Markets Near Record Highs as U.S., China Sign Trade Deal
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President Trump continues to drum up support for his so-called Big Beautiful Bill, urging Republicans to fall in line. Plus, EU-U.S. trade talks go down to the wire as the deadline to make a deal draws closer. We're talking about potentially lowering some tariff lines, giving up some non-tariff barriers the U.S. has identified, and possibly buying some U.S. products. And young Americans pull back on spending.

It's Friday, June 27th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. We begin on Capitol Hill, where Senate Republicans say they're pushing ahead with plans to vote on President Trump's so-called Big Beautiful Bill before next week.

The legislation hit a major roadblock yesterday when Senate parliamentarian Elizabeth McDonough effectively blocked a number of GOP proposals central to it, including Medicaid cuts, ruling that they would have too much of a fiscal impact to be passed by a simple majority using a fast-track reconciliation process.

Some Republicans responded by calling for McDonough's firing, but current leader John Thune has called that a nuclear option akin to ending filibuster rules. Undeterred, President Trump, who has warned lawmakers not to go on a scheduled recess until the bill is passed, tried drumming up support for the legislation yesterday evening and urged Republicans to fall in line.

And you know, I shouldn't say this, but we don't want to have grandstanders where one or two people's raised their foot. We are, we don't know. And they do it to grandstand. That's all. Not good people. They know who I am, who I'm talking about. I call them out.

But we don't need grandstanders. We have to get our country back and bring it back strong. Elsewhere in Washington, we are expecting a major decision from the Supreme Court today as it wraps up its term. Most watched is a ruling touching on President Trump's controversial executive order denying birthright citizenship to children born in the U.S. unless one of their parents is a citizen or legal permanent resident. By one estimate, the policy would deny citizenship to an estimated quarter million babies a year.

While the court isn't considering the constitutionality of Trump's move, it will rule on whether judges in single districts can block the policy nationwide, weighing in on a long-running debate that's angered presidents of both parties, given that litigants often file suits in courts that they expect to be sympathetic to their claims. The court is convening at 10 a.m. Eastern.

The U.S. is inching closer to a trade pact with the European Union. Speaking to Bloomberg Television yesterday, Commerce Secretary Howard Lutnick said the administration is finalizing a handful of deals ahead of the president's July 9th deadline to reimpose higher tariffs that he paused in April.

I think we could get a deal done now. Europe will be right at the end. But you've got to remember, they're our largest trading partners. So the fact that they come at the very end makes some sense. It's deep. It's complex. But I'm kind of optimistic now. With an update now on where negotiations stand, I'm joined by journal reporter Kim McRaehl in Brussels.

Kim, EU leaders, as you report, met last night debating how much they're willing to sacrifice to win over Trump and get a deal signed swiftly here. What's the latest? What are you hearing? Sure. Yeah. So they did. They had their debate last night. Some of the key questions are what is the EU basically willing to give up to offer to the U.S.? We're talking about potentially lowering some tariff lines, giving up some non-tariff barriers the U.S. has identified, which might mean changing some policies.

and possibly buying some US products, possibly closer cooperation on China. Those are some of the things the EU is suggesting it could offer. And the question is, what could it actually get in return for that? And how much of some of the quite high tariffs the Trump administration has imposed recently can be pulled back? That's

That's sort of the central part of the debate. And the idea last night was to get a sense from top leaders of what they're willing to accept. And things do seem to be moving. The U.S. yesterday provided a document that the European Commission has said is aimed at furthering negotiations. It sounds like it may be something of a counteroffer.

I don't know when we'll get some more details of what's actually in the document, but this is something we'd expect the commission is looking at closely right now. We'll, at some point, likely in coming hours or days, be talking with the member states about what this actually means for negotiations. Okay, so perhaps some EU member state convergence here on lowering tariffs on U.S. imports, and yet...

These divisions always do seem to exist among this group of countries. You report Germany and Italy are kind of in one camp, pushing for something to be done quickly, frustrated, at least in the case of Germany, that, you know, there's hundreds of little customs codes that you might be thinking to tinker with the Americans right now. And the chancellor of Germany saying, come on, we got to speed this up, not get caught up in the weeds.

That's right. Yeah. And I think in the case of Germany, there's some clear pressure from industry that is struggling under some of the high tariffs that have been imposed by the U.S. The car industry in particular, which is currently facing 25% tariffs. Steel and aluminum sector is facing 50% tariffs for exports to the U.S. There are a few other sectors that German Chancellor Friedrich Merz has talked about as particularly important for them, aside from those also chemicals. He

He's looking for a quick deal. He wants to see relief for those sectors and he wants to see sort of a more of a focus on a broad brush approach that's not necessarily entirely shared by other member states. I think there is a general view from member states that they want to move forward.

But different countries in Europe are affected in different ways by the various tariffs that have been imposed by the U.S. That's the substance of it all. Let's talk about kind of the posturing, the negotiating. We've heard from European Commission President Ursula von der Leyen saying she's ready to walk away if the right deal isn't there. Is that a real threat or just bluster? And

And can the EU and U.S. afford for these talks to fall apart? Yeah, I think, I mean, they certainly would hope that it is viewed as a real threat in the U.S., the extent to which they will follow through on this, given the risk of a potential escalating trade war, which European member states certainly want to avoid, given the risk of a spillover into other countries.

parts of the US-EU relationship, such as defense and security, they have taken some steps to make sure that they're ready to retaliate if they feel that they need to. And so they've approved a relatively small package of counter tariffs against the US that's ready to go on hold right now. If they feel they want to pull that out, they've threatened some additional measures

that could potentially target U.S. services, the services sector, digital companies. So they are working to try to put something credible as a response on the table. But we also know the commission, the member states really would prefer a deal. How much they're willing to accept to get to that point, that's really the open question and the one they're debating right now. Journal reporter Kim McRaehl is in Brussels for us. Kim, thanks as always for the update. Thank you.

And while talks with the EU go down to the wire, Trump and Lutnick have said that the U.S. has finalized a trade deal with China. That includes an agreement to deliver rare earth materials to the U.S. in exchange for Washington easing its own restrictions on certain exports to China. Optimism about a China trade truce is lifting markets, with stock futures pushing higher after the Nasdaq and S&P 500 closed yesterday near all-time highs.

Coming up, a leadership shakeup at Tesla as the EV maker faces headwinds at home and abroad. And we'll look at the Gen Z spending pullback making some retailers nervous after the break. Still getting around to that fix on your car? You got this. On eBay, you'll find millions of parts guaranteed to fit. Doesn't matter if it's a major engine repair or your first time swapping your windshield wipers.

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Pressure on Tesla is continuing despite the return of CEO Elon Musk. We're reporting that the EV maker has parted ways with Musk's top aide, Omid Afshar, who was in charge of the company's sales and manufacturing operations in North America and Europe.

Tesla's director of human resources for North America has also left the company, which is struggling with declining global sales, an aging lineup, and backlash over Musk's work with the Trump administration. Afshar and Tesla didn't return requests for comment. Overnight, competition ramped up further, with Xiaomi's newly launched SUV drawing a rush of first-day orders in what analysts say might be a Tesla killer.

the Chinese consumer electronics giant's YU7 is almost $1,400 cheaper than Tesla's Model Y, and in the space of just three minutes sold 200,000 units, beating analysts' expectations.

A new car is not likely to be on the budget for Gen Zers, though, with young Americans cutting back on spending. According to data from market research firm Sarkana, those aged 18 to 24 spent 13 percent less year over year between January and April as they face mounting economic challenges such as job scarcity and student loan repayments.

Journal economics reporter Rachel Wolf says that even though young people don't make up the vast majority of consumer spending, they're still an important group for businesses. That's because if they hook young people early, they could continue to have their business for years to come.

Young people also tend to go on smaller, more frequent shopping trips, which means that they have more impulse purchases. So the pullback has been especially noticeable for retailers catering to Gen Z. I spoke to Thread Wallets and their sales for the past month or so have fallen almost 30% compared to May.

and they're pretty worried. I also spoke to a browse studio in Los Angeles. The founder told me that they just have not seen young people coming in, or if they do come in, they're downgrading to lower cost services. So this is tough for young people for now. People spending less also probably means that they're saving less, and that could dent their ability to generate wealth into the future.

The Commerce Department will today issue its latest report on consumer spending, including the Fed's preferred measure of inflation, at 8 a.m. Eastern. And that's it for What's News for this Friday morning. Today's show was produced by Daniel Bach and Kate Boulivant. Our supervising producer is Sandra Kilhoff. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend and thanks for listening.