What to Make of the U.S.-EU Deal That Averted Trade War

Summary

WSJ What’s News: What to Make of the U.S.-EU Deal That Averted Trade War Release Date: July 28, 2025

In this episode of WSJ What’s News, host Sabrina Siddiqui delves into the significant U.S.-EU trade agreement that has successfully averted a potential trade war. The discussion spans the implications of the deal, reactions from both sides of the Atlantic, and broader economic and political developments influencing global markets.

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U.S.-EU Trade Agreement: Avoiding a Trade War

The episode opens with a comprehensive analysis of the recent trade agreement between the United States and the European Union. Both business leaders and policymakers view the deal as a critical step in maintaining economic stability and preventing a costly trade war.

Sabrina Siddiqui introduces the topic:

"Business leaders on both sides of the Atlantic breathe a sigh of relief that the U.S. and European Union have averted a bruising trade war with their agreement on tariffs and investment." [00:39]

Key Terms of the Deal:

• Baseline Tariff: A 15% tariff imposed on most European goods.
• EU Commitments: The European Union has agreed to purchase hundreds of billions of dollars in U.S. energy products and invest significantly in the United States.

Insights from Brian Schwartz: Brian Schwartz, the Wall Street Journal's White House economic policy reporter, provides an in-depth perspective on the negotiations and the deal's implications.

• Negotiation Dynamics:

  "There was a letter that was sent out by President Trump recently basically saying that the EU was set to pay a 30% tariff. But then things quickly changed when the president decided to meet with the leaders of the EU in Scotland." [01:38]

• Deal Benefits:

  "The deal seems to give more of a benefit to the United States than it does to the European Union. You're talking about the European Union guaranteeing hundreds of billions of dollars in investments into the United States." [02:09]

• Tariff Strategy:

  "Trump has zero intention on removing these tariffs entirely, that they're going to be part of his negotiations trading strategy." [02:08]

Market Reactions: The U.S. stock market responded positively to the agreement, with the Nasdaq rising slightly, while the Dow Industrial Average and S&P 500 had negligible changes. The White House has actively promoted the deal as a significant achievement.

European Response: While the agreement has been hailed as a victory by President Trump, European analysts contend that the EU conceded significantly to avoid punitive tariffs, potentially sacrificing long-term economic benefits.

Next Steps: The agreement, while a crucial milestone, requires comprehensive implementation. The promised investments and tariff adjustments will unfold over the coming years, with potential impacts on job growth and economic relations between the two blocs.

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Public Sentiment on Trump’s Immigration Policies

A recent Wall Street Journal poll reveals nuanced American opinions on President Trump's approach to illegal immigration.

• Overall Support:

  "A majority of Americans support President Trump's goal of cracking down on illegal immigration." [04:03]

• Deportation Preferences:

  • Pro-Deportation: 62% favor deporting individuals who entered the country illegally.
  • Opposition to Methods:
    • 58% oppose detaining and deporting without judicial proceedings.
    • 58% also oppose deporting immigrants to prisons in countries like El Salvador and South Sudan.

These findings indicate that while there is significant backing for tough immigration measures, there is considerable discomfort with the methods employed, highlighting a divide between policy objectives and public approval of execution strategies.

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President Trump’s Stance on Russia and Gaza Crisis

In recent remarks from Scotland, President Trump addressed escalating tensions involving Russia and the humanitarian crisis in Gaza.

Demand for Ceasefire:

"A new deadline of about 10, 10 or 12 days from today. No reason in waiting. It's 50 days. I want to be generous, but..." [05:19]

Trump reiterated his firm stance on Russia’s actions in Ukraine, indicating potential economic repercussions if President Vladimir Putin does not agree to a ceasefire within the shortened timeframe.

Gaza Humanitarian Initiative: Trump announced a new program aimed at delivering food directly to Palestinians in Gaza to combat the severe hunger crisis.

• Statements on Humanitarian Aid:

  "The food crisis in Gaza is a terrible situation." [05:36]

Details about the initiative remain sparse, raising questions about whether it represents a new effort or an expansion of existing programs. A White House spokeswoman stated that more information would be provided soon.

Context of the Crisis: The United Nations reports a dire situation in Gaza, with thousands of children suffering from malnutrition and numerous fatalities due to starvation.

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Corporate Workforce Reductions: A Strategic Shift

Shifting focus to the corporate landscape, the episode explores the trend of CEOs openly discussing workforce reductions as a strategic move rather than a sign of distress.

Insights from Chip Cutter: Wall Street Journal reporter Chip Cutter explains the underlying factors driving this shift.

• Reasons for Workforce Reductions:

  • Cooling Labor Market: Companies are more selective in hiring, especially for white-collar positions.
  • Adoption of AI: Increased reliance on artificial intelligence and technology to streamline operations and reduce costs.

• Changing Executive Perspectives:

  "CEOs used to talk about employees as the talent, as their greatest assets, to now many CEOs thinking that these employees are almost an impediment." [08:00]

• Corporate Strategies:

  • Blurring of job roles, such as combining product manager and software engineer responsibilities.
  • Increased use of technology to minimize the need for additional headcount.
  • Maintenance of smaller, more agile teams influenced by startup culture.

Market Implications: The trend reflects a cautious approach to job creation, with companies prioritizing efficiency and technological integration over expanding their workforce. This mindset impacts higher-paid, knowledge-based jobs, leading to a more strategic and reduced approach to hiring.

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Dubai Chocolate: The Next Big Food Trend?

The episode concludes with a discussion on the latest food trend, Dubai Chocolate, which is gaining traction on platforms like TikTok and in convenience stores.

Features of Dubai Chocolate:

• Composition: Rich chocolate shell filled with pistachio cream and shredded katai dough.
• Popularity: Rapid rise in demand among American food companies.

Challenges Highlighted by Owen Tucker Smith:

"The list of ingredients in Dubai Chocolate happen to be difficult to procure. Chocolate has already been a problem because cocoa prices are remaining so, so high." [10:28]

• Supply Chain Issues:

  • High costs of ingredients like chocolate and pistachios.
  • Limited availability of katai dough in the U.S., causing bottlenecks.

• Sustainability of the Trend: While Dubai Chocolate is currently popular, there's ambiguity about its longevity. Companies are betting on its potential to become a staple, akin to pumpkin spice or salted caramel, but its future remains uncertain.

Potential for Long-Term Success: Owen Tucker Smith notes the challenge for companies to balance trendy flavors with sustainable business practices, emphasizing that not all viral food trends will stand the test of time.

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Production Credits: This episode was produced by Peer Bienname with supervising producer Michael Kosmides. Additional audio provided by Reuters.

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For more detailed insights and daily updates, tune into WSJ What’s News every weekday and deep dive into market movements and global developments.

Transcript

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[Sabrina Siddiqui]

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[Sabrina Siddiqui]

The US EU trade deal averts a potential trade war as President Trump seems set on tariffs it goes to show.

[Brian Schwartz]

That Trump has zero intention on removing these tariffs entirely, that they're going to be part of his negotiations trading strategy. And it's a real clear signal for other countries coming to the table. They're not going to do away with these tariffs one way or another.

[Sabrina Siddiqui]

The deal marks a victory for Trump but faces pushback in Europe and why companies are touting workforce reductions to Wall street. It's Monday, July 28th. I'm Sabrina Siddiqui for the Wall Street Journal, covering for Alex Osola. This is the PM edition of what's News, the top headlines and business stories that move the world today. Business leaders on both sides of the Atlantic breathe a sigh of relief that the U.S. and European Union have averted a bruising trade war with their agreement on tariffs and investment. Now attention is shifting to assessing the deal's winners and losers. The deal would impose a 15% baseline tariff on most European goods, while the EU has also agreed to buy hundreds of billions of dollars of U.S. energy products and invest in the U.S. brian Schwartz, the Wall Street Journal's White House economic policy reporter, joins me to discuss. Brian, this is the most consequential agreement Trump has announced thus far. How did we arrive at this deal?

[Brian Schwartz]

Well, this was weeks in the making. There was a letter that was sent out by President Trump recently basically saying that the EU was set to pay a 30% tariff. But then things quickly changed when the president decided to meet with the leaders of the EU in Scotland. That ratcheted things up very, very quickly and it led to the deal. That and his presence, according to everybody we talked to, really did make the difference to push this thing over the finish line over the last few days.

[Sabrina Siddiqui]

What does this agreement mean for the.

[Brian Schwartz]

U.S. well, frankly, the deal seems to give more of a benefit to the United States than it does to the European Union. You're talking about the European Union guaranteeing hundreds of billions of dollars in investments into the United States. That's a big deal. I don't remember a trade deal featuring the European Union that had those types of details. And on the other hand, the 15% tariff, although less than the 30 that the president originally said he would put on the European Union is significant because it goes to show that Trump has zero intention on removing these tariffs entirely, that they're going to be part of his negotiating strategy. And it's a real clear signal for other countries coming to the table. They're not gonna do away with these tariffs one way or another.

[Sabrina Siddiqui]

And what has the reaction been like here at home?

[Brian Schwartz]

The stock market overall has been pretty happy about this. The White House has, of course, been pushing out how big of a deal this is. Listen, this was one of his whales for the President and his team, and in the end, they managed to get this done.

[Sabrina Siddiqui]

How has the deal been received in Europe?

[Brian Schwartz]

When I read things on, like, expert analysts on this stuff, a lot of people think it really isn't a great deal for the European Union, that they gave a lot of way in order to avoid the President's wrath. A lot of analysts think that EU gave away kind of the barn here a little bit. That's the thinking out of fear that the President was going to unleash the tariff juggernaut on them.

[Sabrina Siddiqui]

So the deal has been agreed to in principle. What are the next steps?

[Brian Schwartz]

Just like any other trade deal, it's not going to be something that happens automatically. You know, these are hundreds of billions dollars of investments over the time span of a couple years. So you're not going to see something jump out in the next week where you're going to see this company come out and immediately be able to build a plant somewhere in the United States. But if it pans out the way the President wants it to pan out, that is going to be pretty significant for potential job growth here in the United States.

[Sabrina Siddiqui]

Brian Schwartz is a White House economic policy reporter at the Wall Street Journal. Brian, thank you.

[Brian Schwartz]

Thank you.

[Sabrina Siddiqui]

Following President Trump's trade deal with the European Union, the euro sank against the dollar in U.S. markets. The Nasdaq edged 0.3% higher, while the Dow industrials slipped 0.1% and the S&P 500 wall. A majority of Americans support President Trump's goal of cracking down on illegal immigration, but they say his approach has gone too far. That's according to a new Wall Street Journal poll, which found that just over half of voters approve of Trump's handling of illegal immigration, a centerpiece of his agenda. 62% of respondents favored deporting people who came to the country illegally. But 58% of voters opposed two steps under Trump's mass deportation push. The first is detaining and deporting people believed to be in the US Illegally without them seeing a judge or getting a hearing. The second is deporting immigrants to prisons in other countries such as El Salvador and South Sudan, where they have no personal connections. Speaking in Scotland today, President Trump said he would shorten the deadline for Russian President Vladimir Putin to reach a ceasefire with Ukraine or face more economic pressure from the U.S. i'm going to make.

[Donald Trump]

A new deadline of about 10, 10 or 12 days from today. No reason in waiting. There's no reason in waiting. It's 50 days. I want to be generous, but.

[Chip Cutter]

We.

[Donald Trump]

Just don't see any progress being made.

[Sabrina Siddiqui]

Earlier this month, Trump had given Putin 50 days to agree to a peace deal or threaten that the US Would unleash a tariff package on Russia's trading partners. Today, Trump voiced frustration with Russian attacks on Ukraine intensifying. Despite what he thought were positive talks with Putin. It was not exactly clear what actions Russia would face if it didn't end the fighting by mid August. The president also said the US And Europe would launch a program to deliver food directly to Palestinians in Gaza as a deadly hunger crisis grips the territory. Speaking in Scotland with UK Prime Minister Keir Starmer, Trump described the food crisis in Gaza as a terrible situation. The initiative's details are unclear, with questions arising over whether it is a new effort or an expansion of an existing Israeli backed program. A White House spokeswoman said further details of the plan would be forthcoming. Trump's announcement comes amid growing pressure over Gaza's food crisis, which has rapidly deteriorated in recent weeks. The United nations says thousands of children are being treated for malnutrition. Its medical partners have reported that more than a dozen children have starved to death this month alone. Coming up, CEOs are shrinking their workforces and they couldn't be prouder. That's after the break.

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[Sabrina Siddiqui]

Big companies are getting smaller and their CEOs want everyone to know it gone are the days when trimming headcount was a sign of trouble. Companies are openly touting workforce reductions to Wall street, marking a shift from more careful language in the past. Smaller workforces influenced by startups and the use of AI are now viewed by many executives as an asset. For more, I'm joined by Wall Street Journal reporter Chip Cutter. Chip, what is behind the shift in how corporations are talking about staff reductions?

[Chip Cutter]

Part of it is a cooling labor market and this desire among many large companies to really embrace AI and to wring costs out in the process. So we've from a point where CEOs used to talk about employees as the talent, as their greatest assets, to now many CEOs thinking that these employees are almost an impediment, that large teams might be holding them back from progress. And so we've seen a really dramatic swing now in the ways that companies are talking about this. They're almost bragging about the ways that they're able to cut headcount just to give you a little flavor for what we're seeing out there. The CEO of Wells Fargo recently said that the bank had been able to cut headcount for 20 consecutive quarters. He said that the bank was using attrition, quote, as our friend. The CEO of Verizon, meanwhile, boasted to investors that the company had been, quote, very, very good on headcount. He noted that it's going down all the time.

[Sabrina Siddiqui]

We're expecting the latest monthly jobs report on Friday. What does this smaller workforce trend tell us about the labor market?

[Chip Cutter]

It just shows that we are at this moment where companies are thinking really critically about whether to add white collar jobs or not. This is all affecting the corporate positions, these higher paid, knowledge based jobs that are out there. And so what companies are doing is they're starting to blur roles, they're keeping jobs unfilled, they're holding back on hiring. So it's not that we're typically seeing large scale layoffs yet, but it's companies sort of really evaluating whether they need to add jobs to grow going forward. We've heard, for example, companies talk about a product manager being blended with that of a software engineer. There's been other examples of that, of companies saying we're going to use more technology to then ensure that we no longer need to add headcount in this area. Perhaps it gets redeployed elsewhere, or perhaps we just don't fill those positions.

[Sabrina Siddiqui]

Chip Cutter is a reporter at the Wall Street Journal. Thank you, Chip.

[Chip Cutter]

Thank you.

[Sabrina Siddiqui]

The latest food trend to take over TikTok feeds and convenience store treat aisles. Dubai Chocolate, A confection that typically involves a shell of rich chocolate filled with pistachio cream and a shredded dough known as katai. Some of the biggest food companies in America are picking up on it. While considering whether the Dubai Chocolate flavor might endure as a future like a pumpkin spice or salted caramel, my colleague Alex Osola spoke with WSJ reporter Owen Tucker Smith and asked him about the challenges these companies are facing as they are looking to incorporate Dubai Chocolate into their products.

[Owen Tucker Smith]

So the list of ingredients in Dubai Chocolate happen to be difficult to procure. Chocolate has already been a problem because cocoa prices are remaining so, so high. And so chocolate has actually been a product that plenty of food companies have been backing away from recently. Pistachios are also a traditionally expensive nut, and some companies had even been skeptical about including more pistachio desserts because it hasn't always traditionally sold well. And then the Katai fe is a lesser known product in the US and you all of a sudden have all these companies from across the world trying to get a hold of it at the same time. And when those things happen, there's a supply chain bottleneck. Prices go up, supply goes down. And it means that you have to really deploy a lot of resources in your company to make it happen at an affordable level, at a high qual and in the short time frame required to get it out. While this is still a hot trend.

[Sabrina Siddiqui]

Given these challenges, is this likely to become a long term staple in terms of flavor profile?

[Owen Tucker Smith]

That is the question for all these food companies these days is there's a new TikTok trend every week that's hyping up a new flavor profile, a new food, and oftentimes you don't want to chase those because by the time you get the resources together, it's already over. And one of the examples we cite in the story is whipped coffee, which for a moment during COVID felt like it was all the rage. But if you had pivoted your business model to chase something like that, now, it wouldn't be good for you. But at the same time, another trend is that we're seeing a faster emergence of long term flavor profiles, meaning that there are trends that might look like a fad at the moment, but are actually very quickly becoming competitors to some of the staples like salted caramel. And so that's the bet that these companies are making. But you'll never know if it's going to be a long term thing until it stands the test. Of time.

[Sabrina Siddiqui]

That was WSJ reporter Owen Tucker Smith speaking with Alex Osola. And that's what's news for this Monday afternoon. Additional audio in today's episode, courtesy of Reuters. Today's show was produced by Peer Bienname with supervising producer Michael Kosmides. I'm Sabrina Siddiqui for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for list it.