Bad news or good news?

Daily update

The EU and the US agreed that US consumers should pay more tax—levied at 15% for imports from the EU. EU President von der Leyen made vague pledges to buy stuff from and invest in the US, without the necessary authority to make those pledges reality. Pharmaceuticals and steel seem to be excluded from this deal. The result is better for the US economy than the worst-case scenario, but worse for the US economy than the situation in January this year—but it is bad news markets have probably anticipated.
Elsewhere, the lost art of letter writing is noticeable by its absence—Trump seems to have stopped writing letters announcing trade taxes for other countries. Trade negotiations between the US and China continue today with media suggestions that the current trade taxes will endure another three months.
The increased tax burden on US consumers will be felt in the future (August trade taxes are likely to hit consumer prices in early 2026). Policy uncertainty has been affecting businesses already. The Dallas Fed manufacturing survey’s comments section may hint at whether that uncertainty is fading.
The UK CBI retail sales data for July is likely to be influenced by retailers’ political agenda, and warm weather.