Trade Talks: A Deal in the EU, Talks with China in Stockholm 7/28/25

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. A fresh trade deal reached. A U.S. and E.U. agreement that imposes a 15 % tariff on European goods. The big question, of course, is now what comes next? We head to Stockholm with Eamon Javers on the ground for the U.S.-China negotiations. The scale of the U.S.-China relationship and its impact for the global economy is such a different order of magnitude. And U.S. Trade Representative Jamison Greer joins us on this new transatlantic framework.

0:41The Federal Reserve meets this week amid rising pressure from many parts of the Trump administration to lower interest rates. Former Fed Vice Chair Roger Ferguson says when it comes to inflation, a key part of the Fed's job, the voting committee has a tricky decision ahead. You have to be very careful because the possibility of a bad cycle, I think, is maybe a little more present than the Secretary of the Treasury would like to admit. Plus, the rest of today's news that got us squawking, like Tesla's new deal on chips, the kiss cam moment that led to a viral ad, and the Department of Government Efficiency still shaking things up thanks to AI.

1:18I've been using AI like crazy recently. I get impressed and then I get unimpressed. It's Monday, July 28th. Squawk Pod begins right now. Stand Becky by in three, two, one. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. The U.S. and the EU reaching a framework trade agreement just a few days before punitive U.S. tariffs were set to snap into place. The U.S. will place a 15 percent import tariff on most goods from the EU. The EU plan to invest hundreds of billions of dollars in the U.S.

1:59in rampant purchases of U.S. energy and military equipment. Here's President Trump on all of this yesterday. I think it's great that we made a deal today instead of playing games and maybe not making a deal at all. I think it's I'm going to let you say it, But I think it's the biggest deal ever made. Thank you very much. Congratulations.

2:23European Commission President telling reporters that the deal with the U.S. was, quote, the best we could get. She said neither side would tariff aircraft, certain chemicals and generic drugs. Also, semiconductor equipment not on that list. Many details, though, still do remain to be hammered out, including on spirits and potentially on steel and aluminum. And the big question, of course, is now what comes next in terms of the next trade deals? China. Yeah. Well, China is the biggie, but you still got India and so many others. I'm surprised we've made as much progress as we have. Japan and it could force others' hands to not be the last one resisting.

3:07We didn't have, you know, it's higher tariffs. It's going to cost more. It's going to cost more. The Wall Street Journal, by the way, says it's going to cost more. It's going to cost more. Also, by the way, doesn't touch on so many of the things that he talked about with Europe, meaning digital taxes for big tech, how you deal with pharmaceuticals. There's a whole list of things that he's been complaining. The things that could be good. And, you know, we can definitely find things on, you know, critics will find certain things and proponents will find certain things. Maybe some stuff people would rather make it here.

3:43Maybe there's a little bit of onshoring that comes from it. The 15 % that we get, you know, you can say the corporations or consumers pay it. You're still going to get it. That money is still going to, you know, people want to tax corporations. I don't know if you're going to get it. It's going to continue. Money will continue to come. And I think it's going to open up some markets for our people to sell stuff into those 27 countries in the EU. On the other side, it could be inflationary. We'll see. Let's get to the other big trade story today. Treasury Secretary Scott Bessent resuming talks with his Chinese counterparts on a potential deal with the U.S.

4:20Eamon Javers. Really? It's in Stockholm, Sweden. Well, isn't that nice? And he joins us now. Good morning, Eamon. Beautiful city. Good morning, Joe. Yeah, it is a beautiful city. Somebody had to throw themselves on the grenade to get this assignment. So I volunteered for it. Look, high stakes in Stockholm today. It's been a bumpy ride, as you guys know, getting here so far. You remember back in May, we had those negotiations in Geneva. And just a couple of days after a deal was announced there, we saw both sides accuse each other of violating the terms of the agreement. So we were sort of back to square one in London in June.

4:55That's where we got that temporary deal. And that deal was for 55 percent tariffs from the U.S., 10 percent tariffs from the Chinese. The deal also included U.S. access to rare earth minerals and Chinese access to U.S. universities. That deal, though, was temporary. The deadline was August 12th. So the big question here in Stockholm, guys, is whether they can kick that can down the road, extend that deadline perhaps another 90 days. The expectation here is that they will do that. But there's a whole bunch of other things on the table here, including potentially the idea of the fate of TikTok. Is that in this negotiation?

5:31Is that not part of this track? We don't know for sure. Also, Chinese purchases of Iranian and Russian oil. That's possibly on the table for discussion. Don't know for sure where that will land as well. And then the big question, guys, is a Trump Xi Jinping meeting, whether that could happen as early as October. Secretary Besant has said it's definitely not happening before the Labor Day holiday in the U.S., but could it happen after that? That seems to be in the air here, at least in Stockholm, as these two sides come to negotiate. They're going to be meeting at the prime minister's house here in Stockholm.

6:06It's the Rosenbad. It's just here to my right. We expect the delegations to arrive momentarily. Haven't seen much movement so far throughout the movement, but throughout the morning. But we'll keep our eyes open for that, guys, as we expect both sides to meet for a session that could last as late as midnight. That's how late they went in London a month ago. So we'll see what they do here in Stockholm. Guys, back over to you. One gets done immediately. You're called into action on the next one now. Do you think that there are, I've seen both sides of the argument. This is going to embolden China.

6:42They're going to be the one that really decides not to play ball. Others saying the writing's on the wall. You don't want to be the last person standing that's resisting a deal with the United States. It's still going to be tough, I guess, right, Eamon? It's so many things are involved, so many different. I can think of like 10 different reasons or at least factors that would enter into the final deal that you'd want to arrive at, which I don't even know how you do it. It's so complicated. Yeah, and I think it's difficult to get inside the heads of the Chinese negotiators. The degree to which the EU deal yesterday plays into these negotiations today, you'd have to think.

7:24I mean, obviously they're aware of it. It might have some impact, but the scale of the U.S.-China relationship and its impact for the global economy are just such a different order of magnitude that you've got to imagine also that this negotiation is sort of has its own momentum and is focused on its own things. There's so much at stake for the Chinese economy. The U.S. is really asking for the Chinese to totally change their economic system. Secretary Besson has said he wants them to be more of a consumer economy and not subsidize exports as much as they've been doing for the past generation or so.

7:57That is a huge change and a huge ask. Whether the Chinese are amenable to that, whether they feel like this is the pivot point in history for them to make that change or not, difficult to say. We'll see what comes out of this negotiation this afternoon. We hope to get a briefing from officials whenever they're out today to at least get a sense of where things are. We expect meetings to happen today and tomorrow, possibly into Wednesday. So it's a bit of a jump ball here in terms of what we're going to see and when we're going to see it. All right, Eamon. So you're immersing yourself over there.

8:30What does that look like, immersing yourself in Swedish culture? Do you have a bunch of meatballs? Do you have meatballs every meal? Swedish meatball? Joe, I literally did have Swedish meatballs for dinner last night. They were fantastic. They come with a nice side of potatoes and cucumbers. It was really terrific. We took a little boat tour yesterday. Got anything else for me? Got to get out on the water. You know, educate the ugly American. You just got back on vacation. Got anything else? How about that mermaid? No, that's not. Yeah, no, that's a lot of natural blonde, I guess. No bottle blondes.

9:10I've got to say it is a gorgeous city, and we've been sort of walking around as much as we can. We've only been here since Sunday. We flew overnight on Saturday, so we've only been here since Sunday morning. So we've been walking around as much as we can and prepping for the day today. First time? It is fantastic. First time, yeah. All right, my friend. You've got an iPhone. It means you can get pictures. You can be taking them right now, in fact. Send me a few, will you? If you see something, I'll send you I'll tag you on. I'll tag you on Twitter here in a minute. Don't be a pervert. I'm talking about scenery.

9:44Say anything. What are you talking about? See you later, Eamon. Thank you. See ya. Samsung reaching a more than 16 billion dollar deal to supply semiconductors to Tesla. That's according to a Samsung regulatory filing and post by Elon Musk on X. Musk said that a Samsung factory in Texas will fabricate Tesla's A16 chip, although he didn't give a timeline for production on that. In one post, he said, I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not too far from my house. In another post, Musk said that the$16 billion number for the deal was a bare minimum and claimed that actual output is likely to be several times higher.

10:30Right. He has a house? That's the biggest news to me. Yeah, no, he's got like a small house. Tiny house. Tiny house, right there, though, on the property. But not on wheels. No. Although that would fit his, you know, he's around, he is mobile. The Department of Government Efficiency deploying an AI tool aimed at cutting half of the government's regulations by the end of President Trump's first year in office. It's according to a Washington Post report. It says that the so-called Doge AI deregulation decision tool is looking through 200 ,000 federal regulations to figure out which are no longer required by law.

11:08PowerPoint presentations seen by the Post suggesting the tool could save the country trillions of dollars and says it has already been used at the Department of Housing and Urban Development. So we'll see how AI is used, and we can just hope it doesn't hallucinate. Though I have to say, I've been using AI like crazy recently, and I have not had the sort of hallucinations that we sort of saw about six months ago. I get impressed, and then I get unimpressed, which makes me hopeful for continued... I get impressed, and then I call a bank and get walked through the same ridiculous stupid... Like, they have a new AI agent that is terrible, shuts your card off constantly, can't get through to a person, can't get it fixed.

11:47Do you ever argue? With the AIHs? Yeah, I say, you know what? You pretend you're thinking you're not. You're collating crap from, you know, it's GIGO. If they go in and, you know, if you're looking for some real actual analysis of something, it still doesn't do that. They GIGO a bunch of crap from wherever, publicly available places. they put it together and pretend that they've come up with something, which they really haven't. They've just summarized stuff. Although if you ask it to put together good gift ideas or stuff for a trip, it's pretty good. I'm not saying they're not already more original than I am as far as that goes, but there are things they can do.

12:30But I'm excited about a year, two, three years from now. And then there's times where. But I also think that some of this, like thinking you can get rid of your employees and have customer-facing things out there that are working well. Are you talking your own book here? No, I'm not talking about us. I'm talking about when I very recently have dealt with a bunch of these things. We've been having this issue for the last five to ten years with all the consumer help support, which has already gone to machine learning and other things where you're pressing the one, two. Right. But it's not. No, I would say now this this version of it, though, is materially better.

13:10You can get a lot more stuff. Well, I think it's still Gigo. Like I think some of my bank in particular shuts off like things that should not be shutting off. You can't get through to a person. You can't get through the rest of it. And that's just bad management on their part. Right. But all these days, I mean, it's going to get better. They're using all this power. It is getting all these. Yeah, I think day by day. That company at the center of the viral Coldplay kiss cam moment, trying to make some lemonade out of lemons. Astronomer, that's the company hired actress Gwyneth Paltrow for an ad in which she serves as a temporary spokesperson.

13:49We've been thrilled so many people have a newfound interest in data workflow automation. And Paltrow is the ex-wife of Coldplay frontman Chris Martin, who highlighted Astronomer's CEO and its chief people officer after they were featured on a kiss cam at a Coldplay concert hugging and then ducking when the camera found them. Astronomer's CEO has since resigned, married, has children. And even more weird, Ryan Reynolds, he has an ad agency which helped produce that new astronomer ad. Well, that ad agency is always pretty tongue-in-cheek too. They did the Peloton ad after that fiasco. His mobile phone ads.

14:37His ad company does his own. And they're always pretty tongue-in-cheek and pretty irreverent with some of the things they pull together. He hasn't done one about Blake Lively yet, but I'm waiting for that. Yeah, I'm going to be waiting for that. For a while. Tees will be next. Up next on Squawk Pod, a deal with the EU, negotiations with China. Are we fighting a trade war or avoiding one? U.S. Trade Representative Jameson Greer joins us. It's an amazing thing for our country. For 70 years, we followed a trade policy that maybe at a certain time made sense, But ultimately, the net result was other countries had higher tariffs and non-tariff barriers on the United States.

15:26This is Squawk Pod. Up and Andrew, Q. You're watching Squawk Box on CNBC. I'm Andrew Ross Sorkin, along with Joe Kernan and Becky Quick. Trade negotiations with China set to resume this morning. Join us now from Stockholm, U.S. trade rep, Jameson Greer. Mr. Ambassador, thank you for joining us this morning. Of course. Great to be here again. How are you? Great. Do you want to look backwards or forward? Before we I mean, we definitely want to talk about China, but we just had our own discussion about whether the the Japan deal, the EU deal, whether they were net positives for both countries, net negatives, whether someone wins, someone loses.

16:08Do consumers lose? Is it a good thing for the country in your view? I mean, that's obviously you think it is, but tell us why. It's an amazing thing for our country. For 70 years, we followed a trade policy that maybe at a certain time made sense, but ultimately the net result was other countries had higher tariffs and non-tariff barriers on the United States. We had a very open economy, and a lot of it resulted in offshoring of manufacturing and jobs to other countries. President Trump is now reversing that through these deals. We're essentially reaching settlements with countries that are good for them and good for us, where we get to keep some level of tariff on the country.

16:45But we also open their markets to our exports. And this is how you get rid of trade deficits. It's how you create a manufacturing boom. So these are obviously huge net positives for America and American workers. Go into some of the devil in the details for the EU deal. Is everyone going to be driving an American car now? Are they going to get rid of all the Mercedes and Porsches and Audis? Correct. Every single European will be driving an American car. But they are going to be reducing their tariffs. They're going to be accepting aspects of American auto standards. They're going to be reducing their tariffs on all industrial goods shipped by the U.S., so think chemicals, medical devices, et cetera.

17:28They're going to be reducing their tariffs on a number of agricultural goods. that we make here in America. And we'll be able to have a 15 % tariff on the EU. And this is important because we have a$235 billion trade deficit with the EU. President von der Leyen of the European Union, she was very straightforward. She said this deal was about trying to reach balance. They acknowledged the legitimacy of the American challenge that we face as America with our trade deficit. But now we're just on a great footing to have a really good partnership with the EU, following on the heels of the big NATO win from the president a few weeks ago.

18:04This is just this positions us to take our relationship with the EU forward in a new and a better way. Ambassador, I want to read you the Wall Street Journal's op ed page this morning. This is their critique of the deal. They say the deal doesn't appear to address America's biggest commercial grievances with Europe, such as digital taxes, punitive regulation against U.S. tech firms and such faux food safety rules as GMO restrictions and bans on hormones related to U.S. beef, nor does it require Europeans to pay more for drugs. One of Mr. Trump's longstanding complaints, it goes on to say that the spending that Europe's going to be enacting here in the U.S.

18:42was effectively going to happen anyway. What do you make of all of that? The spending was not going to happen anyway. We looked at the numbers together with our European colleagues, and they invest around, their numbers, around$100 billion per year, they're going to essentially double or even triple that per year over the next part of the president's term. In terms of the LNG purchases, they buy about$80 billion a year. They're going to crank that up, that and other energy purchases to about$250 billion a year. So it's obviously more and better. Those are numbers. That's math. With respect to trade barriers, I mean, there are always going to be challenges with other countries, but the EU has said that they are going to work with us on things like mutual recognition of telecommunication standards, cybersecurity.

19:29So our networks and network equipment can talk to each other. They're going to streamline processes for certifications for pork and for dairy. So there is a lot of technical detail in here, including some of those what we call non-tariff barriers. And that is what we're looking at, right? Standards for autos, these kinds of things, making sure that there aren't network usage fees. And that's something that some of our digital folks care a lot about. So we do cover quite a bit of ground in this agreement, and we expect it's going to have a greater impact on reducing our deficit and, frankly, increasing U.S.

20:01exports to the European Union. Ambassador Greer, there still are a few questions just about the details. I know you all are still working some of these things out, but is it clear that there will be no additional tariffs beyond 15 percent, including things like pharmaceuticals and others down the road? So it's 15 % across the board with respect to steel. However, that's something where we want to keep working with the European Union. It's very important to the president that other countries make sure that they protect their steel markets and solve the overcapacity issues or imports from third countries that come and displace their steel.

20:38So there are certain sectors like that where we need to have further discussions with them. We know the Europeans want to have some kind of an outcome there. You know, Joe mentioned a few other issues of digital services, taxes, et cetera. We've been very clear with the Europeans that we want to see those removed as well. So there are certainly areas to keep working on in different sectors. We have been with you every step of the way. The administration, I guess, with what's happening with China, you know, it looked like things were going well. Then it looked like, you know, both sides were accusing the other side of not following through on the initial framework.

21:13And then Treasury Secretary Besson said it seems like things had turned for the better. Where do we stand right now? It's kind of a it's kind of a saga that we're on. Are we entering the latest round in a good position? Should we expect positive surprises, Ambassador? Well, I would say, first of all, the U.S. is in an incredible position. We spent the past three months trying to reorder global trade to make sure we can get rid of these systemic imbalances that have persisted. We now have deals with the EU, Japan, and a number of partners. So we come into these negotiations with a strong hand. Our discussions with the Chinese are always cordial and constructive.

21:56This is the third round in the past three months. So just the fact that we're talking and we want to move forward in a positive way is its own good sign. You know, I don't expect some kind of enormous breakthrough today. What I expect is continued monitoring and checking in on the implementation of our agreement thus far, making sure that key critical minerals are flowing between the parties and setting the groundwork for enhanced trade and balanced trade going forward. When are we going to hear about a meeting between President Xi and President Trump? Are there things happening behind the scenes that we don't know about?

22:33What can you tell us? I mean, listen, these things, there's certainly interest on both sides for the leaders to meet. They have a good relationship. They communicate with some relative frequency. And there have been discussions of having a meeting in the near future. I don't know where that will be or specific dates, but that's certainly something that's on the agenda of both sides. We were surprised that both the EU and Japan, the deal was done before India. Can you update us on what's happening? Are there sticking points? Is that it's been imminent for a while? We've got to figure out a new word for maybe not use imminent.

23:15Yeah, you could go back and find clips of me saying we're about to have a deal with India. I mean, I think the thing to understand with India is their trade policy for a very long time has been premised on strongly protecting their domestic market. That's just how they do business over there. And the president is in a mode of wanting deals that substantially open other markets, that they open everything or near everything. So we continue to speak with our Indian counterparts. We've always had very constructive discussions with them. They have expressed a strong interest in opening portions of their market.

23:54We, of course, are willing to continue talking to them. But I think that, you know, we need some more negotiations on that end with our Indian friends to see how ambitious they want to be. With Japan and the EU now done and other countries, do you expect and, you know, August 1st is coming. Do you expect things to start happening even even more quickly? Is there a could you see other countries say, wow, we've got to get this done? We don't want to be glaringly one of the countries that has not gotten a deal yet. That probably wouldn't make the president happy. And I guess that must be a consideration, no?

24:42There are a lot of these countries that feel a lot of pressure from their home political situation. And every day I'm in conversations with many of these trade ministers. and many of them are being very ambitious in terms of taking down tariffs and non-tariff barriers, others less so. For me, of course, I work for President Trump, and President Trump, he's more interested in having a good deal rather than a quick deal. So in some of these instances, we will wait and see. We'll see how ambitious countries want to be. We don't feel a necessary urgency for deals. We like to have deals. We want to have something that can help restructure trade.

25:22But we've all heard the president repeatedly say that he's happy with the tariff. He's happy to just send a letter and set a tariff as opposed to having a deal. So there are plenty of countries who are interested. And we review these options with the president all the time. And he's really weighing what's going to be the best way to get at this deficit and to instigate reshoring. Will it just be a flat tariff or will it be some other kind of arrangement? So you could have more deals. But again, it's not something that we are, We don't feel under pressure to have more deals. I'll put it that way.