When Trump and Von Der Leyen shook hands in Scotland on July 27, it wasn’t just for the cameras. It was the start of something real.
A sweeping EU–US trade deal was sealed, tariffs were slashed, and markets exhaled. But the spotlight’s shifting fast and all eyes are now on China.
Will they be next in line for a deal… or is the trade war about to drag on?
EU–US Trade Deal: Key Takeaways
On July 27, 2025, the US and EU agreed to a deal putting a 15% tariff on most EU goods entering the U.S. That’s half of the previously threatened rate and effectively prevents further escalation. Specifics include:
- Sectors like aircraft parts, generic drugs, critical raw materials, and semiconductors enjoy zero-for-zero tariffs.
- US tariffs on steel and aluminum remain at 50%.
- In return, the EU commits to $600 billion in US investments and $750 billion in US energy purchases (LNG and nuclear fuel) over the next three years.
Markets cheered that a trade war was avoided. US and European equity futures ticked upward. Still, critics warn the pact might tilt in the US’s favor.
Why This Trade Deal Matters to Markets
For Wall Street, this isn’t just a handshake, it’s a sigh of relief. Markets love one thing above all, clarity. And that’s exactly what this EU–US trade deal brings.
Stock indexes are flirting with new all-time highs and risk-on sentiment is back on the street. But here’s the catch: while the new tariffs seem lighter than past threats, they still raise costs for European exporters, and possibly for American consumers too.
Big global players in autos, pharma, and semiconductors now have a new rulebook. Analysts will be glued to upcoming earnings calls, watching for signs of margin compression, pricing adjustments, and whether companies can pass on the pain or absorb it.
Six Deals in Three Months: US Trade Strategy Accelerates
The trade deal with the EU is just the latest move in what looks like a rapid-fire string of tariff negotiations under the Trump administration.
As the chart below shows, since the April 2025 tariff hike announcement, the US has inked or outlined new trade terms with the U.K., Vietnam, Indonesia, the Philippines, and Japan, each deal cutting previous tariff rates and opening access for U.S. goods.
For the EU, a 30% rate was slashed to 15%, with car-related trade and investment also included. The message is clear: the U.S. is aggressively reshaping its trade landscape, and China could be next in line.
US–China Trade Deal: A Truce, Not a Treaty
Across the Pacific, a similar drama is unfolding, but without the same resolution.
Since early 2025, the U.S. and China have imposed reciprocal tariffs of up to 145% on imports ranging from electronics to agricultural products.
In May, both sides agreed to a 90-day pause: U.S. tariffs softened to around 30%, China’s to about 10%.
Now, negotiators are meeting in Stockholm starting July 27 to extend that truce another 90 days. A successful extension could set the stage for a pending Trump–Xi summit.
Meanwhile, U.S. officials have paused export controls on tech to avoid derailing sensitivity in talks.
Global Markets on the Edge
Here’s where this story turns market-moving: the EU–US deal brought calm, but that calm could be fragile.
If China talks break down in early August, tariffs could kick back into the 100%+ range. That would threaten global supply chains and reverse equity gains fast.
European markets may rally early, but margins in autos and pharma will come under pressure as US import costs bite.
Risk assets coupled to consumer global growth: semi stocks, industrials, defense, could become vulnerable if the China truce unravels.
Sector-by-Sector: What to Focus On
- Autos & Manufacturing: Lower tariffs ease disruption on transatlantic exports. But if China falls off, car and parts stocks could swing hard.
- Energy & Commodities: EU’s $750 billion energy purchase plan may stabilize U.S. energy prices and LNG flows in Europe.
- Defense & Tech: EU military equipment purchases and investment fuel sectors that sell US tech into allied markets.
Is China Next?
Will China get a deal like the EU’s? Or end up in a prolonged trade war?
The answer is not very clear, yet.
- The Stockholm talks offer a chance to extend the tariff pause to August 12 and possibly beyond. A breakdown, though, would escalate duties and uncertainty fast.
- A Trump–Xi summit in the fall could pave the way for deeper normalization or freeze relationships further.
- US export control pauses suggest Washington wants a win, but it’s no guarantee they avoid escalation if talks stall.
Trade Talks Are the Catalyst, Not the Conclusion
The EU–US framework deal has bought time but hasn’t resolved trade’s longer conflict arc. Global markets feel relief now. But China’s outcome will likely determine whether 2025 ends in stability or more uncertainty.
For investors and traders: risk and opportunity remain front and center in the coming weeks. Watch headline events, but also track margins, supply chains, and commodity flows that respond faster than policy.
The trade picture is still being painted, and China will decide how bold or cautious it gets.
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