WSJ What’s News - U.S., EU Strike Biggest Trade Deal So Far

Episode Date: July 28, 2025

A.M. Edition for July 28. The agreement avoids a damaging trade war with the U.S.’s largest trading partner. WSJ Brussels reporter Kim Mackrael explains the significance of the deal. Plus, Israel announces a pause in military activity in Gaza to allow in humanitarian aid. And Samsung will supply Tesla with chips in a $16.54 billion deal. Azhar Sukri hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

The US and European Union reach a landmark trade agreement. It delivers stability and predictability for citizens and businesses on both sides of the Atlantic. Plus, Samsung and Tesla agree to a multi-billion dollar chip supply deal and Israel pauses military activity in Gaza to allow in humanitarian aid. It's Monday, July 28th. I'm Azhar Sukri for the Wall Street Journal. Here is the AM edition of What's News, the top headlines and business stories moving your world today.

Certainty in uncertain times. That's how European Commission President Ursula von der Leyen described the agreement the world's two biggest trade partners reached yesterday. It is the largest deal President Trump has announced so far as he tries to remake the global trading system. We are agreeing that the tariff straight across for automobiles and everything else will be a straight across tariff of 15 percent. In return, the EU has agreed to buy US energy products and invest 600 billion billion in the US. Our Brussels reporter Kim McRaele has been following the talks. Kim, explain to us what has been agreed and just

how consequential this deal is. So I think the basic framework for this idea and I have to mention we don't have anything in writing at this point. So really all of what we understand about what was agreed to is based on what the two leaders, President Trump and the European Commission's President Ursula von der Leyen said last night. So they both say that we're looking at a 15% tariff on most European goods that are exported to the US. Crucially for the EU, that includes autos, that includes the automotive sector, which is something that the Europeans were very concerned about, especially because of the German car industry, which is currently facing the 25% tariff that Trump issued for the world.

What's really important about this is that the EU is the biggest regional trading partner of the United States. So the block has 27 member states. They all have a common trade policy. And when you take them together, they are the US's biggest trading partner and the biggest source of foreign investment to the US. So when you think about it on a daily basis, the two sides exchange more than $5 billion worth of goods and services each day. So what are the US and the EU getting out of this? From the EU side, they have sort of agreed to cementing quite high tariffs, much higher

than ever before. So previously, tariffs for European goods exported to the US were less than 5% on average. We're looking at a jump to 15% for most goods. So it's a huge shift and something that is expected to have a negative impact on the European economy. On the other hand, moving to a point where businesses have a sense of what level they should expect gives the kind of stability that a lot of European business leaders and business groups have been saying they really could use to try to plan for the future. On the American side, it reinforces Trump's interest in having baseline tariffs that are quite high compared to previous years. He hopes that that could allow for some reshoring of industry in the US.

The other thing that the US can get from this is the pledges that the EU made in terms of additional investments in the US, as well as pledges to purchase more from the US, especially on energy, liquefied natural gas, I think is something that we'll probably see when the details of the agreement come out. We'll probably see a big focus on that. How does this trade deal then compare with some of the other deals that Trump has been reaching especially ahead of the August deadline as he tries to remake the global trading system? Yeah so what we see with the

general outline of this deal is that it looks quite similar to the agreement that was announced with Japan last week. So both of them got the 15% baseline tariff, both had it applied to the automotive industry as well. And I think what that tells us is that we're starting to see 15% shakeout as the likely level of minimum tariffs on most major US trading partners. So it is true that the UK, which did a deal earlier on, did get a 10% level. At this point, it looks like most others are likely to see 15% or higher. It puts some pressure on other countries that don't have a deal yet. And I'm thinking, for example, of South Korea, to try to get something similar because the

situation you may have now is those that have a 15% tariff or in the UK's case a 10% tariff they may end up having a competitive advantage over other trading partners that for example are facing those 25% tariffs on cars that Trump put in to place. Wall Street Journal Brussels reporter Kim McRaele thank you so much for your insights. Thanks so much for having me. And Trump will continue his trade efforts when he sits down with British reporter Kim McRaele, thank you so much for your insights. Thanks so much for having me. And Trump will continue his trade efforts when he sits down with British Prime Minister Keir Starmer today to iron out final details of the UK agreement. US and Chinese officials

are also set to meet in Stockholm today and tomorrow to discuss extending their trade truce beyond the current August 12th expiration. Turning to Gaza now, where Israel has announced a tactical pause in military activity to allow for safe routes for humanitarian aid as deadly malnutrition spreads across the enclave. The announcement follows growing pressure from Arab and Western officials over what residents and humanitarian workers say is the worst hunger crisis in Gaza since the Hamas-led attack on Israel in October 2023. The World Food Programme, or WFP, said yesterday that it welcomes Israel's commitment to humanitarian pauses and corridors and hoped new measures would

improve conditions on the ground. However, the WFP's country director for the occupied Palestinian territories, Antoine Renard, says this shouldn't be a one-off. This is long overdue and we need still to reiterate how important is the ceasefire. So now we see this as a as a proper way for us to increase the assistance into Gaza but it will not be within you know one single day that we can actually change the current level of salvation that you have currently in Gaza. In a sign of how desperate the situation has become, Israel, the United Arab Emirates and Jordan resumed air drops of aid overnight and this morning,

parachuting loads including flour, sugar and canned food into the enclave. Coming up, a major win for Samsung as it signed a multi-billion dollar deal to manufacture semiconductors for Tesla. And in the face of rising temperatures, Europe is taking notes from the US on air conditioning. That and more after the break. Samsung Electronics will make chips for Tesla in a $16.5 billion multi-year deal, marking a major win for its foundry business. In a post on X, Tesla boss Elon Musk said Samsung's new factory in Texas will be dedicated to making the EV maker's next-generation AI6 chip.

The Journal's Korea Bureau Chief Tim Martin says the deal is crucial for Samsung and comes at a particularly sensitive time for the US and South Korea, who are yet to hash out a trade agreement. This is one of the largest chip deals we've ever seen. This represents 7% of its overall revenue and that includes Samsung's divisions with smartphones and televisions and appliances. This is just a massive amount of money, but it comes at a very vulnerable moment. These chips will be made at its new facilities in Texas and appeasing America, helping the U.S.

revive its semiconductor industry is a core concern for Samsung and many global companies. There's a big push that started under President Biden and now certainly is the case under President Trump that foreign companies need to do more of their business and core technologies in the US and perhaps no industry is more vital than semiconductors. Hong Kong-based CK Hutchison says it's in talks with a BlackRock-led consortium to include a strategic investor from China as part of its plans to sell ports on either end of the Panama Canal. CK Hutchison didn't identify the Chinese company. Earlier this month, The Wall Street Journal reported that China was pushing for state-owned

Costco to be an equal partner and shareholder of the ports. This, as earlier moves to put the ports into US ownership, reportedly angered Chinese leader Xi Jinping. President Trump has identified the ports as a security concern due to their Chinese connections. And Citigroup is launching a new premium credit card aimed at frequent travellers. It's the latest salvo in a high-stakes war among banks to win over affluent customers. With a $595 annual fee, the Strata Elite card is City's answer to JP Morgan Chase's Sapphire Reserve and American Express' Platinum cards, which offer a bevy of rewards but charge higher annual fees. And seeing as we started the show with a major transatlantic deal, we thought we'd end on another important change of heart, bringing Europe closer to the US. Because it seems that

searing summer heat waves may be softening Europeans' long-standing resistance to air conditioning. And that's kicked off a new political fight about the wisdom of installing the technology everywhere as climate change reporter Matthew Dalton reports. This year what happened was that the heatwave came particularly early. At the end of June, beginning of July, before people had a chance to get out of the cities and go on their extended European vacations, people were really feeling the heat. So that prompted a lot of criticism, generally from the right, from politicians in France and the UK and Spain, where the heat wave was particularly ferocious.

There are two sides to this. and the UK and Spain where the heat wave was particularly ferocious. There are two sides to this. There's one side where if it gets too hot, people can die. The flip side of that is that a lot of Europeans don't like air conditioning that much. They don't like the feeling of being in an air conditioned room for extended periods of time. And then I think a lot of Europeans are concerned about the energy usage from air conditioning. And there are also some industries that depend on cooling to keep their products good. I mentioned in my story a vineyard that air conditions its wine vats to keep them from turning to vinegar. So there are some cases where air conditioning really is a necessity. And that's it for What's News for this Monday morning. Today's show was produced by Daniel

Bach and Kate Bullivant. Our supervising producer is Sandra Kilhoff. I'm Azhar Sukri for The Wall Street Journal. We'll be back tonight with a new show. Until then, stay cool and thanks for listening.