US-EU Trade Deal Concerns; Trump Responds to Powell Report

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1:23So healthcare is connected, not complicated. What's that look like? cheaper prescriptions that are easier to get, and care that looks at the whole person how you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the global trade war. European Union officials are set to meet in the coming days to discuss how to respond to a possible no-deal trade scenario with President Trump. The move comes as the U.S.

2:06is said to be seeking tariffs on EU goods higher than 10 percent with limited exceptions. We get more from Bloomberg's Oliver Crook in Berlin. At the end of the day, I think that their frustration, their difficulty is that it is going to come down to Trump at the end of the day, how he's feeling very close to the negotiations. I was at the G20 just last week, and I got a feeling from some of the finance ministers, many of them didn't want to speak on the record on this, but saying that basically they did feel that the United States was softening a little bit, potentially because they're taking on a sort of trade war against everybody all at once.

2:37But there was also this sentiment out there that in the long term, this negotiation, whatever happens over the next couple of weeks, is probably not the end of the discussion in terms of tariffs with the United States. So potentially for many of these countries looking to build coalitions outside of Europe, not just the EU, something bigger in order to potentially take on the United States in a more confrontational manner, because who knows what the next few years will hold. Bloomberg's Oliver Crook says President Trump wrote to the EU earlier in the month warning the bloc would face a 30 percent tariff on most of its exports on August 1st.

3:08Nathan Commerce Secretary Howard Lutnick says he's confident a deal with the EU can get done, but he's sticking with the August 1st deadline for higher tariff rates on major trading partners and a baseline of 10 percent for everyone else. The world is paying 10 percent right now and China's paying 30 percent. 10 percent is definitely going to stay. The small countries are likely to be 10 percent, but the bigger countries are likely to pay higher. That's just the way it's going to be because we can't have these one trillion dollar trade deficit. Commerce Secretary Howard Ludnick spoke on CBS's Face the Nation heard every Sunday on Bloomberg radio.

3:46And Karen, President Trump's pushing back on a report that Treasury Secretary Scott Besant warned that ousting Fed Chair Jay Powell would be bad for markets. In a post on Truth Social, the president called the Wall Street Journal, quote, typically untruthful. He went on to say he knows better than anyone what's good for markets, touting recent record highs for the major indexes. The journal cited sources who said Besant warned that attempting to oust Powell would result in political and legal obstacles. Nathan, the yen is strengthening versus the dollar as investors digest the impact of Japan's election results.

4:19Prime Minister Shigeru Ishiba says he intends to stay on despite his ruling coalition failing to secure a majority in the 248th-seat upper house in a crucial parliamentary election. David Boiling is a director at the Eurasia Group. This is sort of the second punch that Ishiba has taken. I think it's very hard. He was already on shaky ground. He's even on more shaky ground to remain as prime minister. He's vowed to do so. But, you know, Taro Aso, very influential member, former prime minister, has already said that he wants to push him out. So I think there's going to be the knives are coming out and we'll just have to see if he can hang on.

4:59It's not going to be easy. Eurasia Group's David Boiling. The loss is another blow to Ushiba's coalition, making it a minority in both houses following its October defeat in the lower house election. Well, Karen, a worldwide cyber attack is underway after hackers exploited a widely used Microsoft program. Bloomberg's John Tucker's here with the latest. John, what's happening? Well, hackers, Nathan, spotted a security flaw in Microsoft's SharePoint servers. This has allowed them to launch a worldwide attack on government agencies and businesses over the past few days. The U.S. Cybersecurity and Infrastructure Security Agency He says this vulnerability allowed hackers to access file systems in internal configurations as well as execute code.

5:43More than 10 ,000 companies with SharePoint servers are at risk. The U.S. is the largest number of these companies. Silas Cutler, a researcher at Michigan-based cybersecurity firm Census, says this is a dream come true for ransomware operators. The Washington Post reports the breach has already affected U.S. federal and state agencies, universities, and energy companies. Now, Microsoft has released a new security patch for customers to apply to their SharePoint servers to, as they put it, mitigate active attacks targeting on-premise servers. They're also adding to rollout others. Shares of Microsoft pre-market right now down about two-tenths of a percent.

6:25In New York, I'm John Tucker, Bloomberg Radio. All right, John, thank you. Meanwhile, Alaska Air has resumed operations after an IT outage temporarily grounded its fleet. The grounding was canceled just after 2 a.m. Wall Street time this morning. It's the second time in just over a year Alaska Air has had to ground its fleet because of IT problems. Checking sports now, Karen. Scotty Scheffler has captured his second major this year after dominating the British Open. Let's get the details with Bloomberg sports anchor John Stash. shower stash. This was an impressive performance. It really was, Nathan.

6:58Scheffler had a four-shot lead to start the final round, and that lead grew to seven, and when he played the last hole at Royal Portrush, he was up by four. The champion golfer, Scotty Scheffler. He felt in his career, and you certainly felt today, it was only a matter of time before he claimed the greatest prize in golf. That's courtesy of the RNA. Finished 17 under par at one point, went 32 two holes without a bogey. He's the seventh in Open Championship history to have four rounds in the 60s. We'll hear from Schefter coming up. John Stashauer, Bloomberg Sports. All right. Sounds good. Thank you, John.

7:33In other sports-related news, President Trump is threatening to block the Washington commander's bid to build a new stadium in the District of Columbia. The president says he may put a restriction on the team if they don't change the name of the team back to the Washington Redskins. The president has previously complained about the football team's decision to change its name amid concerns the old name was a slur against Native Americans. Donald Trump also leveled criticism at the Cleveland Guardians, the major league baseball team that changed its name from the Cleveland Indians in 2021. Back on Wall Street, Karen, investors are huddling up for another busy week of earnings.

8:08Let's take a look with Bloomberg's Charlie Pellett. Tech names including Tesla and Alphabet will be very much in focus amid expectations from analysts for S &P 500 profits to rise 2.8 % year over year. Scott Kronert is head of U.S. equity strategy research at Citigroup Global Markets. I think we're looking at a burgeoning free cash flow backdrop for many of the companies within the S &P 500 and what you get with this is a lot of financial flexibility. Also reporting this week, IBM and Texas Instruments, Capital One Financial, Ameriprise, Blackstone, Chipotle Mexican Grill, Coca-Cola, General Motors, and Honeywell International, among many, many others.

8:50In New York, Charlie Pellett, Bloomberg Radio. Thank you, Charlie. Stellantis has swung to a $2.7 billion net loss in the first half as restructuring expenses, waning sales, and the impact of U.S. tariffs hit the struggling automaker. Stellantis' shipments fell 6 percent in the second quarter amid declines in North America and Europe. The company still hasn't issued financial guidance for this year due to U.S. tariff uncertainties.

9:17Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Monica Ricks. Monica, good morning. Hey, good morning, Karen. Ukraine says it is under attack this morning. Ukrainian air defenses, Russia launched missiles and drones with those explosions heard across the country. The attacks coming a day after Ukraine's President Zelensky pushed more peace talks with Russia. Meantime, the Palestinian health ministry says it's experienced its deadliest day in over 21 months of war. More than 90 Palestinians have been killed this weekend while trying to access food and aid in Gaza.

9:54The head of FEMA will testify before Congress this week. Bloomberg's Amy Morris is in Washington. David Richardson has led FEMA since May. He'll appear July 23rd at a hearing for a House emergency management panel. Subcommittee Chairman Scott Perry will focus on how FEMA can become more agile and effective in disaster response. But lawmakers are also expected to grill Richardson on FEMA's response to the Texas floods, which killed more than 100 people earlier this month. And Democrats want to know about the time it took FEMA to activate search and rescue teams and how it managed calls for help.

10:26President Trump earlier this year had announced plans to overhaul or even eliminate FEMA to give states a bigger role in disaster response. In Washington, Amy Morris, Bloomberg Radio. In Texas, a state legislator will hold a special meeting on those devastating floods. The number of missing people has dropped dramatically down to just three people in Kerr County now. More than 130 people were killed. And a close call in the sky in Minot, North Dakota. A Delta pilot there had to make what he described as an aggressive midair maneuver to avoid crashing into a B-52 bomber. The pilot says he was never given a warning by air traffic control and had to apologize to passengers once they were on the ground.

11:05Luckily, no one was hurt. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Monica Ricks. This is Bloomberg. All right, Monica, thank you.

11:19Time now for the Bloomberg Sports Update. Here's John Stashauer. John, good morning. Good morning, Karen. Scottie Scheffler dominated the Open Championship in Northern Ireland, finishing 17 under par, winning by four shots. One couldn't help but at least begin to consider whether he is now dominating golf like Tiger Woods once did. A Royal Portrush Scheffler was asked about the comparisons. I still think they're a bit silly. You know, Tiger won, what, 15 majors? This is my fourth. just got one-fourth of the way there. So just, I mean, it's, I think Tiger stands alone in the game of golf. You know, he was inspirational for me growing up, and he was a very, very talented guy, and he was a special person to be able to be as good as he was in the game of golf.

12:02And it's true that while Scheffler has won four majors over the last four years, Tiger won four in a row in 2001, including a win at the PGA that was by 15 shots. American Harris English yesterday finished second, and New Jersey native Chris Goddorop was third. He had only learned last Sunday that he was going to be in the field after he beat out Rory McIlroy at the Scottish Open. Yankees off the big comeback Saturday night in Atlanta. Had a quick start first inning yesterday. High drive, right center field. There it goes! See ya! A home run for Judge. His 36th of the year, it's 1-0 Yanks. Yes, Network.

12:40Yanks beat the Braves 4-2. solid six-inning start from Marcus Stroman. Toronto finished a sweep of the Giants. The Blue Jays have won 10 in a row at home. That includes the recent four-game sweep of the Yankees. Or are now back in Toronto tonight with the Jays three games ahead in the AL East. The Mets first win since the All-Star break at Citi Field. Salvaged one from Cincinnati 3-2. The Red Sox salvaged one from the Cubs at Wrigley 6-1. Garrett Crochet's 11th win. The National's 60th loss beaten by San Diego 8-1 and Milwaukee completed a second sweep over the last two weeks of the Dodgers and the Brewers have won 10 in a row.

13:15They're tied for first in the NL Central. John Stashauer, 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. 11 days to go until President Trump's August 1st tariff deadline. The European Union is said to be preparing now for a no deal scenario, while the Trump administration holds firms to its demands on the EU and other major trading partners. Commerce Secretary Howard Ludnick made the case on CBS's Face the Nation. It's fair trade.

13:51It's reciprocal trade. Why should we have our country be wide open while theirs is closed? Commerce Secretary Ludnick on Face the Nation heard every Sunday on Bloomberg Radio. This morning, we're joined by Bloomberg's Jill Deeses. So, Jill, the negotiations go on on the media and behind closed doors as well. Where do things stand between the U.S. and the EU just ahead of this August 1st deadline? Good morning. Good morning, Nathan. Well, I think the best way to think about this agreement at this point or any kind of negotiation that's unfolding is that it does appear as if the stance by Donald Trump himself, the Trump administration, the White House is hardening ahead of that August 1st deadline.

14:32At this point, Trump has already threatened to hit most EU exports with tariffs of about 30 percent. And so from an EU negotiation side, you've got, you know, this block that is sitting there thinking, you know, is it actually even possible to try to negotiate for a lower rate? I think that at this point, you know, what seems a little bit more conceivable several months ago, this idea that maybe you could, you know, negotiate for tariffs of 10 percent on most goods or so seems to be, you know, a bit out the window. So if your officials in Brussels, I mean, I think what we've heard is that ultimately what they are trying to calculate for now is what happens if this agreement that is reached by August 1st or, you know, whenever that deadline passes, you know, what happens if that's, you know, incredibly unbalanced?

15:17What if they don't end up getting a lot of the major exemptions that they were ultimately hoping for? And so if you're Brussels, you're looking at this arrangement and you're saying, okay, you know, potentially there There could be preparations to retaliate in a scenario where there's absolutely no agreement. So I think that that's kind of where we're at. I'd actually argue that when you look at the totality of all of these other negotiations that are happening around the world, you know, other other economies are also in sort of a similar position where I think they're, you know, increasingly being confronted with this possibility that you could have fairly high tariffs by August 1st, perhaps higher than, again, what was, you know, ultimately thought of when Trump first came into the office in January.

15:57So what could retaliation by the EU look like? I mean, we've heard the possibility of retaliatory tariffs on certain politically sensitive goods, as well as the idea of this anti-coercion instrument coming out. What seems most likely at this point? Yes. So let's start with those potential tariffs. So the EU has already actually approved potential tariffs on somewhere in the neighborhood of 21 billion euros worth of U.S. goods. The idea is that, you know, these could be implemented that would target politically sensitive American states. Potentially they include products such as soybeans from Louisiana.

16:33That's, of course, home to House Speaker Mike Johnson, potentially some other agricultural products, poultry, motorcycles. They've also prepared a list of tariffs on an additional 72 billion dollars worth of billion euros rather worth of American products in response to reciprocal levies and automotive duties. So, you know, that's additional targets. And then the thing that you're talking about at the end there, this anti-coaggression instrument, that is something that we've reported on recently. A growing number of EU member states are thinking, look, this is ultimately what would be our most powerful trade tool.

17:08This would give officials more broader powers to take retaliatory action. And so that's something that at least in certain corners of the bloc is being pushed. But again, I think it just really kind of goes to show you that at least when it comes to the EU, again, they're preparing for this idea that what ultimately is decided may not be particularly favorable to the EU. And so it's pushing them in this position to consider those retaliatory efforts. 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.

17:41Eastern each morning on Apple, Spotify or anywhere else you listen. You 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.

18:18And 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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