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cover of episode US-UK Trade Deal Begins, Trump Tax Bill, Europe's World-Beating Rally

US-UK Trade Deal Begins, Trump Tax Bill, Europe's World-Beating Rally

2025/6/30
logo of podcast Bloomberg Daybreak: Europe Edition

Bloomberg Daybreak: Europe Edition

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Bill Ferry
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Farah Al-Baraoui
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Lara Williams
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Lizzie Burden
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President Donald Trump
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Tiwa Adebayo
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Wes Treating
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Zoran Mamdani
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Bill Ferry: 作为彭博社的高级编辑,我认为特朗普政府在贸易问题上的信息非常混乱,他们承诺的90天内达成90项贸易协议的目标根本没有实现。虽然他们声称与一些国家达成了贸易框架,但实际上进展缓慢,而且特朗普政府似乎更倾向于直接宣布某些国家必须支付的费用,而不是进行真诚的谈判。这使得市场对美国经济的实力和美元的价值产生了怀疑。 Lizzie Burden: 作为彭博社的记者,我认为英国的贸易协议可以被视为一个警示故事,它告诫其他国家不要在解决所有关键细节之前接受部分协议。尽管英国政府正在宣传降低关税带来的好处,但英国央行行长安德鲁·贝利强调与其他国家达成协议的重要性,这表明这些协议对英国经济的重大影响。此外,特朗普政府似乎更注重速度而非实质内容,这使得人们对这些协议能在多大程度上真正降低贸易风险产生了疑问。

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This is the Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify or wherever you listen. It's Monday the 30th of June here in London. I'm Caroline Hepker. Coming up today, back to 10%, the UK becomes the first country to partially reduce President Trump's tariffs as its trade deal takes effect.

In limbo, with nine days until the end of the US's tariff pause, Canada, the EU and Japan are all still chasing deals.

And European stocks outperform their U.S. peers as the euro surges since the start of the year, while global investors are shifting money to Europe. Let's start with a roundup of our top stories. The U.K.-U.S. trade deal comes into effect this morning, marking the only trade deal that the White House has implemented with nine days to go on its self-imposed tariff pause.

The limited agreement sees tariffs reduced on cars imported into America from 25% to 10%, while import taxes on the aerospace sector have been removed completely for Britain. The US promises dozens more deals on the table in the coming days, but Bloomberg senior editor Bill Ferry says the White House's slogans don't match reality.

It's all over the board in terms of the messaging from the administration. Scott Bessett really signaling that a handful of countries that are seen as negotiating in good faith will possibly get extensions. But then Donald Trump also signaling that he's willing to just make announcements about what some economies, what some countries will have to pay and end the talks. We're not getting close to the 90 deals in 90 days that trade czar Peter Navarro promised at the beginning of this.

Ferry's points to Taiwan, Japan and the EU as some of those who may be able to broker an extension. President Trump's policy of reshaping global trade has shattered market assumptions about the strength of the US dollar, stocks and the economy.

Canada has withdrawn its digital services tax on technology companies in a bid to restart trade talks with the US. The tax would have charged 3% of the digital services revenue that a firm makes from Canadian users, above $20 million Canadian dollars in a calendar year, with the first payment due today. But the move comes after President Trump said that he was ending all trade discussions with Canada last Friday due to the levy.

About three quarters of Canada's exports go to the US, but it is also America's largest buyer. Republicans have until Friday to pass President Trump's tax bill through a fractious Senate. Eight Republican senators openly dislike parts of the so-called Big Beautiful Bill, with only four dissenting votes needed to sink it. Some say it doesn't cut enough. Others, like Senator Tom Tillis, say it cuts health benefits too much.

Now, Republicans are about to make a mistake on health care and betraying a promise. After speaking out, Tillis was threatened by President Trump with a rival Republican primary candidate, prompting Tillis to say that he would not stand for re-election and will not back the bill. A recent Pew Research survey found that 49% of Americans oppose the bill, while 29% support it.

Now, New York's Democratic mayoral candidate, Zoran Mamdani, says that he'd rather live in a world without billionaires, citing the need for greater equality across the city, state and the country in the U.S. The 33-year-old state assemblyman gained international attention after winning a major victory in last week's New York Democrat primary. Over the weekend, Mamdani stepped up his rhetoric against the city's wealthiest.

What our victory showed on election night was less a victory between one man and another, but a victory for a city that New Yorkers can afford. Mamdani's views have unsettled business leaders and mainstream Democrats. President Donald Trump threatened to withhold federal funding from New York City if Mamdani is elected in November, calling him a communist.

President Trump says that he has identified a buyer for the U.S. operations of TikTok, but did not name the winning bidder. The news comes after U.S. and Chinese officials confirmed that they'd agreed on a trade framework last week. Speaking during a pre-taped interview on Fox News yesterday, the president expanded on the terms of that deal. We have a buyer for TikTok, by the way. I think I'll need probably China approval, and I think presidency will probably do it. Well, it's a group of very wealthy people.

President Trump speaking. A January deadline for TikTok's Chinese parent company ByteDance to find a local buyer was pushed back twice by Trump, who this month extended it again by a further 90 days from the 19th of June.

European stocks have outperformed their U.S. peers by the biggest margin on record in dollar terms in the first half of 2025. Now, it's the most dramatic sign yet that the region's markets are staging a comeback after more than a decade playing catch up. Blue Wigs T.R. Adebayo has that story.

Europe's market is on the comeback relative to the US. The euro is up 13% against the dollar in the six months through June, and German bunds have outperformed Treasury since April after a chaotic Trump tariff rollout. Assets in emerging European markets like Poland and Hungary are also rallying sharply as investors pivot to Europe amid concern that White House economic policy will harm earnings. Market participants are

optimistic about the future, especially as Germany, the region's largest economy, is now committed to borrow more and invest massively in defence and infrastructure after over a decade of austerity.

A net 34% of investors are currently overweight euro area equities compared to a net 36% underweight U.S. peers, according to the Bank of America fund manager survey published this month. In London, Tiwa Adebayo, Bloomberg Radio.

And to the UK now, where the Prime Minister is working to contain a government rebellion ahead of a vote on his flagship welfare policy. Keir Starmer admitted that he was distracted by international affairs in the week when more than 120 Labour MPs threatened to vote against planned cuts to sickness and disability benefits. The government was forced into a humiliating U-turn on the plans, cancelling some £3 billion of planned disability cuts...

Health Secretary Wes Treating says that the government has listened to backbenchers' concerns. The overall message from the parliamentary party was we agree with your principles of reform, that we've got to provide better protection for those who genuinely can't work through no fault of their own. We've got to get more support for people who can work to get them into work. And thirdly, we've got to make this system more sustainable.

So, Health Secretary Wes Treating speaking there as the government is expected to win Tuesday's vote on the reformed welfare bill in the House of Commons. Despite the U-turn, though, dozens of MPs are still considering a vote against the government.

So, those are our top stories for you this morning. Right, let's think about the markets then. So, I mentioned the hope, the optimism around the outperformance that Europe has seen over the first six months of the year. It does seem like something quite profound and fundamental is happening, given Germany has removed its debt break and there is this focus on additional spending. It's partly also driven, of course, by the strength of the euro, which this morning trades at 1.1732, so up by a tenth of 1%. The

dollar is weakening against most currencies down three tenths right now. As for the stock market futures for the U.S., we're seeing the S&P 500 eminence up by four tenths of one percent. Last week, of course, we had a gain every single day, five sessions for the S&P 500.

As for the optimism around the trade talks, the loonie is edging higher. Canada ditched its digital services tax to try to get a trade discussion back on track with the U.S. The Nikkei has also jumped about 1.5% this morning, again on optimism. Actually, it's up by about nine-tenths right now. The yen also strengthening near 144%.

Asian equities gaining for a fifth day also in a row. 10-year U.S. Treasury yields, meanwhile. Let's think about the bond markets this morning. 428 is where we stand. So, a little movement on the 10-year yield. Brent crude futures this morning trading at $67.63. So, down two-tenths of 1%. Those are the market figures that you need to know about.

Coming up in the next part of the programme, we're going to be talking then about the 90 trade deals that were meant to happen in 90 days. Where are we? We're going to get an update on that. And we'll also be speaking about the European stock market outperformance with Farah Al-Burawi, who leads our team covering equities in the European region, which I think will be an interesting chat. But before we get to that,

There's another story that's got my attention, of course, another issue. The heatwave in the UK set to peak today at 34 degrees in some parts of Britain, including here in London. The newspapers say the heat's on, meltdown Monday. Twitter has advice for walking your dog early or late. And Bloomberg's Lara Williams says that one of Britain's warmest and sunniest springs ever may lift the spirits.

giant strawberries, a jump in retail sales and solar energy, but actually repeatedly breaking records comes with a lot of challenges. She points out, which I hadn't realised, that this spring has been the driest in the UK in more than 50 years. And they were also increasingly swinging between hot temperatures

dry and rainy weather. And you can see that in just the last three years of data, 23, very, very hot. 2024 was super soggy. And then again, back to very hot and dry for 2025. So as Lara says, you know, the UK uniquely exposed also because of the housing stock here, the lack of air conditioning. I'm sure you noticed it over the weekend. So I'll put a note so that you can find Lara Williams is reporting on, yes, the heat wave in the UK.

Now, Trump's trades are, Peter Navarro promised, there would be 90 trade deals in 90 days. Well, with nine days or so until President Trump's country-specific tariffs are set to resume, the UK is cheering, Canada is scrambling, and Japan is still talking. Bloomberg's Lizzie Burden joins me now to discuss. Good morning, Lizzie. So, firstly, Britain seems to be the only country that has actually managed to reduce its Trump-era tariffs. How big a difference will it make?

Yeah, good morning, Caroline. Well, there's been a lot of debate, hasn't there, about whether being front of the queue vindicated Starmer's softly, softly approach to Trump, this image of him picking up Trump's scattered papers from the floor, widely mocked as a symbol of the prime minister bowing to the president, literally. And, Caroline,

Caroline, Britain's deal has really been held up as a cautionary tale for other countries of why not to accept a partial deal before you settle all the key details on sectoral tariffs, on steel, for example, because those are still at 25% when the government's goal was zero. Now, the UK government is touting the immediate benefits for UK autos, for the aerospace sector, because of the lower tariffs. But I think

it's really telling that even despite all of this progress, the Bank of England Governor Andrew Bailey has repeatedly emphasized the importance of other deals, especially with the US and China, and kind of implicitly acknowledging that that's more consequential for the UK economy. Hence why we had the US-China trade talks hosted in London. It's a sign of the economic significance of that deal.

Politically, in terms of the US-UK framework, the agreement between the two...

But being in Donald Trump's good books isn't really doing much for Keir Starmer. On Friday, that's going to be a year of the Labour government in office. And it's the domestic picture that's giving Starmer a headache. You've got Starmer facing a vote on his flagship welfare policy tomorrow. It's provoked widespread criticism. It's called his leadership into doubt. And his fiscal U-turns have really threatened the Chancellor's fiscal rules and her job as well. So being the

globe-trotting dealmaker isn't necessarily actually helping Keir Starmer. No, indeed. But then in terms of the broader state of the trade negotiations with the US and other countries, where do we stand? Well, markets are looking ahead to this July 9th deadline. The president says that it could be brought forward. The Treasury Secretary says it could be pushed back.

But we've got lots of good news. You've run through some of it. You could say Trump's policy of escalating to de-escalate is actually working. We had China last week confirming that it's reached a trade framework with the US. We've had reports that the EU does actually see some sort of agreement before July 9th, which would mean that the EU can avoid 50% tariffs and that

US can avoid possible countermeasures. And then this morning, we've had Canada dropping its digital services tax on tech companies like Metro and Alphabet so that the US talks can restart, so that they can get a deal done by July 21st. That's the date that they're aiming for. So progress on lots of fronts, but there is this criticism that the Trump administration's prioritizing speed over substance. So really a question lingering over how much these...

MOUs will really reduce the trade risk. Yeah, okay. Do we

Do we yet know the full economic impact that they're going to have though? Because that's the other calculation to be made. No, but we'll get more of an idea of it this week, won't we? Because we've got lots of economic data coming out. Tomorrow, we've got the Eurozone CPI print, 10 a.m. London time. Economists expecting inflation to hit 2%, so the ECB's target, but tariffs, as you hint, remaining a potential headwind.

Then in the U.S. on Thursday, we get the jobs report a day early because of the Independence Day holiday on Friday. So again, we're going to look for cracks in the labor market as evidence of the impact of tariffs. And if you get a weak report, that could further fuel the Fed cut bets.

And then if we look back on Friday, we already had some crucial U.S. economic data. We had the U.S. consumer spending report falling in May, a sign of the elevated uncertainty. And you had PCE rising more than expected, ever so slightly, but both fueling the stagflation narrative. So there's plenty more data to fill in this picture. OK, Lizzie, thank you so much for being with me this morning. That is Bloomberg's Lizzie Burden then.

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As we think about President Trump's country-specific tariffs, they are set to resume. Although, of course, Howard Lutnick talked about 10 deals being on their way. So we are counting down the days when it comes to Trump tariffs and what impact they will have.

Now, we're also thinking, though, about stock markets this morning. I mean, amazing to think that the first six months of the year, European stocks have outperformed their U.S. peers. The euro has also surged. Investors globally are also shifting more money to Europe. So, joining us now to discuss is Farah Al-Baraoui, who leads our team covering equity markets in the EMEA region. Farah, good morning. Just can you

you put it into context for us just how well have European assets actually performed? I mean, the answer is really well. We've seen European stocks outperform the S&P 500 by the most on record for a semi-annual performance. So that's over 15 percentage points. So

really significant strength here but this is when we're looking at it in dollar terms so the equity market performance has actually been supported by also a rally in the euro which is up 13 against the dollar in the six months through june so you have very strong performance on the equity side on the

FX side, but also on the bond side. We've seen some strength in the German bonds, even though that government is going to be issuing bonds and investors are really just buying all Europe this year. Yeah. I mean, is it simply about more spending from Germany? Is that why we're seeing such gains? How broad is it?

That is a really massive part of it. So you had a government that had no issuance. It was very austere in terms of its measures. And then all of a sudden, it's spending on defense, on infrastructure. And infrastructure and other governments are following suit.

So Germany has sort of really changed the outlook fundamentally for Europe, at least that's according to the investors that we're speaking with. And that's why a lot of them are turning optimistic on the region, that a lot of this spending is going to translate into economic growth and that's going to boost the euro, that's going to lift earnings and potentially even help narrow the gap between valuations in Europe and the U.S., where the U.S. still continues to trade at a significant premium to Europe.

We've had so many false dawns for Europe before. Why do people think this time is different? And is it going to continue? What about kind of year end and thinking about 2026? Absolutely. So what's different is that this time people are more and more optimistic. You have over the past four years, there were a lot of inflows into the U.S. equity market and

And more and more people are seeing that that's going to start to normalize, and Europe will be a beneficiary again as we start to see some economic growth. At the same time, you have the ECB. It's significantly more dovish than the Fed. It's cut rates significantly more over the past few months, so that's going to help support the region as well.

And other than that, you can see all of this actually being translated into the flows. So you have flows picking up in Europe. It's actually set for the second biggest amount of inflows into the equity market in

ever. So again, investors are putting their money where their mouth is. That's not to say people are selling the U.S. or out of the U.S., but again, there is some optimism about Europe, especially that earnings growth is expected to be pretty close to the rate that we're going to see in the U.S. next year.

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.

Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa, play Bloomberg 1130. I'm Caroline Hepker. And I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day, right here on Bloomberg Daybreak Europe.

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