What's in the U.S.-EU trade deal?

Summary

Marketplace Morning Report: "What's in the U.S.-EU Trade Deal?"
Release Date: August 5, 2025

Hosted by David Brancaccio, the Marketplace Morning Report delivers a comprehensive overview of the latest business and economic news. In this episode, Brancaccio delves into the intricacies of the newly negotiated U.S.-EU trade deal, examines Amazon's evolving business strategy amidst market fluctuations, explores the current state of major oil companies, and highlights the growing influence of artificial intelligence in the corporate workforce.

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1. Detailed Breakdown of the U.S.-EU Trade Deal

David Brancaccio opens the segment by highlighting the significance of the European Union (EU) as the largest trading partner of the United States. He states:

"As a bloc, the European Union is the biggest US Trade partner, which is now to be guided by the number 15%" (01:03).

Henry Epp provides an in-depth analysis of the trade agreement's specifics:

• Tax Caps on European Imports: Most European imports, including critical sectors like pharmaceuticals and semiconductors, will have taxes capped at 15%. This is a reduction from the previous 27.5% tax on European cars and car parts imposed earlier in the year.

• Ongoing Investigations: The U.S. continues to investigate imports of prescription drugs and computer chips globally. While higher taxes could be imposed on these imports, those manufactured within the EU will remain under the 15% cap.

• Exclusions and Retaliatory Measures: European steel and aluminum imports are currently exempt from the new tax cap. Additionally, the European Commission has delayed retaliatory tariffs on U.S. goods by six months to facilitate the finalization of the trade deal.

Epp emphasizes the collaborative efforts between the U.S. and EU:

"European officials have said they're working with the US to release a joint statement outlining the trade agreement." (01:25)

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2. Amazon's Strategic Shift Amid Market Challenges

Following the trade discussion, David Brancaccio transitions to the technology sector, focusing on Amazon's recent financial performance:

"Amazon stock is down more than 9% in the two trading days that followed its quarterly results. Profits beat expectations, but there were hints of slower growth ahead for Amazon's remote computing for hire business." (02:28)

Kristen Schwab explores perceptions of Amazon's multifaceted business model through interviews with industry experts:

• Diverse Operations: Interviewees like Aaron Charis describe Amazon not just as a retailer but as a conglomerate and ecosystem encompassing technology, logistics, advertising, and entertainment.

  "They are, yes, a retailer, yes, a tech company, yes, a logistics company, yes, an advertising business and all also, you know, yes, an entertainment company." – Alan Good (03:17)

• Cloud Computing Dominance: Amazon Web Services (AWS) is highlighted as a more profitable arm compared to its traditional retail sector, with margins around 40%. This segment serves high-profile clients like Toyota and Airbnb.

  "The margins on Amazon's cloud business... are something like 40% advertising. About the same, maybe more. But retail, it is a loss leader akin to Costco's $5 rotisserie chickens." – Sucharita Kadali (03:28)

• Retail as Infrastructure: The retail division remains crucial, providing the necessary infrastructure to support other profitable ventures like advertising.

  "The pure retail part of Amazon... allows them to have the infrastructure to sell other things more profitable." – Santiago Galino (04:26)

• Industry-Wide Implications: Other retailers are adopting similar diversification strategies to remain competitive, with companies like Target, Wayfair, and Walmart expanding into third-party selling platforms, financial services, and healthcare.

  "These days, the business of selling stuff isn't enough." – Kristen Schwab (05:14)

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3. The Mixed Fortunes of Major Oil Companies

David Brancaccio next addresses the contrasting financial performances within the oil industry under the Trump administration's energy policies:

"With the Trump administration's embrace of fossil fuel powered energy, the big oil companies are coming off surprisingly mixed sales and profit reports." (06:36)

Elizabeth Troval reports on the varying fortunes of leading oil giants:

• BP's Performance: BP shares saw a modest increase of 2% in London, buoyed by strong profits.

• ExxonMobil and Chevron: These companies disappointed investors despite the favorable policy environment.

Tom Klose and Alan Good discuss market dynamics influencing these outcomes:

• OPEC's Production Increase: Continued ramping up of oil production by OPEC has led to an oversupply in the market, depressing oil prices and, consequently, company earnings.

  "OPEC continues to ramp up production... pushed down prices and company earnings." – Tom Klose (06:54)

• Strategic Management by Big Oil: Despite lower prices, major companies have maintained profitability through strategic measures like layoffs, technological investments, and asset divestitures.

  "A set level of earnings at a certain oil price today is higher than what they may have generated five or ten years ago." – Alan Good (07:13)

• Impact on Smaller Companies: Smaller oil firms face existential threats, with potential cost-cutting and consolidation looming, although consumers benefit from lower gasoline prices.

  "The good news for consumers is we're going to have cheap gasoline." – Alan Good (08:16)

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4. Palantir's Growth and the Rise of AI in Workforce Automation

In the concluding segment, David Brancaccio touches upon the intersection of government contracting, artificial intelligence, and workforce dynamics:

"Beneficiary when the Trump people cut federal workers is a company that makes the data processing and artificial intelligence to replace those humans." (08:29)

• Palantir's Financial Milestone: Palantir, a significant government contractor, reported its first-quarter sales reaching $1 billion.

• AI-Driven Workforce Reduction: The company's CEO expressed on CNBC that AI technologies could facilitate the reduction of hundreds of staff members, while simultaneously aiming to "increase sales tenfold."

• Stock Performance: Following the announcement, Palantir's stock appreciated by 4% and saw an additional 5% increase in premarket trading.

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Conclusion

This episode of Marketplace Morning Report provides listeners with a nuanced understanding of critical global trade developments, the strategic maneuvers of major corporations like Amazon and Palantir, and the fluctuating fortunes of the oil industry under current economic policies. Through expert insights and detailed reporting, the episode underscores the interconnectedness of global markets and the pivotal role of strategic decision-making in navigating economic challenges.

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For more in-depth analysis and updates, tune in to future episodes of the Marketplace Morning Report.

Transcript

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[David Brancaccio]

As a bloc, the European Union is the biggest US Trade partner, which is now to be guided by the number 15. I'm David Brancaccio in Los Angeles. Last week, the US EU trade deal was painted with a broad brush, but now we're getting some finer detail. With taxes on most European imports capped at 15%, Marketplace Henry Epp reports.

[Henry Epp]

What's new is that 15% cap will apply to pharmaceuticals and semiconductors. According to an EU official quoted in Reuters, the US Is still investigating imports of both prescription drugs and computer chips from across the globe. The result of that probe could lead the Trump administration to impose higher taxes on imports of those items. But for drugs and chips made in the EU, that tax won't be any higher than 15%. Under the trade framework, European cars and car parts will also face a 15%. That's down from the current 27.5% charge, which the Trump administration imposed earlier this year. Major exceptions to the cap for now are European steel and aluminum. Meanwhile, the European Commission announced Monday that it will delay a set of retaliatory tariffs on US Goods for six months to give the sides time to finalize a deal. Those measures had been set to take effect on Thursday. European officials have said they're working with the US to release a joint statement outlining the trade agreement. I'm Henry AP for Marketplace.

[David Brancaccio]

Amazon stock is down more than 9% in the two trading days that followed its quarterly results. Profits beat expectations, but there were hints of slower growth ahead for Amazon's remote computing for hire business. Amazon is putting more money into its cloud computing business and more into developing artificial intelligence for all its Products Marketplace's Kristen Schwab has more.

[Kristen Schwab]

When you think of Amazon, what first comes to mind?

[Henry Epp]

I will think of Amazon as a tech company.

[Tom Klose]

Amazon is a conglomerate now.

[Alan Good]

They're an ecosystem, I guess is probably the best way to describe it.

[Kristen Schwab]

That's Santiago Galino, Sucharita Kadali and Aaron Charis. And their answers are a far cry from Amazon's origins as a bookseller or even what it is most known for today. Amazon Prime. Aaron Charris runs E commerce at Bain and Company.

[Alan Good]

They are, yes, a retailer, yes, a tech company, yes, a logistics company, yes, a advertising business and all also, you know, yes, an entertainment company.

[Kristen Schwab]

Amazon has its cloud services through aws. It has its own warehousing and trucking, and it makes media, including a new James Bond movie. Charis says these parts of Amazon are becoming more essential than Amazon.com itself. The margins on Amazon's cloud business, which has clients like Toyota and Airbnb, are something like 40% advertising. About the same, maybe more. But retail, it is a loss leader akin to Costco's $5 rotisserie chickens. Sucharita Kodali is a retail analyst at Forrester.

[Tom Klose]

In all of the calculations that we have done, it is hard to envision a scenario where that traditional retail business is profitable.

[Kristen Schwab]

Affordable products and fast shipping is likely subsidized by Amazon's other products like aws. But it doesn't mean Amazon is going to forget about prime, says Santiago Galino, a professor of operations at Wharton.

[Henry Epp]

The pure retail part of Amazon, I think is there to stay because it allows them to have the infrastructure to sell other things more profitable.

[Kristen Schwab]

For instance, every Amazon search includes ads companies have paid for to boost their position. Those ads and nearly everything outside retail and need retail to work. And this is increasingly a strategy other retailers are using to diversify. Target and Wayfair have third party selling platforms. Walmart offers financial services, healthcare and pet insurance. Here's Baines Charis again.

[Alan Good]

That's always the worry is that my competitor makes money in places that I don't and it allows them to subsidize where they fight with me.

[Kristen Schwab]

These days, the business of selling stuff isn't enough. I'm Kristen Schwab for Marketplace.

[Wix Designer]

As a designer, you know, clients want it all. A stunning site that runs their business and scales with their success. But tight deadlines shouldn't mean compromising your vision. Wix Studio is built for designers like you. Plan sites in seconds with AI powered site mapping, then design, starting in Figma or in the WIX Studio editor with precise layout tools. Then bring your vision to life with no code, animations, AI tools and one click responsive design. Design smoother and deliver sooner. Go to wixstudio.com Our state has changed.

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[David Brancaccio]

With the Trump administration's embrace of fossil fuel powered energy, the big oil companies are coming off surprisingly mixed sales and profit reports. BP shares are up about 2% this morning in London with strong profits. But ExxonMobil and Chevron disappointed investors. Marketplace's Elizabeth Troval reports.

[Tom Klose]

For those in the business of bringing oil out of the ground, Tom Klose with consulting firm Turner, Mason & Co.

[Alan Good]

Says there's a lot of disappointment out there, mostly in the price of crude oil.

[Tom Klose]

The problem? OPEC continues to ramp up production. Morningstar's Alan Good that's tipping the market.

[Alan Good]

Into a little bit of oversupply that's.

[Tom Klose]

Pushed down prices and company earnings. But Good says big oil has been strategic with layoffs, deploying technology and selling off costly assets, which means they have.

[Alan Good]

A set level of earnings at a certain oil price today is higher than what they may have generated five or.

[Tom Klose]

10 years ago, doing more even at a lower oil price. As for US Operations, Matthew Bernstein with Rystad Energy says the current price per barrel in the mid-60s may not be ideal for these big companies, but it.

[Alan Good]

Doesn'T break the model like prices in the 50s or low 50s would.

[Tom Klose]

Though smaller oil companies are not quite as well positioned, it really becomes a.

[Alan Good]

Question of, frankly, survival for a lot.

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Of these companies where their inventory is more limited compared to the largest players.

[Tom Klose]

We'll likely see cost cutting and consolidation. That may not be great news if you work in the Permian Basin, but as for the rest of us, Tom.

[Alan Good]

Klose again, the good news for consumers is we're going to have cheap gasoline.

[Tom Klose]

He expects a stretch of lower prices at the pump. I'm Elizabeth Troval for Marketplace, a big.

[David Brancaccio]

Beneficiary when the Trump people cut federal workers is a company that makes the data processing and artificial intelligence to replace those humans. Stock in Palantir, a huge government contractor, reported its first quarter ever where sales reached $1 billion. The company's CEO is on CNBC saying AI can even help him cut hundreds of his own staff at a time he hopes to increase sales tenfold. Palantir stock went up 4% yesterday and is up another 5% in premarket trading right now. In Los Angeles, I'm David Brancaccio. It's the Marketplace Morning Report from apm, American Public Media.

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