EU agrees to speed up trade talks

Summary

Marketplace Morning Report: EU Agrees to Speed Up Trade Talks Release Date: May 26, 2025

Hosted by David Brancaccio, Marketplace

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1. Introduction: EU and US Trade Negotiations

In today's episode of the Marketplace Morning Report, David Brancaccio delves into the latest developments in EU-US trade relations. Following President Donald Trump's recent imposition of a 50% tariff on European goods, the European Union has agreed to expedite trade discussions in an effort to mitigate escalating tensions.

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2. U.S. Tariffs and EU's Response

David Brancaccio opens the discussion with Henry Epp, who provides an overview of the current trade climate:

David Brancaccio [01:02]: "The European Union has agreed to speed up trade talks this after President Donald Trump last week ordered a higher 50% tariff on European goods."

Trump Administration Analyst elaborates on the strategic delays and negotiations:

Trump Administration Analyst [01:20]: "Trump said he would delay that 50% import tax until July 9 after speaking with European Commission President Ursula von der Leyen on Sunday. And that would give the sides more time to negotiate a trade deal..."

Despite initial efforts for reciprocity, the Trump administration has stood firm on its tariffs:

Trump Administration Analyst [01:30]: "President Trump rejected the EU's latest offer last week... Trump turned down that offer and suddenly threatened a drastic tariff on the entire bloc at the end of last week."

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3. Historical Context and Trade Policy Shifts

Henry Epp provides historical context, highlighting the unpredictability of the Trump administration's trade policies:

Trump Administration Analyst [02:07]: "Yeah, it's just one example of the trade policy chaos ever since that so-called Liberation Day event that Trump held in early April... The US intended to put a 20% tax on European imports."

The EU's retaliatory measures have added complexity to the negotiations:

Trump Administration Analyst [02:25]: "The EU then announced retaliatory tariffs on billions of dollars of US goods... It has to balance the different economic priorities of all its members."

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4. Market Reactions to Trade Developments

The episode highlights the immediate impact of the trade talks on the stock market:

Henry Epp [02:47]: "All right, a sense that the trade war maybe is down a gear is credited with boosting the stock market. S&P futures are up 1.6%. Nasdaq futures up 1 point."

This positive movement suggests investor confidence in the potential de-escalation of trade tensions.

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5. U.S. International Development Finance Corporation

Shifting focus from trade tariffs, David Brancaccio introduces James Kunder to discuss the U.S. International Development Finance Corporation (DFC):

David Brancaccio [04:25]: "The Trump administration has dismantled much of the U.S. foreign aid infrastructure. But today one entity left standing and why? It's called the U.S. International Development Finance Corporation."

James Kunder, acting Deputy Administrator of USAID from 2006 to 2009, explains the DFC's role and the administration's funding proposals:

James Kunder [05:57]: "The Development Finance Corporation was started by the US Government about six years ago... So if an American company sees an investment opportunity somewhere in the developing world, the Development Finance Corporation helps provide financing..."

Kunder emphasizes the dual objectives of the DFC:

James Kunder [06:45]: "When Congress passed a law to create this organization, the idea was that it would do both, both lift people out of poverty and it would also help American firms get access to critical minerals or to energy."

He also addresses potential criticisms regarding the DFC's approach:

James Kunder [07:32]: "I believe this is a potential win-win situation because in the short term, these minerals are beneficial to US national strategic interest... But what I fear... is that they see those long-term effects as too remote."

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6. South Africa’s Communication Sector Adjustments

In the latter part of the episode, Henry Epp discusses changes in South Africa's communication laws, particularly concerning foreign-owned companies:

Henry Epp [08:30]: "Given South Africa's history of apartheid, that country has a law requiring foreign-owned communications companies... Now, amid a draft plan to ease some of those requirements, South Africa's communications minister said today the moves are not only meant to help Elon Musk's Internet via satellite company, Starlink."

This development underscores South Africa's efforts to balance local ownership requirements with attracting global tech firms, ensuring no preferential treatment is given to specific companies.

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7. Conclusion

David Brancaccio wraps up the report by summarizing the day's key economic and trade stories:

David Brancaccio [09:28]: "I was hoping you wouldn't say that. I need to go and get some whiskey."

The episode concludes with a light-hearted exchange, signaling the end of the morning's in-depth analysis.

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Key Takeaways

• Trade Negotiations: The EU's commitment to speeding up trade talks aims to alleviate the tension caused by Trump's tariffs, with both sides navigating complex retaliatory measures.

• Market Impact: Reduced trade war intensity has positively influenced stock market indices, reflecting investor optimism.

• Development Finance: The U.S. International Development Finance Corporation represents a strategic shift towards private sector-led development, balancing American strategic interests with global poverty alleviation.

• Global Communication Policies: South Africa's adjustments in communication ownership laws highlight the ongoing balance between local economic empowerment and global tech integration.

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For more insights and detailed analysis on the latest business and economic news, tune into the Marketplace Morning Report every weekday morning.

Transcript

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[David Brancaccio]

The Tariff.

[Henry Epp]

O meter is down a notch this morning. I'm David Brancaccio in New York. The European Union has agreed to speed up trade talks this after President Donald Trump last week ordered a higher 50% tariff on European goods marketplaces. Henry Epp is here with the latest.

[Trump Administration Analyst]

Trump said he would delay that 50% import tax until July 9 after speaking with European Commission President Ursula von der Leyen on Sunday. And that would give the sides more time to negotiate a trade deal, though at this point there aren't many details around what an agreement might look like. President Trump rejected the EU's latest offer last week, according to Bloomberg. That would have had both sides remove tariffs on some industrial products and it would have allowed more exports of American agricultural products to the eu. Trump turned down that offer and suddenly threatened threatened a drastic tariff on the entire bloc at the end of last week. And that threat is still dangling over these negotiations for the next six weeks.

[Henry Epp]

Henry, on this day after Memorial Day, remind us about the twists and turns of trade leading into summer here.

[Trump Administration Analyst]

Yeah, it's just one example of the trade policy chaos ever since that so called Liberation Day event that Trump held in early April. And that's when he announced tariffs on most countries across the globe. At that point, the US intended to put a 20% tax on European imports. The EU then announced retaliatory tariffs, tariffs on billions of dollars of US goods. But Trump backed off, dropping tariffs to 10% until his threat late last week. The European Commission handles trade negotiations on behalf of all of its 27 member states, and it has the backing of its members to trigger some of those retaliatory measures if needed. But that setup also makes the EU's job trickier. It has to balance the different economic priorities of all its members.

[Henry Epp]

All right, a sense that the trade war maybe is down a gear is credited with boosting the stock market. S and P futures are up 1.6%. Nasdaq futures up 1 point.

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[Henry Epp]

The Trump administration has dismantled much of the U.S. foreign aid infrastructure. But today one entity left standing and why? It's called the U.S. international Development Finance Corporation. It's about capital to private companies working in low income countries. President Trump's budget blueprint proposes a $3 billion raise for the DFC. For more on an aid organization spared, we turn to James Kunder who is acting Deputy Administrator of USAID from 2006 through 2009 and is now principal at Gunder Realy Associates. That's a Northern Virginia based consulting firm specializing in international development. Good morning.

[James Kunder]

Thank you, David.

[David Brancaccio]

I want to understand this better. How does this development finance corporation, how's it supposed to work?

[James Kunder]

It's relatively obscure US Government agency. Traditionally, America has engaged with the poorer countries of the world through my old organization, the U.S. agency for International Development. USAID.

[David Brancaccio]

Yeah, I heard about that place. It used to exist. So in lieu of that, in lieu.

[James Kunder]

Of that The Trump administration, David, is focusing on the Development Finance Corporation, which has a slightly different take, which is what we should be doing is supporting US Companies who want to invest in those countries. The Trump administration is actually proposing a $3 billion increase in funding supporting these companies with capital.

[David Brancaccio]

Is there money behind this?

[James Kunder]

There is definitely money behind it. The Development Finance Corporation was started by the US Government about six years ago. Many observers view it as a direct attempt to blunt the People's Republic of China, so called Belt and Road Initiative. So if an American company sees an investment opportunity somewhere in the developing world, the Development Finance Corporation helps provide financing, either direct financing or loan guarantees to help reduce the risk of investing in one of these developing countries.

[David Brancaccio]

Does this Development Corporation connect that work with lifting people out of poverty in low income parts of the world?

[James Kunder]

When Congress passed a law to create this organization, the idea was that it would do both, both lift people out of poverty and it would also help American firms get access to critical minerals or to energy. A perfect example of this, there's a railroad project, the Lobito rail project. That rail line can help American companies invest, but it could also contribute to agriculture work along the rail line and perhaps lift a lot of people out of poverty.

[David Brancaccio]

You're describing really a larger shift, the pendulum shifting toward private sector led development. It can sound more transactional, extractive, you know, can it overall get the job done?

[James Kunder]

I believe this is a potential win win situation because in the short term, these minerals are beneficial to US national strategic interest. In the long term, having people prosper in Africa opens up markets for other US products and also prevents the kind of radicalization or impoverishment that causes conflict. But what I fear in the Trump administration is that they see those long term effects as too remote. And that's why they decided, in my view, in a strategic blunder to stop funding the US Agency for International Development.

[David Brancaccio]

James Kunder was acting deputy administrator of USAID from 2006 to 2009. He's principal at Kunder Realy Associates in Virginia, a consulting firm specializing in in Matters International. Mr. Kunder, thank you.

[James Kunder]

Thank you for your time, David.

[Henry Epp]

And given South Africa's history of apartheid, that country has a law requiring foreign owned communications companies doing business there to sell 30% stakes to local historically disadvantaged enterprises, which would typically be black owned. Now, amid a draft plan to ease some of those requirements, South Africa's communications minister said today the moves are not only meant to help Elon Musk's Internet via satellite company, Starlink, no special dispensation for Starlink or any other company or individual was the promise today. In New York, I'm David Brancaccio. This is the Marketplace morning report from apm, American Public Media.

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[James Kunder]

I think you're breaking into this wall.

[Henry Epp]

Regardless.

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I was hoping you wouldn't say that. I need to go and get some whiskey.

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I think I would get the whiskey for sure.

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