EU-US Tariff Battle Heats Up; Trump Will Send Air-Defense to Ukraine

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1:36Bloomberg Audio Studios, podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm Karen Moskow. Here are the stories we're following today. Karen battling back in the trade war. Bloomberg News has learned the European Union is preparing to step up its engagement with other countries hit by President Donald Trump's tariffs. Let's go to London and get the very latest with Bloomberg's James Woolcock. Good morning, James. Good morning, Nathan and Karen. The EU is reaching out to the likes of Canada and Japan to see if there might be a unified global response to America's trade aggression. This reporting from Bloomberg comes after the US president issued a new ultimatum of a tariff rate of 30 % over the weekend on the block.

2:22Germany's Chancellor Friedrich Mertz warned that rate of 30 % would hit exporters in Europe's largest economy to the core. Talks are still stuck on several issues, especially cars and tariff rates on agriculture. But if levies do go up in two weeks' time, the EU is prepared to retaliate on roughly$84 billion worth of U.S. goods, risking further trade escalation. In London, James Woolcock, Bloomberg Radio. All right, James, thank you. Well, President Trump will be heading to the U.K. for his second state visit. King Charles will host the president in September. Trump had warmly welcomed the offer of another state visit to Britain when he was handed the invitation by U.K.

3:00Prime Minister Keir Starmer in February. The U.K. was the first country to sign a tariff reduction deal with the U.S. in May. Before the president heads overseas, Karen, he may have found a new pressure point for Federal Reserve Chairman Jerome Powell. The president and his allies have been seizing on cost overruns at the central bank's headquarters renovation as they continue to hammer Powell for leaving interest rates unchanged. The president made the point to reporters at Joint Base Andrews outside Washington last night. We should have the lowest interest rate on earth, and we don't. He just refuses to do it, and yet he's spending$2.5 billion rebuilding the Fed.

3:38President Trump says he thinks Powell should quit. White House National Economic Council Director Kevin Hassett discussed it as well on ABC's This Week. The bottom line is that this is the most expensive project in D.C. history,$2.5 billion with a$700 billion cost overrun. White House Economic Advisor Kevin Hassett on ABC's This Week heard Sundays on Bloomberg Radio. Nathan, for the second time this year, the world's most powerful finance ministers gather in South Africa without the presence of U.S. Treasury Secretary. Scott Besson will skip the Group of 20 again this week, continuing a boycott of South Africa by top U.S.

4:12officials begun by Secretary of State Marco Rubio. He stayed away out of scorn over his host theme for its G20 presidency of solidarity, equality and sustainability. Turning now to the newest developments in the war in Ukraine, Karen, President Trump says the U.S. will send more Patriot air defense batteries to Ukraine. He spoke with reporters on his way back to the White House. I haven't agreed on the number yet, but they're going to have some because they do need protection. But the European Union is paying for it. We're not paying anything for it, but we will send it. It'll be business for us and we will send them Patriots, which they desperately need.

4:48Ukraine had been receiving weapons from the U.S., but only with money remaining from former President Joe Biden's time in office. President Trump had previously refused to consider seeking additional funds, arguing it would only harden Russian President Vladimir Putin's stance and dim chances to end the fighting. Nathan, former President Joe Biden is pushing back at one of President Trump's harshest claims about his mental acuity while he was in office. In an interview with The New York Times, the former president said he made all the clemency decisions that were recorded with an auto pen and that he had orally granted all pardons and commutations issued at the end of his term.

5:23And he says President Trump and Republicans are, quote, liars for claiming his aides used an auto pen without his authorization. Turning to the latest on the flood disaster in Texas, Karen, the search for victims is expected to resume today along the Guadalupe River. Recovery efforts had to be put on hold yesterday with another round of heavy rains leading to high water rescues elsewhere. More than 160 people may still be missing in the July 4th floods that left at least 132 dead. Meantime, Homeland Security Secretary Kristi Noem is pushing back. It reports that FEMA's response to the disaster was delayed.

5:56So the fact that Democrats are politicizing this while people are still looking for their babies, they're still looking for their family members, I think is absolutely despicable. And the American people just, I think, need to know the truth of what they're doing and how they're taking advantage of this situation to help themselves politically. Homeland Security Secretary Kristi Noem appeared on Fox News Sunday, heard every Sunday on Bloomberg Radio. Nathan Wall Street returns to work with a focus this week on inflation and earnings. We get a preview with Bloomberg's Charlie Billett. According to data compiled by Bloomberg Intelligence, analysts are expecting the slowest profit growth rate in two years.

6:32Emily Rowland is co-chief investment officer at Manulife John Hancock. Analysts are penciling in 5 % earnings growth for S &P 500 companies. That's come down a bit, so the bar is lower. We're going from 13 % earnings growth, just awesome results in the first quarter. Banks will be front and center this week with reports from JPMorgan Chase, Citigroup, Wells Fargo, Morgan Stanley, and Goldman Sachs. Also reporting this week, 3M, General Electric, and Netflix in New York. Charlie Pellett, Bloomberg Radio. Okay, Charlie, thank you. Futures are lower as we begin the new trading week, but Bitcoin is on the rise again.

7:10In fact, the cryptocurrency is trading at a record right now up 2.8 percent above$122 ,400. Bitcoin is now up about 30 percent since December. Nathan, we're starting to see some of the impact of the U.S. trade war with China. China ended the first half of the year with a record trade surplus of about$586 billion. after exports to the U.S. began to stabilize. Exports rose year on year by a higher than expected 5.8 percent in June. Shipments to the U.S. fell 16 percent from a year earlier after slumping by over 34 percent in May. And staying in Asia, Karen, the slump in Japan's long-term bonds is accelerating, pushing yields sharply higher in a move that puts global debt markets on alert.

7:54While the pressure in Japan is being heightened by a looming election on July 20th, concerns over government spending beyond their means also apply to the UK, Europe and US.

8:07Time now for a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Two women were killed and two other people were wounded in a shooting at a Lexington, Kentucky church in a rampage that began after a state trooper was shot and wounded. Authorities said the suspect was also killed Sunday. In a news conference, Lexington Police Chief Lawrence Weathers says it began after the trooper pulled over a vehicle near the airport. The trooper had pulled over a vehicle on Terminal Drive after receiving a license plate reader alert in the area of Vassels Road.

8:45The trooper was shot and the suspect fled. Chief Weathers says the suspect then carjacked a vehicle and fled to the church where he began shooting at people there. The suspect was later killed by Lexington police. NATO Secretary General Mark Ruta is set to meet President Donald Trump this week. NATO said Ruta will be in Washington today and tomorrow and will meet with Mr. Trump, Secretary of State Marco Rubio, and Defense Secretary Pete Hegseth, as well as members of Congress. Attorney General Pam Bondi is said to have fired multiple Justice Department employees who were involved in two federal prosecutions of President Trump during the Biden administration.

9:26The Washington Post reports, according to several people familiar with the terminations, 20 people were fired from the department, including two prosecutors who worked under former special counsel Jack Smith. Reports of increasing tension between A.G. Bondi and Deputy FBI Director Dan Bongino over the Justice Department's handling of the Jeffrey Epstein case. There are new details now about a confrontation the two had last Wednesday, with Bongino reportedly storming out afterwards. Former U.S. Attorney General Chris Christie says he believes the decision went all the way to the top. There's no chance, in my opinion, that Pam Bonney made this decision on her own.

10:06No chance. She was instructed by the White House that we're not releasing this stuff. And that's why he's defending her. Former AG Chris Christie was on ABC's This Week, Heard Sunday's on Bloomberg. Global News, 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. All right, Michael Barr, thank you. Some people treat ChatGPT like some kind of smart search engine and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work.

10:44It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting work mode, available on plus and pro plans. What if you could have even more and more and more help to pursue your goals. At LPL Financial, we offer more ways for advisors and their clients to thrive. So what if you could? Paid advertisement investing involves risk, including potential as a principal LPL Financial LLC member FINRA SIPC.

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12:32Time now for the Bloomberg Sports Update brought to you by Flushing Bank. Here's John Stashauer. John, good morning. Good morning, Karen. Baseball has hit the All-Star break. The game is tomorrow in Atlanta. The home run derby tonight. Yankees at the stadium out hit 10-2 by the Cubs who won 4-1, snapped a six inning tie with a Dansby Swanson two-run homer. Yanks got only an early home run by John Carlos Stanton. The Cubs with 57 wins at the break. Their most since 2008. Yanks are 53-43, still two games behind Toronto, and now only one ahead of the Red Hot Red Sox, who beat Tampa Bay 4-1, have won 10 games in a row.

13:08Mets in Kansas City shut out until two runs top of the ninth that tied the game, but not for long. Loft it over, Mauricio, base hit. Here comes Tobert, flying around third. The throw, the dive, he's safe. The Royals win it. A redemption swing from Nick Lofton. His second game winner in the homestand. And the Royals beat the Mets 3-2. Royals TV had it. They scored off Sean Minaya, who in his season debut came in in relief and threw three scoreless innings before giving up that run in the ninth. Mets 55-42, half game behind the Phillies. Nationals lost 8-1 at Milwaukee and then kicked off the MLB draft by taking, as expected, a high school shortstop from Oklahoma whose father played in the big leagues, but not Ethan Holiday.

13:55He went fourth to Colorado where his father, Matt, played. The Nats took Eli Willits. His father, Reggie, played for the Angels. He was recently the Yankees' first base coach. Yannick Sinner and Carlos Alcaraz met five weeks ago in that French Open final that Alcaraz won in five sets, five and a half hours at Wimbledon. It went to center in four sets, and he said the loss in Paris may have helped. You just have to understand what you did wrong, trying to work on that. That's exactly what we did. We tried to accept the loss and just kept working. And this is for sure one of the reasons why I hold this trophy.

14:30Sinner and Alcaraz dominating tennis. They've won the last seven Grand Slams. John Stash, Bloomberg Sports, Karen, Nathan. Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business app. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager on a morning where trade jitters are working through the market once again. President Trump over the weekend threatened the European Union and Mexico with 30 percent tariff rates. But now the president says he's still negotiating. So the European Union is talking to us. They want to open up their country.

15:08I would say Japan to a much lesser extent in terms of opening up their country. South Korea wants to make a deal other than tariffs. But after these latest tariff threats from President Trump, Bloomberg News has learned the EU is stepping up engagement with other countries that have come under the administration's trade crosshairs. For more on this, we're joined by Bloomberg News senior editor Bill Ferries. And in fact, Bill, we're just seeing a headline from an EU official saying that European Commission President Ursula von der Leyen is going to speak today with Canadian Prime Minister Mark Carney.

15:38What further engagement can we expect here? Is this a potential pivot away from U.S. trade? Good morning. Good morning, Nathan. Well, the EU negotiators, I think, found the talks that they've been involved in really disrupted by President Trump's announcement over the weekend that he was just looking for a 30 percent tariff on their goods. Negotiations had been proceeding with the assumption, really, the working assumption that perhaps there might be a lower tariff rate, but also particular carve outs for some industries. So we're talking about German automakers or alcohol exports from Europe, things like that.

16:15So there really had been a lot of progress made in kind of a complex formula. The president saying, you know, it might be 30 percent and we'll leave it at that. It's you know, this could be just another negotiating tactic. You know, it's only July 14th. August 1st is still a long ways away. But the EU signaling that they want to work more closely with some other U.S. trade partners who are perhaps feeling the same kind of heat, including Japan and Canada. That's not clear what exactly they might do. They might share some tips on what's going on in their own negotiations. They might find a way to reroute some of the trade to help soften the blow of whatever happens with the U.S.

16:54But there is this sign of a little increasing unity for people on the other side of the negotiating table from the U.S. when it comes to trade. It's interesting to, you know, point out that we are days away from August 1st. You say it's a long ways off, but it's just a little more than two and a half weeks. And if the European Union is looking to step up engagement with some of these very same trading partners that the U.S. is in the middle of negotiations with, I mean, how much more is there to give potentially? Yeah, I mean, it is coming up soon, but it's still two and a half weeks. And I think in Trump world, we've seen that you can get a lot of whiplash in a two and a half week period.

17:34There are ways for European exporters to look at perhaps different markets for some of their goods. They had reached, you know, they have reached some agreements in the past with China on trade, with other countries. I think we've seen that in Asia as well. Countries looking to find alternatives to goods that traditionally went to the U.S. It's a lot easier with things like energy and in some cases agriculture. But in the end, U.S. is a very hard market to replace. So I think at the best, you hope to soften the blow, not not replace your trade entirely. OK, so while the president continues to put pressure on trade partners, we're also seeing him put even more pressure on Fed Chair Powell, not just over interest rates, but now over these cost overruns at the central bank's renovations.

18:24Yeah, he's been obviously hammering Jay Powell for months about how he thinks Powell needs to cut rates and cut rates faster. He calls him too slow. He's called him a loser. He's put out a lot of insults. It's not clear if the goal is to just get Powell to quit, if it's to get him to actually cut those rates or what. But they have opened this new front over these renovations taking place at the Federal Reserve headquarters that the Fed itself admits have gone way over budget. They say due to rising costs in the wake of the pandemic, the administration, Trump's allies are saying maybe there's some mismanagement here.

19:05Powell did address that before Congress just a couple of weeks ago. He gave that explanation about the rising costs, and he said there's no VIP elevators, there's no fancy marble going in. It's just a matter of rising costs. But this is a potentially dangerous new front for the Fed chief as Congress looks to, Republicans in Congress look to investigate, and the administration hammers home this message that he should go. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen.

19:44You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast-to-coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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