EU-US Trade Deal Nears Finalization Amidst Tariff Discussions; UK Services Sector Shows Resilience

By / / Breaking News

Key Takeaways

  • EU and U.S. are nearing a finalized trade framework agreement, with a joint statement "pretty much ready" and implementation already underway, despite the EU noting "no celebration" over the deal.
  • The U.S. is expected to implement a 15% all-inclusive tariff rate on Section 232 items, which will apply to a broad range of EU exports including pharmaceuticals, cars, and car parts, once U.S. investigations are complete.
  • The EU is actively pushing for zero or Most Favored Nation (MFN) tariff rates on essential products such as medical items, chemicals, and wines, and is working to secure exemptions for many products.
  • The UK services PMI for July rose to 51.8, exceeding estimates, and the Composite PMI reached 51.5, indicating continued expansion in the British economy.
  • UK new car registrations fell 5% year-over-year in July to 140,154 units, with Tesla (TSLA) UK vehicle sales dropping nearly 60% yearly in July to 987 cars.

EU-US Trade Deal Progress and Tariff Details Emerge

Negotiations between the European Union and the United States are reportedly "pretty advanced" on a joint statement regarding a new trade framework deal, with EU officials indicating the statement is "pretty much ready" and awaiting U.S. confirmation. Despite the progress, an EU official noted there is "no celebration" regarding the framework agreement, highlighting that not reaching a deal could lead to internal divisions within the EU and potential escalation of high tariffs from both sides. The implementation of this EU-U.S. framework trade deal is already underway.

A significant detail emerging from the discussions is the U.S. intention to implement a 15% all-inclusive tariff rate on Section 232 items. This tariff rate is set to apply to a wide array of goods, including pharmaceuticals, once U.S. investigations are complete, and will also cover cars and car parts. This 15% rate is a "clear ceiling," encompassing any previous Most Favored Nation (MFN) tariffs, providing clarity for businesses.

The EU is actively working to secure exemptions for a variety of products, with officials stating they are "working hard to get many products included in US tariff exemptions at zero tariff rate." Specifically, the EU believes that medical items, chemicals, and wines should face "no or low U.S. tariffs, preferably zero or Most Favored Nation Rate." While a joint statement is largely prepared, finalizing the list of essential products exempt from U.S. tariffs is expected to "take some time." The agreement also includes provisions for "zero-for-zero" tariffs on strategic products like certain chemicals, generic drugs, semiconductor equipment, and some agricultural products.

UK Economic Indicators Show Mixed Performance

In the United Kingdom, the services sector demonstrated resilience in July. The S&P Global Services PMI Final registered 51.8, surpassing both the estimated and previous figures of 51.2. Similarly, the S&P Global Composite PMI also rose to 51.5, exceeding estimates of 51.0 and the prior month's 51.0, signaling continued expansion in the private sector.

However, the automotive sector faced headwinds. UK new car registrations fell by 5% year-over-year in July, totaling 140,154 units, according to the Society of Motor Manufacturers and Traders (SMMT). This decline follows two months of growth. A notable contributor to this drop was Tesla (TSLA), whose UK vehicle sales plummeted nearly 60% yearly in July, with only 987 cars sold. Despite this, electric vehicles (BEVs) still held a 21% share of the new car market in July, though their growth moderated to 9.1%.

Eurozone PMI and China Trade Clarification

In the Eurozone, the Services PMI Final for July came in at 51.0, slightly below the estimated and previous figures of 51.2. The HCOB Composite PMI for the Eurozone also registered 50.9, marginally lower than the estimated and prior 51.0.

Separately, an EU official indicated that key details regarding rules of origin with China still require clarification. This suggests ongoing complexities in trade relations beyond the immediate focus on the U.S. deal.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. We are not financial professionals. The authors and/or site operators may hold positions in the companies or assets mentioned. Always do your own research before making financial decisions.
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