boobs' public appearance comes as she now has to grapple with a new fiscal hole created by her own party. The £5 billion U-turn in welfare cuts means that she will very likely have to either raise taxes or borrow more in her autumn budget.

Fantastic person, a great person.

son, husband, father as well. Tragic loss from FIFA side, my side, the whole global football family.

FIFA President Gianni Infantino's tributes were echoed by Cristiano Ronaldo, who said he's sending his Portugal teammate Diogo Jota's family all the strength in the world. And those are our top stories for you this morning. Let's have a look at the markets. In terms of equities, we're sliding now for Eurostoxx, 50 futures down four tenths of 1%.

S&P 500, E-mini futures also down three-tenths of 1%. President Trump ramping up tariff tensions. We've had more statements just in recent minutes. In terms of other markets moving, the Blue Bag Dollar Spot Index is weaker two-tenths of 1%. Remember, there is no cash treasury trading today due to the public holiday in the United States. Gold is also up by almost half of 1% this morning. This as the MSCI Asia-Pacific Index is down two-tenths of 1%.

In a moment, we'll bring you the latest on the countdown to Donald Trump's trade deadline, plus why life on the fairways of Scotland's golf courses isn't all smooth. But another story that caught our eye this morning. Caroline, I don't know if you've ever dreamed about drifting off into the corporate sunset with a cushy job on a board somewhere, but that dream apparently is over. Yeah, I mean, I would say the thought had perhaps crossed my mind for future stages of my life, the Act 3 or 4 coming down the line. But Beth Cowart from Bloomberg Opinion says...

give up basically on that dream. These days, being on a board, she says, is more like a cold shower. The era of rubber stamping and phoning it in is over. She references a period during COVID where board meetings turned into emergency calls several times a month. And she says the pace hasn't slowed down since. You've got executives leaving, so you've got boards getting involved in finding new leaders for big companies.

You've got activist investors circling in a lot of companies as well. Questions over how a company is going to approach issues around DEI or ESG, for example. Then add the geopolitics of that as well. So being on a board has turned out to be a very busy job as well. Also, I quite like this fact. There's a lot more tension apparently on boards too. A survey by PwC found that nearly half of directors wanted to replace at least one of their peers on the board as well. So apparently even when you're in the room, not everyone is friends.

Absolutely. Yeah, she does say that it could be, of course, good for corporate governance, which, you know, is also a factor here. But there should also be, and this is a kind of growing movement as well, that there should be better onboarding, better training if you want to be a director. I mean, there's also liability, you know, when things go wrong. Directors have a lot of responsibilities. So maybe that should become sort of a more formalised structure. But yeah, it was a really great piece, Beth Coit from Bloomberg Opinion.

Well, that's bringing more on our top story now. Just five days to go until Donald Trump's tariff pause deadline. The US president has been giving more details about what countries should expect to happen after that. Our senior editor, Bill Ferries, is with us now for more. Bill, Donald Trump, we've been hearing from him just in the past hour or so, talking about what will happen after July 9th, letters going out to countries from today. Is this better or worse than we had expected?

Well, I think it's going to depend on what that letter says, depending on which country you're in. I mean, Trump landed.

in Washington on Air Force One and said he'd start sending out 10 or 12 letters to countries and that the rates that the tariff rates that countries will have to pay will be up to possibly 70 percent. So I think that is a worst case scenario for just about any country out there at this point. Of course, there's been a lot of scrutiny of the few details we have on this Vietnam deal.

That was reached with a 20 percent tariff for Vietnam's exports to the U.S. and a 40 percent tariff for goods that were transhipped through Vietnam. So I think there's going to be, you know, a lot of countries were hoping that maybe they could get a better deal than Vietnam, something maybe between 10 and 20 percent. I think to hear 70 percent is going to be alarming. The other thing that Donald Trump said when he landed in Washington was that countries will start paying those tariffs on August 1st.

which does lead me to wonder whether there is a little wiggle room between July 9th and August 1st for some countries to try to work a better deal. We'll have to see how that plays out. Yeah, I mean, so far there are only three framework deals that have been announced. So we're told that there are more coming. So who are the likely countries to get across the line? I mean, it seems to be a bit of a guessing game.

It really is. I mean, you know, if we took this process back a month or two, we heard repeatedly that Japan was near the front of the front of the queue in terms of getting some kind of an agreement and things seem to be going well. It's just been in the last 10 days or so. We've heard the president really critical of Japan and their their rice negotiations.

And Otto's policy. So they perhaps they've fallen back. Maybe they'll just get a letter. India, we know that their negotiators have stayed in Washington longer to work on a deal. That's a very complicated pact. It's another country that might get more of a framework and an agreement to continue on.

But then there's a lot of countries that fall kind of below that radar and might be thinking, you know, maybe what Vietnam got is the same thing that we're going to get if we're in Southeast Asia. So those are the kind of the countries we're looking for. I'd say South Korea is on that list as well. And the EU, of course, there's been some more positive signals between the U.S. and the EU in the past week.

Yeah, well, let's talk a little bit about that. I mean, Ursula von der Leyen talking about she expects there to be an agreement in principle by the deadline. Mara Šefcevic was in Washington yesterday. What is the latest that we're hearing about those negotiations?

Well, you know, the EU was at one point facing a flat 50 percent tariff. There's been a lot more talk about perhaps like a different levels for different products type of thing. So much more nuanced agreement. That's one of those ones that I think is also like India, very complex. There's obviously it's a it's the biggest U.S. trading relationship there is.

So I think there's talk about, you know, perhaps some goods like bourbon might be taken off the EU's retaliatory list if they get perhaps a better deal from the U.S.,

But the framework you're talking about, that's what we saw with the UK. It's generally what we saw with China. I would expect it would fall, the EU deal would fall in there where we get some outlines, but perhaps talks continue after next week. Meanwhile, President Trump is due to sign his tax bill into law later today. How big a win is it? And what does it actually mean for the U.S. economy?

It's a big political victory for Donald Trump. This has basically been his only signature piece of legislation that he's talked about since taking office. It includes, I mean, some huge priorities. It includes an extension of his 2017 tax cuts.

It includes an increase in the debt ceiling limit that the U.S. was set to hit in August. So that basically takes that off the table for markets. But it also includes a lot of things like increased money for border protection and in cuts to Medicaid and who qualifies for that health insurance program. So it really is going to be a big overhaul for

of the U.S. economy and the way business has been done. In terms of what comes next, he's gotten a lot of his legislative priorities. There's still a budget that will have to come later this year. Okay. Bill Ferry is our senior editor. Thank you very much for joining us.

Join us in Atlanta or via live stream on August 12th for Bloomberg's Business Value of AI event and networking reception. This event will gather business and technology executives to share their experiences and provide insight into how to best use data to optimize the customer experience.

You'll also learn how companies have successfully implemented AI agents that have led to improved productivity and profitability. This program is proudly sponsored by IBM. Register at BloombergLive.com slash AI slash Atlanta. Well, now I want to talk about golf. In Scotland, the game is traditionally more accessible than in the US or in England. But for dozens of small clubs away from the glitz of maybe royalty or President Trump's own two resorts, the ones that

aren't on the golf tourism route, rising costs and less visibility are making life tough. Bloomberg's James Ludden joins us now from Edinburgh for more on this really interesting story, James. The business of sport. Scotland is the home of golf, where it is a game for the masses. How big an industry is it in Scotland?

Well, it's a key part of tourism, which is in turn key for the Scottish economy. Tourism alone is worth about £11 billion to the Scottish economy. But when it comes to golf, numbers are kind of hard to pin down. But there was one study very recently that looked into the town of St Andrews, which some of your listeners might know is the

symbolic home of golf. Just that one little corner of southeast Scotland, that is worth £317 million to the economy. So if you extrapolate that across the broader country, it's worth an awful lot more than that. But it's also key that it's a part of the national culture. That's why it is such a big

So what's happening then for the smaller clubs versus the perhaps very well-known courses you mentioned? Yeah, so the smaller clubs, the problem they've got, like most businesses really, is to do with cost. If you think you are a relatively smaller club, you've got to think you have payroll taxes going up, you've got fertilizer costs going up.

How many times do you send out your lawnmower to go and cut the greens? Is it once a day? Is it twice a week? Every time you send out a person to cut the fairways or cut the greens, that's going to cost money. So you've got to work out those sort of costs they do add up. And then at the top end of the equation, if you're not going to compete directly with the big boys like your St Andrews or, you know,

more relevantly possibly with the Trump courses at Turnberry and on the East Coast also by Aberdeen, if you're not going to compete with them directly on price, you've got to think we've got to play pretty canny to make sure that our business is sustainable. And that's really where the issue is. There is, what, 550 companies

Also, of course, it's dotted around the country. And, yeah, that's a lot of golf acreage. And playing numbers, about 200,000 here in Scotland. And of those 200,000, only a small proportion is going to prepare to pay, what, 300 quid plus to play at Trump or what have you. And, you know, if, let's say, if you...

decide on the fly, you know what, I want to go and play at Trump Turnberry today on the West Coast. If you haven't got a package of accommodation or some sort of deal, you are going to be forking out something like £1,000 just to knock a very small white ball around the Scottish links, which for the historically fairly frugal Scots person is not really an option.

Yes, that's, yeah, £1,000 to play would be, yeah, perhaps expensive. I wanted to

James, this is such an interesting story. I did not know that there were so many golf courses, frankly, in Scotland. Do you play? Why did you write about this? And also, is golf increasingly a skill needed for business? I just wonder that, obviously, because you've mentioned President Trump's courses. Is golf, you know, a huge deal in business still? It can be. I mean, I think about 10, 15 years ago, it was very much the thing. Yeah.

It's maybe not quite so much as it was, but having said that, the, forgive me if I get this wrong, the president or the prime minister of Finland, he spent time playing golf with Trump at a recent visit because he played in his youth and he was able to compete with Trump, if you like, on a level playing field.

So it does have its upside, certainly. Yes, I do play. I don't play particularly well. I find it immensely frustrating, but also great fun. And a lot of it is also about the 19th hole, of course, which is equally important sometimes.

This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple, Spotify and anywhere else you get your podcasts. You can also listen live each morning on London DAB Radio, the Bloomberg Business App and Bloomberg.com.

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