US and EU Rush to Finalize Trade Deal Amid Criticism, China Trade Truce Extension Likely

US and EU rush to finalize trade deal before Friday's deadline, with mixed reactions from EU countries. The deal includes a baseline tariff rate of 15% on EU goods imported into the US. Meanwhile, US-China talks are underway, with a 90-day trade truce extension likely. Trump also announced letters dictating tariff rates for over 200 countries, while touting a deal with Japan and expressing skepticism about a deal with India.

In a rush to finalize a trade deal before the Friday deadline, the United States and European Union have agreed to a framework that includes a baseline tariff rate of 15% on EU goods imported into the US. The agreement, announced by President Trump and European Commission President Ursula von der Leyen, has drawn mixed reactions from EU countries [3].

The deal, which aims to avoid a full-blown trade war, has been criticized by key EU members. German Chancellor Friedrich Merz described the outcome as unsatisfying, while France’s Bayrou dubbed it a "dark day" for Europe [3]. The EU has agreed to purchase $750 billion worth of energy from the US over the next three years and invest $600 billion in the US, but these figures are seen as heavily inflated and potentially unfeasible [2].

Meanwhile, the US and EU are preparing for the August 1 deadline of the reciprocal tariffs' extension. Canada is frantically trying to seal a deal to avoid increased tariffs, while other countries face a "world tariff" of 15-20% if Trump is feeling generous [2]. The US administration is also working on letters dictating tariff rates for over 200 countries, while touting a deal with Japan that includes a 15% tariff on goods imported into the US [3].

Separately, the US and China are engaged in talks with a 90-day trade truce extension likely [3]. Trump also expressed skepticism about a deal with India, suggesting more negotiations would be needed before the Aug. 1 deadline [3].

The US Dollar has benefited from the improved risk appetite, with the euro/dollar pair dropping below 1.1550, fully erasing the rally since mid-July [2]. Gold has retreated from its one-month high, currently testing the 50-day simple moving average at $3,323 [2]. Oil, however, continues to trade within the $65-69 range, awaiting key growth, PCE, and jobs data from the US [2].

The market is eagerly awaiting Wednesday’s FOMC meeting and the preliminary Q2 GDP reports from the EU and the US. Today’s calendar is relatively quiet, with the 7-year US Treasury auction potentially disappointing investors [2].

References:
[1] https://www.devdiscourse.com/article/headlines/3513800-trade-tensions-cast-shadow-on-market-performance
[2] https://www.investing.com/analysis/us-dollar-extends-rally-as-useu-deal-boosts-risk-appetite-200664484
[3] https://finance.yahoo.com/news/live/trump-tariffs-live-updates-us-eu-deal-details-emerge-as-china-talks-begin-trump-seeks-15-20-world-tariff-200619425.html
[4] https://www.fxstreet.com/news/eur-usd-remains-below-11600-as-us-eu-trade-deal-appears-to-favor-us-economy-202507290307