On Friday, the editorial team found ourselves wondering: how much would Washington tax the EU? The most common answer was "10%", the current surcharge and the rate the United Kingdom successfully negotiated a few weeks ago (which, in hindsight, proved to be a highly effective tactic by London — more on that later). It turns out the answer is 30%. Donald Trump made the announcement at midday on Saturday, unless Brussels backs down by 1 August.

It is 30% for Mexico as well, by the way. Until Saturday, the two trading partners had largely avoided the White House's wave of criticism. We had mistakenly believed that Europe had regained some credibility with the Trump administration, and that Mexico had been forgotten after the Gulf of Mexico was briefly renamed the Gulf of America. The EU's soft approach has now backfired. Ursula von der Leyen is still hoping for a reduction, but Brussels never really appeared willing to consider a direct confrontation.

To set the tone, I will borrow a quote from a diplomat ‘close to the file' quoted anonymously by French newspaper Le Grand Continent: "We were very close to a 10% British-style agreement. Now, we are going to give in a little more and triumphantly conclude that we have avoided the 30%." 

Europe, the world's leading exporter and importer, is likely to become Washington's useful idiot by financing the US deficit and Beijing's by acting as an outlet for products that will be diverted from the United States. There is one exception: the United Kingdom, which should benefit from the agreement already signed and from possible redirections to export to the US. ‘In the current global context, one recommendation is clear: buy British stocks,' notes research firm Panmure Liberum this morning.

Still, when it comes to the big picture, all of the US's major trading partners have received a threatening letter detailing the tithe that Washington intends to levy or is already levying. Wall Street believes that this policy will ultimately bear fruit: stock market indices are at their peak. Investors still have some concerns, but these remain vague. What is certain is that the average customs duty on imports into the United States is 16%, compared with 2.5% at the beginning of the year.

UBS has calculated that this rate is likely to rise to 18% with the announcements made up to Friday. Adding Mexico and the EU, the 20% mark is likely to be exceeded. This is a considerable shock for global trade, the impact of which is currently being offset by precautionary purchases made before the surcharges came into force. The financial markets, which had reacted slightly on Friday to the first wave of promises to raise tariffs, are tense this morning. Leading indicators on Wall Street are down, 10-year US yields are rising and the dollar is up. However, we are still a long way from the panic of February, March and April. But this calm is obviously questionable given the reset it implies for the global economy. 

Here are the other key news items as we start the week: 

  • It's ‘Crypto Week' in the United States, a week during which Congress could pass a series of bills that would anchor the crypto industry in the financial landscape. Bitcoin is not mistaken: it has just passed the symbolic threshold of $120,000.
  • Donald Trump has kept up the pressure on Fed Chairman Jerome Powell, saying he hopes he will resign. Rumours are circulating in Washington that the US president's loyalists are seeking to build a case for Powell's impeachment.
  • In China, June import and export figures exceeded expectations. Donald Trump (again) announced the shipment of Patriot surface-to-air missiles to Ukraine and could announce further equipment and sanctions against Russia today.

In the earnings calendar, the third week of July marks the return of results from the heavyweights on the stock market. In the United States, the big banks, led by JPMorgan Chase, will kick things off on Tuesday. Netflix, GE Aerospace and PepsiCo will also be in action. In Europe, ASML, Rio Tinto, Compagnie Financière Richemont, Novartis and ABB will be the headliners. In addition to corporate news, there will be a busy macroeconomic calendar, including China's second-quarter GDP and US inflation figures for June on Tuesday, two key indicators for investors.

In Asia-Pacific, equity markets remain relatively stoic in the face of a barrage of letters from the White House. Japan and Australia are just slightly down and Hong Kong is trading in the pale green, while South Korea is up 0.7%. The Indian (-0.4%) and Taiwanese (-0.8%) markets are starting the week in the red. European futures are down at the open.

Today's economic highlights:

On today's agenda: industrial production in Germany. See the full calendar here.

  • GBP / USD: US$1.35
  • Gold: US$3,357.97
  • Crude Oil (BRENT): US$70.41
  • United States 10 years: 4.43%
  • BITCOIN: US$122,203

In corporate news:

  • Burberry shows early promise under new CEO Josh Schulman despite declining sales, boosting investor optimism.
  • Lloyds Banking Group is to acquire digital holding company Curve.
  • BASF has lowered its forecasts for 2025 due to the impact of tariffs on the global economy, in line with analysts' expectations.
  • Mediobanca has rejected a hostile takeover bid from Banca Monte dei Paschi.
  • BPER Banca has successfully completed its takeover bid for Banca Popolare di Sondrio, acquiring 58.35% of the capital.
  • ThyssenKrupp and the IG Metall union have reached an agreement providing for reduced working hours, lower bonuses and the closure of certain sites as part of a plan to restructure the German steel manufacturer.
  • Novartis has failed in its attempt to prevent the marketing of the generic drug Entresto in the United States until 2026.
  • Kraft Heinz is considering spinning off a large part of its food business, including many Kraft products, according to Reuters.
  • Shareholders of Walgreens Boots Alliance have approved the transaction with Sycamore Partners.
  • The CEO of Nvidia will hold a press conference in Beijing on 16 July.
  • Apple has offered at least $150 million per year for the streaming rights to Formula 1, according to Business Insider.
  • Warner Bros' Superman has grossed $217 million since its release.
  • China approves the Ansys / Synopsys deal, subject to conditions.

See more news from UK listed companies here

Analyst Recommendations:

  • Volex Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 415 to GBX 430.
  • Bytes Technology Group Plc: Panmure Liberum maintains its buy recommendation with a price target reduced from GBX 660 to GBX 540.
  • Associated British Foods Plc: Panmure Liberum upgrades to buy from hold with a price target raised from GBX 1900 to GBX 2600.
  • Coca-Cola Hellenic: Goldman Sachs maintains its buy recommendation with a price target raised from GBX 4200 to GBX 4300.
  • Anheuser-Busch Inbev Sa/Nv: Goldman Sachs maintains its buy recommendation and raises the target price from USD 88 to USD 91.
  • Ionos Group Se: Goldman Sachs maintains its buy recommendation and raises the target price from 41.10 to EUR 45.50.
  • United Internet Ag: Goldman Sachs maintains its buy recommendation and raises the target price from 22.50 to EUR 34.60.
  • Sixt Se: DZ Bank AG Research maintains its buy recommendation with a price target raised from 100 to EUR 105.
  • Commerzbank Ag: Deutsche Bank maintains its buy recommendation and raises the target price from 29 to EUR 33.