Trump’s 30% Tariffs Threaten to ⁤Sever EU-US Trade, Sefcovic ⁢Warns

Brussels, Belgium – European Commission Vice-President Maroš Šefčovič has ⁢issued a stark warning, stating that⁢ proposed 30% tariffs by former US President Donald Trump⁤ would effectively sever trade ties between the European Union and the United States.The potential imposition of such sweeping tariffs,a key plank of Trump’s economic platform,has sent ripples of concern ⁣through global markets and ⁢diplomatic circles.

Economic Uncertainty and⁣ Market Reactions

While investors have largely become desensitized ⁢to Trump’s frequent tariff threats, the scale of the proposed 30% levies presents a⁤ meaningful escalation.This uncertainty, however, has⁣ also ⁢flagged a potential ⁣downside for the dollar, as US companies face the prospect‍ of tariffs at any moment,⁤ potentially dampening thier willingness to invest.Despite the looming trade tensions, US stocks have continued to scale record highs,‍ with the ⁤dollar experiencing only a slight boost. The euro, ⁣after an initial dip to a three-week low, has since ⁢regained some ground, trading flat at $1.16905. sterling also remained flat at $1.34855, while the ⁤Japanese yen saw a marginal rise to 147.27 per dollar.

In other currency movements, the dollar strengthened by 0.3% against the mexican peso, reaching 18.686. The Australian dollar fell 0.11% to $0.65675, and the New Zealand dollar slid 0.29% to $0.59910.

Inflation Data and Federal Reserve outlook

Markets are⁢ keenly awaiting⁣ US inflation figures for June, scheduled for release on Tuesday. A Reuters poll ⁣anticipates a 0.3% rise in core CPI. This data will ⁤precede the Federal Reserve’s policy meeting later in July, with markets currently pricing in just over ⁣50 basis points of Fed ⁤easing⁢ by December.

Kenneth Broux,head of corporate research FX⁤ and rates at Societe Generale,highlighted the⁤ crucial question ⁣of whether tariffs will⁣ “percolate to CPI goods” after two months of 0.1% core CPI readings in April and May. Analysts at BNP Paribas believe that visible tariff pass-through and associated risks over the summer will likely keep⁣ the Fed on hold through the end of the year.

Broader Political and Trade Landscape

Adding to the economic ⁢uncertainty, Trump ⁣recently suggested ⁢it‍ would be a “great thing” if Fed Chair Jerome Powell stepped down, a⁢ move that could further undermine the central bank’s independence as he continues to advocate‍ for lower interest⁤ rates.

In Asia, recent data indicated a resurgence in China’s exports for June, ⁣with imports also rebounding. This surge is attributed to exporters rushing⁤ to capitalize ⁣on a fragile tariff truce between Beijing and Washington ahead of an August deadline for a potential trade deal. The ongoing trade dynamics between the US and China, coupled with the potential for broader tariff impositions, ⁤continue to shape the global economic outlook.